Counsel Concerns

Straughter was represented by another attorney, California-based Alan Dowling, in his underlying case. Dowling is not a party to Lawyers Funding's suit. Dowling represented Straughter in executing a non-recourse assignment to Lawyers Funding in the amount of $100,000. At the time, Straughter's demand in the copyright suit was $10 million, according to Lawyers Funding's complaint.

A few months later, Lawyers Funding invested another $12,500 for a total of $27,500. At that time, Dowling executed an acknowledgement of lien, which was attached to the contract between Lawyers Funding and Straughter, according to the complaint in Pennsylvania federal court.

In December 2012, Lawyers Funding claims, Dowling informed Lawyers Funding that Straughter was actively involved in court-ordered mediation with Sony and Usher and that he believed the case would settle for $500,000. Dowling asked for a 15% reduction in the amount then assigned and Lawyers Funding agreed to accept $85,000 in the event the case settled at that time and for that amount, according to the Lawyer Funding complaint.

But, Lawyer Funding claims, Dowling later informed it that Straughter rejected that settlement and subsequently discharged Dowling as his attorney.

In February 2013, the defendants in the copyright case filed a motion to enforce the $500,000 settlement, alleging Dowling had accepted that on his client's behalf. Straughter said he never gave authority to accept the settlement, but the California court ultimately granted the motion to enforce.

In April 2013, Lawyers Funding sent information about its situation to Harris for his review and consideration of what action Lawyers Funding could take to protect its lien. In May 2013, Straughter appealed the enforcement order to the U.S. Court of Appeals for the Ninth Circuit.

Lawyers Funding hired Harris to “accomplish its plan to provide additional funding to Mr. Straughter in exchange for an agreement for LFG to enter a consent judgment which would be executed during the pendency of the litigation except to service notice upon the underlying defendants as garnishees,” according to the Lawyers Funding complaint.

Alan R. Zibelman, a managing member of Lawyers Funding and an attorney with Zibelman Legal Associates, informed Harris of Lawyers Funding's new agreement with Straughter and said Straughter would have to have his own attorney review an agreement memorializing the new terms, which Harris would prepare, Lawyers Funding claims.

Harris then expressed interest in representing Straughter in Straughter's underlying claims against Sony and Usher. Zibelman and Lawyers Funding agreed to waive any conflict and agreed to give Straughter additional funding as long as Harris would protect the investment, according to the complaint in Pennsylvania.

The company then sought assurances from Harris that the confession of judgment would be recorded with the court to ensure Lawyers Funding's ability to serve garnishments. As of February 2014, the judgment was not recorded, and in March, Straughter settled his copyright case, representing himself pro se, Lawyers Funding claims.

The details of that settlement are not reflected on the California docket, but Lawyers Funding states in its complaint that Straughter received an “undetermined amount” minus the attorney fees owed Dowling.

When Lawyers Funding learned of the settlement a few weeks later, it informed Harris of the situation and reminded him of his potential professional liability, according to Lawyers Funding's complaint, which says Harris requested time to try to communicate with Straughter. According to the complaint, Straughter “could not be located and for the past months has refused to return telephone calls.”

Lawyers Funding is now suing Straughter for breach of contract, Harris for negligence and the law firm Harris & Ruble for vicarious liability. Lawyers Funding alleges that Harris failed to file the consent judgment in favor of the funding company and failed to recognize potential conflicts of interest arising from attempts to represent Lawyers Funding and Straughter.

Gina Passarella is a Senior Staff Reporter for The Legal Intelligencer, an ALM sibling publication of Entertainment Law & Finance.

A Philadelphia-based litigation funding company is suing a California law firm and its client over the alleged failure to repay funds loaned to help support the client during his copyright suit against musical artist Usher and various record labels.

Lawyers Funding Group is seeking $102,500 from Los Angeles attorney Alan Harris, his firm, Harris & Ruble, and composer Ernest Straughter, according to the complaint in Lawyers Funding Group LLC v. Harris, 2014cv06369, filed in November in the Eastern District of Pennsylvania. The litigation funding company argues that Harris and his firm failed to ensure the company's right to a portion of any recoveries Straughter earned in his suit over whether Usher's “Burn” violated Straughter's copyright in the song “Reason.”

In September 2011, Lawyers Funding invested $15,000 in connection with Straughter's pending civil litigation against Sony Entertainment, Usher and others over copyright infringement. Straughter, according to his underlying copyright complaint filed in the Los Angeles-based Central District of California, is a Grammy-winning composer and recording artist.

Straughter was represented by another attorney, California-based Alan Dowling, in his underlying case. Dowling is not a party to Lawyers Funding's suit. Dowling represented Straughter in executing a non-recourse assignment to Lawyers Funding in the amount of $100,000. At the time, Straughter's demand in the copyright suit was $10 million, according to Lawyers Funding's complaint.

A few months later, Lawyers Funding invested another $12,500 for a total of $27,500. At that time, Dowling executed an acknowledgement of lien, which was attached to the contract between Lawyers Funding and Straughter, according to the complaint in Pennsylvania federal court.

In December 2012, Lawyers Funding claims, Dowling informed Lawyers Funding that Straughter was actively involved in court-ordered mediation with Sony and Usher and that he believed the case would settle for $500,000. Dowling asked for a 15% reduction in the amount then assigned and Lawyers Funding agreed to accept $85,000 in the event the case settled at that time and for that amount, according to the Lawyer Funding complaint.

But, Lawyer Funding claims, Dowling later informed it that Straughter rejected that settlement and subsequently discharged Dowling as his attorney.

In February 2013, the defendants in the copyright case filed a motion to enforce the $500,000 settlement, alleging Dowling had accepted that on his client's behalf. Straughter said he never gave authority to accept the settlement, but the California court ultimately granted the motion to enforce.

In April 2013, Lawyers Funding sent information about its situation to Harris for his review and consideration of what action Lawyers Funding could take to protect its lien. In May 2013, Straughter appealed the enforcement order to the U.S. Court of Appeals for the Ninth Circuit.

Lawyers Funding hired Harris to “accomplish its plan to provide additional funding to Mr. Straughter in exchange for an agreement for LFG to enter a consent judgment which would be executed during the pendency of the litigation except to service notice upon the underlying defendants as garnishees,” according to the Lawyers Funding complaint.

Alan R. Zibelman, a managing member of Lawyers Funding and an attorney with Zibelman Legal Associates, informed Harris of Lawyers Funding's new agreement with Straughter and said Straughter would have to have his own attorney review an agreement memorializing the new terms, which Harris would prepare, Lawyers Funding claims.

Harris then expressed interest in representing Straughter in Straughter's underlying claims against Sony and Usher. Zibelman and Lawyers Funding agreed to waive any conflict and agreed to give Straughter additional funding as long as Harris would protect the investment, according to the complaint in Pennsylvania.

The company then sought assurances from Harris that the confession of judgment would be recorded with the court to ensure Lawyers Funding's ability to serve garnishments. As of February 2014, the judgment was not recorded, and in March, Straughter settled his copyright case, representing himself pro se, Lawyers Funding claims.

The details of that settlement are not reflected on the California docket, but Lawyers Funding states in its complaint that Straughter received an “undetermined amount” minus the attorney fees owed Dowling.

When Lawyers Funding learned of the settlement a few weeks later, it informed Harris of the situation and reminded him of his potential professional liability, according to Lawyers Funding's complaint, which says Harris requested time to try to communicate with Straughter. According to the complaint, Straughter “could not be located and for the past months has refused to return telephone calls.”

Lawyers Funding is now suing Straughter for breach of contract, Harris for negligence and the law firm Harris & Ruble for vicarious liability. Lawyers Funding alleges that Harris failed to file the consent judgment in favor of the funding company and failed to recognize potential conflicts of interest arising from attempts to represent Lawyers Funding and Straughter.

Gina Passarella is a Senior Staff Reporter for The Legal Intelligencer, an ALM sibling publication of Entertainment Law & Finance.