Brothers who are former partners and trial lawyers in a plaintiffs' law firm now also are opponents in court amid a dispute over more than $1.92 million in legal fees and unpaid expenses.
Mark E. McNabola, managing partner of McNabola Law Group P.C., Chicago, filed a complaint April 5 in Cook County Circuit Court against Edward W. McNabola, of Wilmette, and his firm, McNabola & Associates LLC, of Chicago.
According to the complaint, Mark McNabola founded Cogan & McNabola P.C. with Michael Cogan in 1992, principally representing plaintiffs in negligent injury and medical malpractice claims. Edward McNabola became an equity partner in 2007. Cogan left in July 2012, and the firm took its present name with the brothers as sole partners until September 2012, when Karen A. Enright joined as non-equity partner and attorney.
Things soured on July 20, 2016, when, according to the complaint, “Edward McNabola called a surprise meeting and, having secretively planed for over four months with his attorney, abruptly resigned from the firm with no prior notice” and opened the competing firm. A few days later, he allegedly hired away an attorney, two executive assistants, and a paralegal/law clerk.
The complaint said Edward McNabola incorporated his new firm two days before announcing his resignation, and notes the new firm specializes in the same type of cases, putting the two companies in direct competition.
Mark McNabola's complaint detailed Edward McNabola’s conversion from associate attorney to equity partner, which allegedly involved exchanging his interest in the attorney fees of 38 cases he originated for 205 shares of common stock in the corporation. The complaint said the deal’s structure yielded a “tax neutral” transition as opposed to a “stock bonus” situation.
Edward McNabola nonetheless still received compensation, including attorney fees, from 29 of those cases from 2007 through 2010, a fact Mark McNabola said he didn’t learn until the middle of 2012. According to the complaint, while Edward McNabola acknowledged receipt of the money, he “disputed the firm’s interpretation of the terms of the stock agreement.”
Mark McNabola asserted he had the legal right to force repayment of the money, but he and his brother agreed to submit the dispute to a neutral party, Judge Stuart Nudelman. His ruling, issued Dec. 6, 2012, purportedly called for Edward McNabola to return his interest in the disputed cases to McNabola Law Group. Edward McNabola purportedly asked to have the payment delayed to February 2013.
However, Mark McNabola alleges Edward McNabola “breached his oral agreement” to agree with binding arbitration by failing to repay the $1.4 million, also giving rise to a breach of fiduciary duty claim. Mark McNabola said he learned his brother would not make the payment as of April 5, 2013.
The complaint also accused Edward McNabola of maintaining an email address and website during his entire partnership with McNabola Law Group separate from the firm itself and “designed to attract business to him individually.” It further alleged Edward McNabola failed to pay his 25 percent share of the annual firm operating costs from 2013 through 2015; as of 2016 overhead was to be split 50-50, but Edward McNabola allegedly didn’t make those payments before leaving the firm.
Mark McNabola also accused Edward McNabola of owing $231,180 in unpaid case expenses, “$34,785 for expenses incurred in prosecution of client matters” resolved in settlement or rejected prior to July 2016, losses related to cases he was managing totaling $59,012 and his share of the firm’s losses on unrecoverable cases expenses totaling $202,733. Mark McNabola also said his brother owes 25 percent of the cost of pursuing 2014 litigation against two former partners.
The complaint also levels a claim of false advertising, saying Edward McNabola worked to redirect Google searches to his firm via unauthorized ownership of McNabola Law Group’s Google Business account, and also accused him of ignoring or obstructing McNabola Law Group origination policies so he could claim he brought certain business in alone rather than through the firm.
Mark McNabola and his firm asked a judge to award punitive and actual damages, as well as order an accounting of all client matters McNabola & Associates evaluated from July 2016 through May 2017.
Representing Mark McNabola and the McNabola Law Group in the matter is Yelton & Associates P.C., of Chicago.
Edward McNabola did not reply to a message left by The Cook County Record seeking comment.