Baltimore and Washington law firms battle over Chapman fees

Daily Record, The (Baltimore), Jun 18, 2007 by Brendan Kearney

Less than a week after Nathan A. Chapman Jr., the former star investment banker, began serving his jail sentence for defrauding the state pension system, a Baltimore law firm that claims to have assisted in Chapman's criminal defense filed its own fraud suit against the Washington law firm that represented Chapman.

Jones & Associates PC seeks $300,000 in compensation from Blank Rome LLP and Chapman's lead defense attorney, William R. "Billy" Martin, for the time Nathaniel E. Jones Jr. and his staff spent on Chapman's defense in 2004, according to the suit filed last week in Baltimore City Circuit Court.

Jones claims he and Martin had an oft-reiterated oral agreement, which was also spelled out in an unsigned written contract, that Blank Rome would pay Jones' firm for its contribution to the case.

"It was at all times contemplated, understood, and agreed, and Mr. Martin specifically agreed and acknowledged, that-Blank Rome would directly pay the fees and expenses of Mr. Jones and Jones & Associates in connection with this engagement," the suit states.

In a letter to Jones last June, Alan M. Freeman, partner at Blank Rome, flatly denied the existence of any binding contract and wrote that Blank Rome would not pay Jones.

"[Y]our fee agreement, if any, was with Mr. Chapman and not this firm," wrote Freeman. "Thus, your suggestion that Blank Rome owes you a financial obligation is fundamentally flawed."

Jones said Freeman's letter represented a sudden departure from what had been a collegial relationship between the firms for months and assurances from Martin that payment was forthcoming.

"It's a shocking letter," Jones said Friday in an interview. "I see no chance of them prevailing at the end of the day. Too many people know the facts."

The son of a seamstress and a railroad worker, Chapman founded the nation's first black-owned investment bank, The Chapman Co., in 1986, and became the first black chairman of the University System of Maryland Board of Regents in 1999.

But in 2003, the U.S. Securities and Exchange Commission and the Maryland Securities Commissioner filed civil suits against Chapman in connection with the use of state pension money to boost the initial public offering of eChapman Inc., an online financial services company. The Office of the U.S. Attorney filed a criminal indictment.

After a lengthy criminal trial beginning in June 2004, a jury convicted Chapman on 23 counts of various types of fraud. That November, he was sentenced to 71/2 years in jail and ordered to pay $5 million in restitution. Unsuccessful appeals to the 4th U.S. Circuit Court of Appeals and the U.S. Supreme Court - the high court denied certiorari - delayed the start of his prison term.

Just weeks before his trial, Chapman asked Martin to add Jones to the defense team, citing Jones' familiarity with the previous investigations, the people involved and business law, the suit states.

Mindful that Chapman's $5 million insurance policy would not cover all Chapman's personal and company legal fees, Jones agreed to assist Martin and Blank Rome on the condition that Blank Rome, not Chapman, bear responsibility for paying him, according to the suit.

"We weren't looking to get into a separate negotiation with the insurance company after the trial," Jones said Friday.

A letter addressed to Jones from Martin - but prepared by Jones & Associates - lays out the terms of the agreement as Jones described them in the lawsuit. But Martin never signed that letter, despite indicating that he would, the suit states.

Jones sent Blank Rome an invoice in September 2004 and every two months thereafter for the next year-and-a-half but only learned of Blank Rome's stance through Freeman's letter in June 2006, the complaint states.

In addition to fraud, Jones alleges breach of contract, quantum meruit - payment for services rendered, with or without a contract - and unjust enrichment. Jones seeks $10 million in punitive damages on the fraud count.

A spokeswoman for Blank Rome said Friday that the firm had not yet received the lawsuit but she echoed Freeman's stance.

Martin, now partner at Sutherland Asbill & Brennan LLP in Washington, has also represented Monica Lewinsky's mother, Chandra Levy's parents, and former heavyweight boxing champion Riddick Bowe. He did not return a call seeking comment Friday.