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Marc Dreier. REUTERS/Lucas Jackson

Marc Dreier's ex-wife can sue his client, court says

5/9/2011 COMMENTS (0)

NEW YORK, May 9 (Reuters) - A court reporting service run by the ex-wife of disbarred attorney Marc Dreier can recover fees directly from a client, a New York state appeals court ruled, after his firm failed to cover the bill.

Reversing a trial court, the Appellate Division, Second Department, held that Elisa Dreier Reporting Corp could go ahead with a $41,000 suit against an Internet access company. It said the state's General Business Law did not preclude stenographers from billing clients rather than their attorneys.

"Although the statute holds the attorney presumptively liable for paying the costs of court reporting services, it does not abrogate the client's obligation to pay for the services on its behalf," Justice Leonard B. Austin wrote for the four-judge panel.

Elisa Dreier Reporting was hired by the now defunct Dreier LLP, on behalf of Global NAPS, an Internet access company then locked in a legal battle with Verizon New England. The law firm was run by Marc Dreier, who was sentenced to 20 years in prison two years ago for orchestrating a Ponzi scheme that stole more than $400 million from his clients and investors.

When Dreier LLP filed for bankruptcy after Dreier's arrest, the appeals court noted, Elisa Dreier Reporting did not receive any payment for its work, despite the fact that Global NAPS had been paying Dreier LLP $100,000 per month for invoices related to the case.

In a 2009 memorandum supporting a motion to dismiss by Global NAPS, attorney Daniel Schnapp of Fox Rothschild wrote that Marc Dreier had pressured his clients to hire his ex-wife for court reporting and that she was simply trying to "avoid standing in line with Dreier's other creditors in the Dreier bankruptcy."

Fox Rothschild did not file any briefs in appellate court and did not return calls seeking comment Monday. It was unclear whether they remain involved in the case.

Richard Roth, the lawyer for Elisa Dreier Reporting, said the ruling sets a precedent for service providers having trouble securing payment from the law firms that hired them.

"I think it's a great decision for any vendors of law firms that are trying to get paid and get stiffed," he said. "At the end of the day, who are these vendors working on behalf of?"

A Brooklyn trial judge had held that Dreier LLP was responsible for paying Global NAP's fees because no contract existed between Elisa Dreier and Global NAPS itself. The appeals court ruled the judge erred by ignoring the legislative intent of the law, which was "to assist court reporters in obtaining payment."

The appellate case is Elisa Dreier Reporting Corp. v. Global NAPS Networks Inc, et al, New York State Appellate Division, 2nd Judicial Department, 2010-03163.

The lower court case is Elisa Dreier Reporting Corp. v. Global NAPS Networks Inc, No. 9078/09.

For Elisa Dreier: Richard A. Roth of The Roth Law Firm.

For Global NAPS: Not immediately available.

(Reporting by Joseph Ax)


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