Law firm gets a divorce from Chesapeake Energy case over royalty payments

The two law firms that banded together to sue Chesapeake Energy over unpaid royalty payments in the Barnett Shale are parting ways because of “irreconcilable differences.”

This week, Circelli, Walter & Young was granted permission by State District Judge Dana Womack to drop out of the case after significant disagreements emerged with attorney Dan McDonald and his law firm.

For those who need a refresher, McDonald led a populous cause against Chesapeake over unpaid royalty payments to landowners. He argued that the Oklahoma City energy giant improperly subtracted post-production costs from their checks, which led to a $51 million settlement in July. Over 91 percent of the 13,000 clients they represented agreed to the deal.

But that left open the question of who will represent the 1,100 clients who didn’t accept the deal, including 745 who haven’t been in communication with the two firms.

At first, McDonald’s law firm said they were withdrawing representation from those who did not follow their initial advice to settle, according to court documents. The Circelli law firm took steps to continue with the cases, going as far as talking to Chesapeake about how to proceed.

Then McDonald reversed course, saying he wanted to continue with the cases, records show.

This clearly didn’t go over well with the Circelli firm, which already felt like it had performed “far more extensive work” on the original cases than contemplated, records show. They also said that “stark differences became apparent in strategy, tactics, approach, as well as litigation philosophy” over preparing the cases for trial prior to the settlement.

Adding insult to injury, just before settling the case with Chesapeake in July, Circelli was sued by another attorney who said McDonald has promised him one-third of the fees recovered from the Chesapeake cases. Circelli has since been dropped from that case, which is proceeding.

In asking to withdraw, the Circelli law firm told the judge it “would like to avoid the risk of being drug into any other potential litigation” against McDonald and his law firm. The firm said their “irreconcilable differences” were so “untenable” that it was not in the best interest of the clients.

Womack agreed and granted a divorce. A hearing on the status of the remaining cases is set for Oct. 19.

This story was originally published September 30, 2016 at 10:50 AM with the headline "Law firm gets a divorce from Chesapeake Energy case over royalty payments."