Tenants’ attorneys demand their fees from Gotham while selling out the tenants

In the fall of 2021, Housing Conservation Coordinator's Lynn Horowitz sent an email to Gotham's attorney, Luise Barrack, memorializing a proposed deal they discussed in which tenants would be forced to take rent increases while HCC and TakeRoot Justice would collect fees for an estimated 200 hours of legal work. That 200 hours at prevailing tenant attorney rates, which hover around $500/hour, would be about $100,000. (Read the email #1 below.)

Subsequently, Horowitz wrote another email in which she said the attorneys would be willing to forgo their requested fees that Gotham already agreed to pay if it would facilitate a settlement. (Read the email #2 below.)

These emails confirm that HCC and TakeRoot Justice negotiated their own lucrative fees while simultaneously selling out the tenants for a rent increase in connection with the tenants' class action lawsuit. They sought to deal themselves a whopping sum in fees; they sought to deal Gotham a whopping sum through rent increases; and they sought to have the tenants pay for it all through their noses.

In the ensuing months, many efforts were made to make Horowitz disclose the amount of the attorneys' fees which Gotham already agreed to pay but she balked every time. Tenants have every right to know the details of shady side deals that their attorneys make for themselves with the landlord. Call it what you want, but for all intents and purposes, Gotham and the tenants' attorneys agreed on a deal for payola in exchange for delivering a settlement that included rent increases against the tenants. 

Here's what one Professional Ethics Commission had to say about lawyers negotiating their own fees before a class action settlement is reached:

Several recent cases have condemned a practice of negotiating plaintiffs’ counsel fees prior to settlement of the underlying case. Leading among these is Prandini v. National Tea Co., 557 F.2d 1015 (3rd Cir. 1977). The Prandini court establishes a far preferable procedure of deferring any consideration of counsel fees until after the approval of the class action settlement. See also, Norman v. McKee, 90 F.Supp. 29, 36 (N.D.Cal. 1968), aff’d, 431 F.2d 769 (9th Cir. 1970); Munoz v. Arizona State University, 80 F.R.D. 670 (1978); Jamison v. Butcher & Sherred, supra at 484 (“. . . (I)t is inappropriate for a proposed settlement to provide for direct payment of attorney’s fees to counsel for the class representatives. . .

In view of these authorities, we must conclude that the “inherent conflict of interest” (Manual for Complex Litigation, Rule 1.46 supra) presented by this inquiry requires a plaintiff’s attorney to abstain from any fee discussions with a defendant until after the underlying case has been at least tentatively resolved.

Ponder for a moment how HCC could have pre-determined that tenants' attorneys would spend 200 hours on our case if they hadn't pre-determined the outcome.

Even though HCC is no longer involved in the case, the remaining tenant attorneys continue to negotiate aggressively against their clients as though they have a vested interest in winning a rent increase for Gotham. They no longer talk about the tenants' rights under Rent Stabilization. They no longer talk about the strength of our case even though they cooed about it at the time that it was filed. They no longer talk about litigating tenants' very strong claims. The only thing the tenants' lawyers want to talk about is how much the tenants will give Gotham in rent increases. Why in the world is our own counsel even talking about a rent increase for tenants when it would be a violation of Rent Stabilization Law? It would seem that the original incentive for forcing a rent increase may be alive and well and uppermost in the minds of tenants' counsel. $100,000 may just be too difficult to resist.

Meanwhile, tenants have watched the official utility allowance rate soar for 2022. Yet, Gotham is only crediting tenants with the much lower 2019 rate. Tenants need to close the door on their willingness to accept the 2019 utility rate as a permanent deduction from their rents. We're no longer willing to consider $59 as a fair deduction for a one-bedroom apartment when the rate has soared to $84. It's a difference of $300 per year – that's $300 out of the pockets of low income tenants and into the pockets of Gotham owner David Picket who has a mansion in Westchester County and a $9 million condo in the landmarked Apthorp building on the Upper West Side. Perhaps he needs a utility credit of his own.

Email #1:

Below please find a copy of the last email sent to opposing counsel. 

 

Thanks,

Lynn

 

—- 

**FOR SETTLEMENT PURPOSES ONLY** 

 

Luise, 

 

As promised, I am writing to memorialize Monday’s phone conversation.  

1. Income Recertifications  
1. Our position is that there should not be a change in anyone’s obligation to submit annual recertifications based on the settlement of this law suit. 
2. Gotham will find out two things:  
1. Which tenants are required to submit annual recertifications?  

1. Of those tenants, are the current alleged issues with tenants’ complying with recertifications across the board or only involve a handful of tenants?  
1. Lease Renewals 
1. Gotham prefers a date certain for lease renewals to commence so that it’s locked in regardless of date that the settlement gets approved.  
2. Plaintiffs’ Counsel needs to ask the tenants about this.  
2. Base Rent before the New Proposed Increase/Collectible Rent 

1. We discussed whether the increase would be based off of the tenants’ 2019 lease renewals (less utility credit) or the 2021 lease renewals (less what the utility credit would have been).   
2. Different groups of tenants may want to use a different base year.  
3. Plaintiffs’ Counsel needs to talk to the tenants more about this.  
1. Tiers 
1. In order to propose final tier numbers we need to know the number of tenants in each tier, as reflected on the last rent in a lease that included the utility credit.   
2. We anticipate that the proposed structure will allocate a $0 increase for at least the lowest two tiers of tenants.  
3. Gotham will report back to Plaintiffs’ counsel on those numbers. 
4. Again, the concept of the tier structure appears to be acceptable, but the exact tier structure will require further discussion with the tenants. 

2. Counsels’ Estimated Attorneys’ Fees 
1. For both TakeRoot Justice and HCC, the estimated number of hours is approximately 200.  
3. Lease Terms and Conditions/Riders 
1. As rent stabilized tenants, the leases should be renewed with the same terms and conditions and accompanying riders as any previous leases.  
1. Tenants are reporting receiving riders with changes in them such as the date on which monthly rent is due. These are the kinds of changes that are likely to drive tenants away from settlement.  
2. Assuming we are able to settle, the only change for the upcoming lease renewals should be the elimination of the utility credit and its replacement by a new collectible rent.  
4. Ongoing Litigation 
1. The tenants feel strongly that as we continue to negotiate, Gotham should refrain from pursuing litigation in Housing Court centered around the utility credit dispute. This includes holdovers based on the failure to sign a renewal lease (of which there are about 3 or 4 pending in Manhattan Housing Court, I believe) and nonpayments based solely on the lack of payment of the utility credit (not sure on that number). We will get specific case numbers to you after meeting with the tenants.   

We are hoping to meet with the tenants in the next two weeks and will get back to you about our open questions then. 

 

Lynn Horowitz

Managing Attorney of the Housing Practice

Housing Conservation Coordinators

Email #2

Lynn Horowitz
Managing Attorney of the Housing Practice
Housing Conservation Coordinators

 

Again we ask: Why in the world is our own counsel even talking about a rent increase for tenants which would violate Rent Stabilization Laws? Why is our own counsel proposing to victimize the victims all over again? For $100,000?