• July 28, 2011

Professional lenders (commonly known as “banks”) have long understood that there can be a wide and deep chasm between being owed money and being paid money owed.  They therefore structure loan transactions in many different ways to construct high-speed railroad bridges, if you will, to clear the gorges as quickly and as cheaply as possible (insisting on robust lending agreements, for one of many examples, that waive many defenses in advance to potential a later suit on the debt).

Most other people and business, on the other hand, do not have the leverage, the time, the temperament, or the sophistication to get such systems or terms in place.  As a consequence, many debtors exploit the legal system to stretch out, bog down, complicate, or compromise debt collection, with particular success against “non-lender lenders,” that is, many plaintiffs in civil litigation (who might be considered “tort creditors” or “contract creditors”).

Courts and arbitrators sometimes detect debtor delay tactics, however, and shut them down.

Twin Cities Arbitrator Alain Frécon plainly lost his patience with Louisiana Elastomer, LLC (“LE”), against whom the Minnesota law firm of Lindquist & Vennum (L&V) brought a claim for attorneys’ fees.  So when LE’s CEO, at the eleventh hour, said that he could not attend the scheduled arbitration, Frécon ruled, in essence, “The show must go on,” and, unsurprisingly, L&V prevailed against LE in the fee arbitration.  (The arbitrator’s award is here. (The linked document also includes L&V’s engagement letter with LE, which some may find of interest.))

U.S. Judge Donovan W. Frank (D. Minn.) on cross motions to confirm the arbitrator’s award and to vacate it, ruled in favor of confirming the arbitrator’s award.

Alas, keep in mind that L&V probably still has not been paid.  Perhaps, in hindsight, a $10,000 retainer for a $200,000+ engagement seems a little light.

POST SCRIPT:  Minnesota Litigator owes thanks in connection with this post to a sharp Minnesota Litigator (“ML”) reader.  Keep in mind that the quality of ML is to some extent dependent on the active engagement of its readers.   I won’t go so far to say that, if ML sucks, it is your fault but consider the blog a community asset whose success, to some degree, depends on community support.  THANK YOU!

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