Law Firm Claims NYRA Owes Nearly $4 Million in Legal Fees

by | 11.17.2014 | 12:22pm

Like an old wound that won't heal, the Getnick & Getnick law firm retained by prior management of the New York Racing Association as business integrity council went to U.S. Bankruptcy Court recently in an attempt to collect $3.9 million it said the association owes in legal fees.

The 2007 hiring of Getnick & Getnick was part of NYRA's Chapter 11 bankruptcy proceeding agreed to by then-chairman Steve Duncker. The agreement called for Getnick & Getnick to monitor the association's activities for five years at a monthly minimum retainer fee of $125,000. Among the areas the independent council would monitor were backstretch living conditions, simulcast signals and rebate shops, integrity issues related to drug testing, sanctions and pre-race security of horses, implementation of anti-money laundering policies and other financial system protections.

In March 2011, less than four years into the agreement and at a time when the firm claims it had two ongoing integrity investigations, NYRA fired Getnick & Getnick without court approval.  In April 2012, according to papers filed with the court, NYRA allegedly sought “retroactive” court approval for the firing.

Getnick & Getnick insists the only way NYRA could terminate the agreement early was through NYRA's loss of the New York state racing franchise.

That didn't happen, though a takeout scandal that eventually cost NYRA CEO Charlie Hayward his job prompted New York Gov. Andrew Cuomo to order a state takeover of NYRA. In October 2012, Cuomo appointed David Skorton, president of Cornell University, to chair a newly reorganized NYRA of directors that would oversee operations for three years, after which time NYRA would revert to majority private control.

A Bankruptcy Court hearing had been scheduled for June 2012 but was cancelled by agreement of both parties when the takeout scandal began unfolding and NYRA changes were imminent.

Discussions subsequently were initiated by Getnick & Getnick with Skorton and NYRA CEO Christopher Kay, who was hired in June 2013, and NYRA's new general counsel, Joseph Lambert, hired in May 2014.

According to papers filed Sept. 30 with U.S. Bankruptcy Court for the Southern District of New York, the discussions “included a series of detailed briefings by (Getnick & Getnick) with respect to the integrity concerns that G&G had previously raised with NYRA's pre-takeover board and management.”

The parties also discussed fees Getnick & Getnick claims it is owed but the firm says “discussions between the parties have now reached an impasse.”

Getnick & Getnick says NYRA owes $421,164 in fees and $164,392 in interest for the period Feb. 1, 2010-May 31, 2010; $781,880 in billings for June 1, 2010-Dec. 31, 2010; $291,068 from Jan. 1, 2011-March 10, 2011 (date of termination); $389,631 for March 11, 2011-June 13, 2011, and delivery of a final report to NYRA's board; $1,672,485 for June 14, 2011-July 25, 2012; $139,624 for ethics counsel fees; and $51,459 for bankruptcy counsel fees.

Getnick & Getnick is requesting the bankruptcy court reschedule a June 2012 hearing to address the $3,912,703 in unpaid fees.

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