Judge dismisses lawsuit against lawyer over Chesapeake legal fees

Dan McDonald speaks at a church in 2014 about his mass tort lawsuit against Chesapeake Energy.
Dan McDonald speaks at a church in 2014 about his mass tort lawsuit against Chesapeake Energy. Star-Telegram archives

A lawsuit that accused attorney Dan McDonald of cheating another lawyer out of his share of the legal fees in the $51 million Chesapeake Energy settlement has been dismissed.

State District Judge Dana Womack signed an order Wednesday shutting down the litigation in which attorney Jim Ward was seeking up to a third of the millions in legal fees stemming from the Chesapeake case.

Womack’s order dismisses the litigation with prejudice, meaning that Ward is barred from filing a similar lawsuit in the future. It is not clear from court records whether Ward and McDonald reached a settlement.

Allen Pennington, the attorney representing McDonald, declined to comment. Attorneys in Amarillo and Oklahoma City representing Ward did not return phone calls from the Star-Telegram seeking comment.

In May, McDonald announced the settlement of his massive lawsuit against Chesapeake, once the face of the Barnett Shale gas drilling boom. In about 400 lawsuits representing more than 13,000 clients, McDonald accused Chesapeake of deducting higher-than-necessary production costs from royalty checks.

After years of legal wrangling, and on the eve of the first cases going to trial, about 90 percent of McDonald’s clients agreed in July to an out-of-court payout with Chesapeake. The attorneys got 39 percent of the prorated $51 million settlement, or about $19.9 million.

McDonald worked on the case with another Fort Worth law firm, Circelli, Walter & Young, which had reached a separate agreement on how to divide the legal fees. The Circelli firm was dropped from Ward’s lawsuit.

While Ward never appeared in court— and his name does not appear on any of the court documents — his lawsuit contended that McDonald could not have obtained the settlement without the “indispensable contribution” of him and his team of experts.

McDonald’s attorneys argued that an agreement Ward and McDonald signed in February 2014 was not enforceable when applied to the broader settlement. At best, Ward was due no more than about $113,500 from the limited number of clients he brought into the lawsuit. McDonald ceased having any contact with Ward by July 2014, court records say.

It was only after the Chesapeake settlement was announced that Ward, who runs his business out of his east Fort Worth residence and is only licensed to practice law in Alabama, came out of a “two-year hibernation,” a court filing said.

After Ward filed his lawsuit, $5.3 million was set aside in a trust fund until the issue was resolved. Womack released those funds the day she signed the order dismissing the lawsuit against McDonald.

Max B. Baker: 817-390-7714, @MaxbakerBB