The only sure winners in the legal dispute between TCW and Jeffrey Gundlach are the lawyers, expert witnesses and public relations firms that have been involved in the costliest courtroom battle in the history of the money management industry.
Total costs should easily top $35 million, the bulk of it coming from legal fees that by themselves exceed $30 million, according to those familiar with the case.
“This is not your typical case,” said attorney Daniel Westman, chair of the trade secrets committee of the American Intellectual Property Lawyers Association in Arlington, Va. “It's more of a grudge match than a dispute about the stealing of commercial trade secrets.”
The median cost of legal fees in a trade secrets trial with more than $25 million at stake is $4 million, according to data from the American Intellectual Property Lawyers Association. The association tracked cases from the middle of 2009 to early 2011 for its latest report.
But in grudge cases, Mr. Westman said, each side throws as many lawyers at each other as possible. “It may not make economic sense, but it makes emotional sense,” he said.
Mr. Gundlach's lawyers insist their client would have walked away if TCW had dropped its suit, and TCW officials deny that there is anything personal to the legal proceedings. “We have said all along this is a business dispute”, said TCW spokesman Peter Viles.
Still, there is no arguing that the battle pitting TCW against Mr. Gundlach and his new firm, DoubleLine Capital LP, has become a brutal, nasty and expensive fight.
TCW fired Mr. Gundlach, then its chief investment officer, in December 2009 because, according to TCW Chairman Marc Stern, he uncovered a plot by Mr. Gundlach and his associates to steal trade secrets and other proprietary information to help establish a rival money management firm. Mr. Gundlach insists he was the victim of a plot that TCW officials hatched to deprive him of $500 million in incentive fees.