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By Henry Gottlieb
New Jersey Law Journal
01-16-2007

Nagel Rice & Mazie, whose record of winning multimillion-dollar personal injury and class action cases has been matched by few New Jersey firms, is splitting in half because of personality clashes and disagreements about compensation among the name partners.

The firm's most recent star litigator, David Mazie, announced Jan. 10 that he and seven other lawyers at the Roseland, N.J., firm had formed Mazie Slater Katz & Freeman.

Mazie is best known as the winner of a record $105 million dram shop verdict against a Giants Stadium vending company -- a case reversed on appeal that will have to be retried barring settlement.

The other two equity partners, Bruce Nagel and Jay Rice, childhood chums who started the firm 25 years ago, will head 12-lawyer Nagel Rice.

Unlike most partners in firm breakups, Nagel and Mazie aren't bothering to mouth platitudes about mutual respect and amicability. On Thursday, they accused each other of lying about the causes of the split and of hyping their records of success as lawyers.

Mazie says the split has been in the works since September, when he declined to consider any significant changes proposed by Nagel and Rice in the partnership's "eat-what-you-kill" compensation plan.

Mazie says that under a partnership agreement in 2000, partners would work on the cases they originated and keep all the revenue minus a portion necessary to fund firmwide expenses. Most partners and associates would be assigned to one of the three name partners.

Mazie says the "profit center" concept was made even stronger in 2003 by making each partner responsible for the disbursements in their own cases, creating, in effect, three separate firms.

But under the changes sought by Nagel and Rice, there would have been more fee sharing by the equity partners, Mazie says.

Nagel insisted on the "keep your own fees" system when he was riding high. Mazie, who now benefits from it, says he saw no reason to change it.

Under the partnership agreement, for example, partner Eric Katz and Mazie are in line for the entire net proceeds of a $6.5 million fee award Horizon Blue Cross has agreed to pay to settle a class action case brought by Katz on behalf of all New Jersey physicians. An Essex County, N.J., judge is considering final approval of the deal.

Katz originated the case and Mazie paid the out-of-pocket expenses, so they would keep the entire net fee under the existing partnership agreement. Under the proposed changes -- which were discussed long before the Blue Cross case -- some of the fees might have been shared with Nagel and Rice.

Nagel, however, says the proposed changes would have had minimal effect on compensation. Mazie refused to discuss any proposals and tried to inflate his image at the expense of the firm, and his two equity partners got tired of it, Nagel says.

"Jay and I informed Mazie that we did not want to practice with him any more and that he should find new space," Nagel says. "He did not lead an exodus from the firm; we told him to leave."

Nagel says the compensation changes were under discussion long before the Horizon case and were not directed at any partner. "Mazie knew full well that the proposed modification applied to all equity partners and it would be impossible to tell how it would affect any one partner," he says.

Nagel also suggests that Mazie acted against his own self-interest because Nagel and Rice are in line for large fees in pending personal injury matters, including a $7.5 million medical malpractice settlement. Rice is co-lead counsel in a case involving a train fire in Kaprun, Austria, where 153 people died, Nagel says.

"Mazie also knew full well that Jay and I have several pending matters where the fees would dwarf the Horizon fee and that Mazie would likely have benefited from the proposed changes," Nagel adds.

Mazie scoffs at that. "The proposal would have cost several hundred thousand dollars out of my own pocket," he says.

Mazie came to the firm in 1988, two years out of law school but with a large client in tow, Integrity Insurance Co. After winning a slew of million-dollar verdicts, he doesn't feel beholden to Nagel or Rice.

Nagel, who started with Rice as a two-man operation at 744 Broad Street in Newark, N.J., and built a substantial practice -- with a bunch of million-dollar verdicts himself -- feels he created the platform that permitted Mazie to be successful.

"I think it's about the compensation, but also about two men with who are aggressive and proud and have healthy egos," says a lawyer who knows both.

For the next three months they will remain office mates in the old firm's 11,000 square feet of space on the first floor of 103 Eisenhower Parkway. Then Mazie's group -- including partners Katz, Adam Slater and David Freeman and four associates -- will move to 7,500 square feet on the floor above.

Nagel & Rice will keep the existing space, which is leased for five more years, Nagel says. The firm will have five partners, Nagel, Rice, Diane Sammons, Robert Solomon and Barry Packin, an experienced personal injury lawyer coming from West Orange, N.J.'s Mandelbaum, Salsburg, Gold, Lazris & Discenza. Four lawyers will be counsel to the firm and three will be associates.

Nagel and Mazie remain entwined in at least one matter. In the early 2000s, the firm was among a group of partnerships that brought medical malpractice suits against noted New York laser eye surgeon Joseph Della Russo.

The firm represented seven plaintiffs, but in reality Mazie represented two, Nagel represented two and Slater, who was in Nagel's group, represented three. When Della Russo's insurance carrier denied coverage, he made separate settlements with the plaintiffs and a judge ruled that the carrier, Princeton Insurance Co., had to pay.

Princeton is appealing the ruling, and when oral argument is held in the appellate division on Feb. 7, Nagel will appear for his two clients, while Mazie and Slater will appear for the five clients they now share. Slater says he had been planning to leave the firm, anyway, and that when he heard of the split he decided to leave with Mazie.

Mazie's best known victory has fallen apart on appeal. He won $105 million in compensatory and punitive damages for Antonia Verni, who was paralyzed in a crash with a fan who says he got drunk at a Giants game. An appeals court ruled, however, that the verdict against the stadium vendor was tainted by testimony that isn't inadmissible in dram shop cases, and if the Supreme Court declines to reinstate the verdict, the case will have to be retried.

Nagel says it's wrong to characterize Mazie as the firm's star litigator. His own record of the past 15 years includes 40 verdicts or settlements above $1 million and 15 over $2 million, he says.

He says he and Rice complained that Mazie was diverting traffic from the firm's Web site to a separate site of his own. The firm's site, which Nagel & Rice is keeping, is www.nrmlaw.com, and Mazie's own site, and now his new firm's, is www.nrdm.kaw.com.

If a Web surfer Googles "Nagel Rice & Mazie," Mazie's site was -- and remains -- first on the list and the firm's official site is third. "We demanded that he correct this problem and account for the matters he diverted from the firm and he repeatedly refused," Nagel says.

Mazie says he set up his own site because the firm didn't promote its own. As for whose site pops up first, "I have no control over Google," he says.

The battle of the Web sites is continuing. Mazie says he has asked Nagel & Rice to update its Web site to eliminate prideful claims of victory in cases worth millions that he Slater and Katz handled.