LAW FIRM ENTITLED TO ATTORNEY’S FEES FROM ADDITIONAL DEFENDANTS WHO DID NOT SIGN THE RETAINER AGREEMENT, THE ADDITIONAL DEFENDANTS BENEFITED FROM THE SETTLEMENT AGREEMENT REACHED BY THE LAW FIRM AND THE ADDITIONAL DEFENDANTS HAD SIGNED THE SETTLEMENT AGREEMENT (FIRST DEPT).

The First Department determined the law firm, SGA, was entitled to attorney’s fees and expenses from “additional defendants” who did not sign the retainer agreement but who benefited from the law firm’s work:

In a prior appeal in index no. 153449/14, this Court recognized that an award of attorneys’ fees and expenses against additional defendants pursuant to the common fund doctrine was appropriate, because, although they did not sign the retainer agreement with plaintiffs’ counsel (SGA), additional defendants “signed a settlement agreement obtained by SGA entitling [them] to receive a pro-rata payout from the proceeds of the sale of a building in which [they] had invested” … . Additional defendants received a “substantial benefit” as a result of SGA’s efforts, i.e., funds from the liquidation of an asset (the subject property) as to which defendants had successfully excluded them for 30 years … . …

The fact that SGA has already been partially compensated by plaintiffs does not preclude a fee award, as that would be inconsistent with the purpose of the common fund doctrine to prevent unjust enrichment by “allow[ing] the others to obtain full benefit from the plaintiff’s efforts without contributing equally to the litigation expenses” … . Ital Assoc. v Axon, 2018 NY Slip Op 09013, First Dept 12-27-18