The ongoing $1.2 million fee dispute between law firm Fitch Even Tabin & Flannery LLP and former client LED Wafer Solutions (LWS) has taken a dramatic turn, as an Illinois federal judge suggested Tuesday that the fight may be sent to arbitration — potentially pausing the firm’s push to block the alleged diversion of funds tied to the case.

At a tense status hearing, U.S. District Judge Steven Seeger said the firm’s breach of contract and fraud claims appear to fall under a sweeping arbitration clause in Fitch Even’s retention agreement with LWS. The late-night motion to stay litigation, filed by LWS on Monday, brought the proceedings “an inch away from a ruling,” the judge remarked.

Arbitration Looms Over Fee and Fraud Allegations

The dispute stems from unpaid legal bills Fitch Even claims to have earned while representing LWS in a patent infringement suit against Samsung involving LED technology. LWS, which secured financing from Validity Finance, allegedly failed to pay multiple invoices — leading the Chicago-based firm to sue both LWS and Validity’s CEO Ralph Sutton in September.

Sutton also filed a motion Monday arguing that any claims against him should likewise go to arbitration, citing Validity’s investment agreement with LWS. Judge Seeger, however, voiced skepticism, noting that Fitch Even was not a party to that contract, though he conceded there might still be procedural grounds to pause the case.

“I’m concerned about litigating an issue with Mr. Sutton if arbitration between Fitch Even and LWS is moving forward,” Seeger said. “They both cover similar factual terrain, and I don’t want to get ahead of the arbitration.”

The judge granted Fitch Even one week to respond to the motions before any official ruling, emphasizing that the filings were “just hours old.”

A Race Against Time Over Frozen Funds

Fitch Even’s lawsuit, filed last month, accused LWS and Sutton of diverting or depleting escrowed funds set aside for the firm’s fees — allegedly using them to pay a different law firm to handle the ongoing Samsung litigation.

The firm had requested a temporary restraining order (TRO) to halt any such transfers. However, Judge Seeger warned that even if arbitration applies, the unavailability of emergency relief there is “not a reason to unwind” an arbitration clause.

“If you gave up your right to seek that relief in court,” he told the firm’s attorneys, “then that’s how it goes. You signed the agreement.”

Should the court deny LWS’s arbitration motion, Seeger added, both defendants will face a “short fuse” to respond to Fitch Even’s TRO request.

From Legal Strategy to Fee Standoff

According to the complaint, Fitch Even took over the Samsung case in September 2023, after attorney Mark Raskin joined the firm and pitched a detailed litigation budget to LWS. The agreement allegedly included representations that Validity Finance would fund the case, ensuring payment of legal fees.

The firm said it invested months of work — analyzing over 100 patent claims, drafting 2,000 pages of infringement contentions, and preparing an amended complaint. But by December, LWS founder Jeremy Pitcock began hinting at replacing the firm with counsel willing to work on full contingency.

Two months later, with nearly $1 million in unpaid invoices, Fitch Even claimed that Validity proposed settling for $150,000 and 2.5% of case proceeds — a deal the firm rejected as inadequate. The situation escalated when LWS demanded file transfers to new counsel without offering to pay outstanding attorney fees, raising fears that litigation funds were being drained.

Legal Firepower on Both Sides

Fitch Even is represented by Peter Sullivan, Terrence McAvoy, and Richard Polony of Hinshaw & Culbertson LLP.
LWS is represented by Christopher Esbrook and David Pustilnik of Esbrook PC.
Sutton is represented by Derek Ho, Andrew Skaras, and Matthew Reade of Kellogg Hansen Todd Figel & Frederick PLLC.