The lawyers are coming! The lawyers are coming!
At the mouth of the Lincoln Tunnel, in plain view of 52,000 daily commuters, stands a giant LCD billboard with a picture of a crumbling home. “Not getting paid?” the copy reads. “Call 855-21-SANDY.” “This is personal,” explains Marty Ged, a partner at Boca Raton, Fla.-based law firm Ellis Ged & Bodden. Mr. Ged was born in Point Pleasant Beach, N.J, a block from the boardwalk, in the house his grandfather bought after World War II. Now the house is condemned. A week after Superstorm Sandy, Mr. Ged was back in his home state after a decade practicing law in Florida. He has already set up two offices in Jersey, with another planned for Staten Island. Sandy tore apart the lives and livelihoods of many in the New York area. Now, as the region puts itself back together, property owners, corporations and small businesses are turning to the courts for help. And attorneys—from white shoe lawyers to storm chasers from Texas and Florida—are angling for their piece of the action. Plaintiffs and defendants are lawyering up over insurance payouts, tenant and landlord disputes, business-interruption claims, environmental spills, even criminal cases resulting from price gouging and fraudulent contractors. The city alone is facing more than 700 potential suits stemming from the storm. “There is a real frenzy over Sandy,” said Ken Frenchman, a partner at Manhattan-based Kasowitz Benson Torres & Friedman. “Even if you're not seeing it in court, there is a lot of negotiating going on.” Total damage from the storm is estimated to be $62 billion, with private insurance expected to cover around a third of that cost, or as much as $25 billion, according to reinsurer Munich Re. That would make Sandy the storm with the second-highest insurance toll, ahead of 1992's $22.9 billion Hurricane Andrew. Katrina led to $46.6 billion in payouts. The Property Casualty Insurance Association of America counts at least 1.5 million Sandy insurance claims, most of which are for damaged property. It says 90% have been settled. That leaves tens of thousands in dispute.. “What we're seeing is lots of lowball offers,” Mr. Ged confirmed, “and lots of delay in adjusting the claims.” Property owners seeking restitution are running into fundamental problems. The national flood program is capped at $250,000, which won't cover extensively damaged homes that were worth millions before Sandy hit. Furthermore, many homeowners did not have flood insurance. They had hoped property insurance would cover their losses, which is leading to legal disputes. “If the private insurer can say it was flood-related, then they don't have to pay for it, the government does,” said Victor Tello, coordinating attorney for disaster relief at the City Bar Justice Center. National flood insurance also doesn't cover damage to “basements,” even though many New York dwellings are below grade. Already a class-action lawsuit has been launched in Jersey City challenging this provision. Insurers over the past decade have also made contracts more airtight, learning from each successive storm. “There's less ambiguity, less to litigate,” said Aidan McCormack, a partner at law firm DLA Piper who works with insurers. “You've either got the coverage, or you don't. It's much more black and white than it used to be.” The challenges policyholders face have been a boon to attorneys. Corporate firms are providing pro bono support to homeowners, as are legal aid societies and law students taking alternative holiday breaks. But more often than not, personal-injury lawyers and firms with insurance practices are picking up the slack. Tom Maligno at the Touro Law Center's pro bono storm assistance center said there is actually a dearth of lawyers to help these millions of homeowners clear their claims. “We could really use the help,” he said. Sensing opportunity, out-of-town legal eagles have begun to stream in, like the appropriately named Rain Law Firm, based outside Miami. Hurricane-tested Texas firms have also set up shop. In fact, four out of the top 10 Google hits for “Hurricane Sandy lawyer” are firms from the Lone Star State. A March 17 article in the Austin American Statesman about Steve Mostyn, a prominent Texas attorney with 10-gallon attitude, has been making the rounds of New York law firms. Some took umbrage with his claims of sweeping up $1 billion worth of Sandy claims in the Northeast. Mr. Ged, for his part, takes 25% of the settlement in mediation, 33% in court. “But that's on top of any additional money we get for the client,” he said. “I'm not taking anything I haven't earned. But some guys are.” The biggest cases, though, involve Fortune 500 firms that lost millions in business and damaged property. Risk Management Solutions predicts $16 billion will be paid to cover business interruption claims.. So far, few cases have landed in court. “Insurers don't want to lose their [corporate] clients, who are quite valuable,” said Mitch Auslander, a partner at law firm Wilkie Farr & Gallagher. “More important, they don't want to look like they're not stepping up after a disaster.” Suits have nonetheless trickled in. Fisker, the super-luxury hybrid carmaker, sued XL insurance on Dec. 28 for $33 million over a shipment of cars flooded at the Port of Newark. The case was settled Feb. 21. Drilling supplier TJM filed a $376,000 suit against its insurers for damage to a rig set up at a West 28th Street construction site and subsequent cancellation of its policy. The types of businesses most likely headed to court appear to be commercial and residential landlords whose tenants are suing for rent abatement over loss of power or habitability. “It will all come down to what the leases say in these cases, and that may be a matter a only a judge can decide,” said David Skaller, a partner in the real estate practice at Belkin Burden Wenig & Goldman. Lowey Dannenberg, a law firm in White Plains, has launched a class-action suit on behalf of tenants in more than a dozen New York City complexes owned by two major New York real estate developers, Milstein Properties and the estate of Sol Goldman. Janice McAvoy, a partner at Fried Frank Harris Shriver & Jacobson, is writing an amicus brief for the Real Estate Board of New York and Rent Stabilization Association challenging the case. “Every unit is different,” Ms. McAvoy explained. “If you're on the second floor or the 32nd, if you were flooded or you weren't, these are individual cases, not a class action.” The Bloomberg administration is also facing hundreds of suits. As of last month, the Office of Comptroller John Liu had registered 721 claims. Of those, 63 are personal injury while the remaining 658 are property-based. Criminal cases could also come down the pike. The New York attorney general and district attorneys across the region are looking into fraudulent contractors, phony charities and price-gouging schemes. For example, a spokesman for Manhattan District Attorney Cy Vance Jr. said the DA's office was investigating claims that a group had been stockpiling gas in a dangerous location. As Mr. Ged said, “We're just getting started.”
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