Firm News

C&S Client Sues Houston for More Than $10M in Unpaid Consulting Fees

Cain & Skarnulis filed suit against the City of Houston on behalf of Tri-Stem Utility Bill Audits.  Tri-Stem was hired by the city to audit the bills of CenterPoint Energy.  The audit uncovered overcharges for thousands of streetlights that were no longer in service.  The overcharges were worth tens of millions of dollars, and represented a significant fee to Tri-Stem under its 45% contingent fee agreement. 

The city was forced to litigate against CenterPoint to recover on the streetlights, and to facilitate that, Tri-Stem agreed to reduce its contingent fee to 20% for the litigation, with the city’s outside law firm receiving another 20%.  The city would have recovered 60% in litigation. 

The litigation resulted in a settlement in which the city received 165,000 new LED streetlights and 50 miles of hike and bike trails.  The deal was worth well over $50 million and should have resulted in at least a $10 million contingent fee to Tri-Stem.  The city agreed to the non-cash settlement by council resolution, in which the enormous value was touted.

The city cut a deal with the law firm to pay on its 20% contingent fee, but refused to pay Tri-Stem, contending that there had to be a cash recovery to trigger the contingent fee.  The city also prevented Tri-Stem from performing audits of other city electricity service by breaching its agreement to provide the necessary documentation to perform the audit.  This additional breach deprived Tri-Stem of its expectation of earning millions more on the second phase of the audit. 

The original petition was filed November 2, 2016, and is available here.