Motley Rice

Motley Rice LLC is one of the largest American plaintiffs' litigation firms. Founded in 2003, Motley Rice seeks justice and accountability on behalf of people and institutions harmed by wrongdoing and negligence. The firm is currently involved in litigation seeking to hold accountable those who allegedly financed the September 11, 2001, attacks. Motley Rice is headquartered in Mount Pleasant, South Carolina, and has offices in eight cities across the United States.

Motley Rice LLC
Headquarters28 Bridgeside Blvd, Mt. Pleasant, SC 29464
No. of offices11 offices
No. of attorneys100+
Major practice areasAnti-Terrorism & Human Rights, Asbestos and Mesothelioma, Aviation Disasters, Catastrophic Injury, Consumer Fraud, Defective Medical Devices & Drugs, Environmental Contamination, BP Oil Spill, Occupational Disease, Products Liability, Securities Fraud, Workers Rights, Wrongful Death, Whistleblower/Qui Tam
Key peopleRonald Motley, Co-founding member; Joseph Rice, Co-founding member; Mary Schiavo, Former Inspector General, US Department of Transportation; William Narwold, Member Attorney
Date founded2003
FounderRon Motley and Joe Rice
Company typeLimited liability company

History

Motley Rice was formed in 2003 by co- founding members Ron Motley and Joe Rice after the breakup of the law firm Ness, Motley, Loadholdt, Richardson & Poole P.A. Ron Motley played a vital role in building a case against the asbestos industry in the 70s and also served as lead attorney in the Tobacco litigation of the mid 90s, which resulted in the Tobacco Master Settlement Agreement.

Practice areas

Asbestos and mesothelioma

Motley Rice represented about 96,000 asbestos plaintiffs up to 2004. The firm later transitioned into offering asbestos defendants pre-packaged bankruptcies. Companies that file with the assistance of Motley Rice generally emerge from bankruptcy after just a few months and in some cases just 30 to 45 days. Insurance companies are generally stuck with the liability for asbestos claims discharged in such bankruptcy proceedings. Investors are often allowed to keep their equity and often become wealthy when stock prices rise after a firm is cleansed of asbestos liability. Claimants that are extremely ill generally receive far less compensation than they would otherwise qualify for. Standard bankruptcies last an average of six years and can cost millions of dollars per month.[1][2]

Fees for pre-packaged bankruptcies vary greatly. The Swiss power company ABB suffering from asbestos liability through its Combustion Engineering subsidiary in the United States was charged $20 million for Motley RIce's services. Motley Rice earned additional fees from the contingency payments received by its other clients under the terms of the bankruptcy. Shook & Fletcher, a small Alabama construction company, was charged just $3 million.[1][2]

Critics say that Motley Rice has a conflict of interest in promoting pre-packaged bankruptcies. For example, in the ABB/Combustion Engineering case Motley Rice represented both asbestos plaintiffs and the firm they were suing. In response to this criticism Joseph Rice said, "I had ethical consultants all along. I get paid a fee for a business transaction, and the claimants get paid because I was able to put together that transaction. My interests are 100% aligned with my clients." In this case, patients with exactly the same disease received settlements that varied by a factor of 20 because compensation was calculated by the average historical settlement value of the law firm representing them.[1][2]

Motley Rice is able to effectively market pre-packaged bankruptcies due to the large number of plaintiffs it represents directly and through consulting and co-counsel agreements with local law firms across the country. Motley Rice's huge client base allows it to craft global settlements that defendants know will almost certainly be accepted.[1][2]

When a corporation settles mass claims in a pre-packaged bankruptcy it generally must have an independent administrator process the paperwork and make sure that each claimant has submitted all required documents. Motley Rice outsources this work to a company called the Clearing House. The Clearing House was incorporated by a Rice Motley lawyer in 2001 and was briefly owned by Benee Wallace. Wallace worked as the paralegal and personal assistant of Joseph Rice for many years. In 2002, Wallace left Motley Rice on a "sabbatical" to run the Clearing House. That year Clearing House earned more than $1 million. Wallace sold the Clearing House to a consulting firm that its work was subcontracted to for $100,000 and then returned to Motley Rice in 2003.[1][2]

Notable lawyers

Controversies

Frivolous suit against ITT

In March 2012, Motley Rice was ordered to pay ITT Educational Services almost $400,000 in legal fees for pursuing a "frivolous" lawsuit the judge said was "based on a completely false story."[6][7] On review, the 7th US Circuit Court of Appeals reversed the order and reinstated the lawsuit against ITT.[8] The Court of Appeals was critical of the lower court's dismissal, writing, "[W]e believe that Leveski's case is yet another instance of a district court dismissing an [False Claims Act] suit after viewing the allegations at too high a level of generality." [9]

Congoleum

In the Congoleum bankruptcy Motley Rice refused to answer questions put to it under Rule 2019. Rule 2019, formally called Federal Rule of Bankruptcy Procedure 2019(a), requires that attorneys representing more than one creditor file a statement naming the creditors, the amounts of their claims, an explanation of how the attorney became employed on the case, and the nature and amount of any relevant claims held by the attorney. Rule 2019 is designed to allow judges to identify conflicts of interests. All lawyers representing more than one client in a bankruptcy must file under this rule but many plaintiffs firms fiercely resist doing so. Bankruptcy judge Kathryn C. Ferguson demanded that Motley Rice fully comply with Rule 2019. Her order was upheld on appeal.[2]

Ahearn v. Fibreboard

Fiberboard was an asbestos supplier near bankruptcy that attempted to negotiate a global settlement of the claims against it. The proposed settlement would have relied almost entirely on insurance claims. Before the settlement Fiberboard had unpaid debts of at least $1 billion and was facing about 50,000 asbestos injury suits. Fiberboard did not have enough cash ready to enter the Georgine settlement but decided to pursue the same type of arrangement on its own. Fiberboard first negotiated an inventory settlement with Ness Motley covering 20,000 asbestos claims. This arrangement was later extended to 45,000 claims. Shockingly, the terms of the settlement required Ness Motley to recommend the same terms to any future claimants it might represent. A judge then appointed Ness Motley to negotiate on behalf of future claimants.[10]

Fibreboard and Ness Motley soon announced that they had reached a settlement that would cover all future claims. The judge certified the class within a month of appointing Ness Motley. Ness Motley thus simultaneously represented present and future claimants, an obvious conflict of interest. The proposed settlement would have divided up $500 million among at least 50,000 claimants and earn the firm a $167 million fee. Fibreboard's two main insurers were to contribute about $1.5 billion to a bankruptcy trust fund for future claimants with a very small $10 million from the defendant itself. Under this arrangement Fibreboard would have retained $230 to $300 million in value as a going concern. Unlike most other asbestos settlements no effort was made to ascertain the number of future claimants and what their financial needs may be. This settlement was later overturned on appeal.[10]

Further reading
  • Haddad, Charles. "Southern Discomfort." Business Week, Feb. 17, 2003. About the breakup of Ness, Motley, Loadholt, Richardson & Poole into smaller firms, including ultimately Motley Rice.
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References
  1. Parloff, Roger (6 September 2004). "Welcome to the New Asbestos Scandal. For a quarter-century, companies have struggled with asbestos liability. Now, thanks to the very lawyers who are suing them, they've found a new tool--one that sticks it to their insurance companies and the genuinely sick". Fortune Magazine. Retrieved 10 May 2017.
  2. Brickman, Lester (6 June 2005). "Ethical Issues in Asbestos Litigation". Hofstra Law Review.
  3. Ronald L. Motley Attorney Profile
  4. Joseph F. Rice Attorney Profile
  5. Mary F. Schiavo Attorney Profile
  6. Daniel Fisher, Judge Slaps Motley Rice With Fees Over "Frivolous" Lawsuit, Forbes, 28 March 2012
  7. Martha Neil, Federal Judge: Motley Rice, 2 Other Law Firms Must Pay $395K in Legal Fees re ‘Frivolous’ Suit, ABA Journal, 28 March 2012
  8. Molly McDonough, 7th Circuit erases $400K sanction against Motley Rice, revives whistleblower case, ABA Journal, 10 July 2013
  9. Leveski v. ITT Educational Services, Inc., No. 1:07-cv-TWP-MJD, , 8 July 2013
  10. Coffee, John C. (2015). Entrepreneurial Litigation. Cambridge: Harvard University Press.
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