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Westar Learns That It's Not in Kansas Anymore When it Comes to Legal Fees

When a company has an obligation to an executive's defense costs in a criminal proceeding arising out of his employment, how much is it required to pay?  That's the issue raised in this recent lawsuit by former Westar Energy chairman David Wittig against his ex-employer, seeking payment of attorney fees that Wittig incurred in defending himself against charges that he "looted" money from Westar. 

Westar doesn't dispute its obligation to pay Wittig's bill.  But as this post from details, Westar has objected to paying for Wittig's pricey Washington D.C.-based legal team who charge rates of as much as $600 a hour.  Likewise, Westar balked at advancing $2.27 million to WilmerHale to retain Seth Waxman to handle Wittig's co-defendant's appeal at the 10th Circuit.  Westar argues that any rates exceeding $395 an hour, the top rates in Kansas, are inherently unreasonable.

To date, the courts have sided with Wittig, ruling that the fees sought were not per se unreasonable.  Moreover, the court added that since Westar failed to specify applicable rates when it drafted the indemnification provisions of Wittig's contract, it could not now attempt to cap the hourly rates charged.   So without a contractual clause to protect itself, Westar, like Dorothy in the Wizard of Oz, has learned that we're not in Kansas anymore -- at least when it comes to legal fees.

Posted by Carolyn Elefant on March 5, 2008 at 02:32 PM | Permalink | Comments (0)


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