The opinion of the court was delivered by: OBERDORFER
A bench trial having taken place on March 11 to 13, 1996, there is now before the Court for decision on the merits the claim of Kirkland & Ellis, partners in a Chicago law firm with offices in Washington, D.C., for unpaid fees and disbursements billed to defendant Jose Maria Ruiz-Mateos, through his nephew and United States representative, defendant Alfonso Baron Rivero. Ruiz-Mateos is the head of a Spanish family which owned Rumasa, a holding company with 700 subsidiaries. One of those subsidiaries, Williams & Humbert Ltd., an English company, produced and distributed Dry Sack Sherry world-wide. In 1976, anticipating expropriation by Spain, Ruiz-Mateos purported to transfer the Dry Sack trademarks, including the United States trademark, to another company. As anticipated, in 1983 Spain expropriated the Ruiz-Mateos family interest in Rumasa and hence, in Williams & Humbert. In time, to quiet its title to the Dry Sack trademark, Williams & Humbert sued the transferee company in England and in this Court. Williams & Humbert named Ruiz-Mateos and his family as defendants in the English suit, but conspicuously failed to name them in the complaint filed here. While the action here was stayed, Ruiz-Mateos' then representative in the United States, Alfonso Lacave, at the suggestion of other counsel, consulted Kirkland about potential representation of Ruiz-Mateos' interests in the U.S. litigation. Pls.' Ex. 3.
In a letter dated April 29, 1986, James M. Amend, a Kirkland partner, advised Lacave that while Kirkland's "background on the matter is not deep, it had some thoughts." Pls.' Ex. 3. Amend pointed out that unless Ruiz-Mateos intervened in the U.S. action, Williams & Humbert would "continue reaping the benefits" of the U.S. sales of Dry Sack without pressing the pending litigation. Williams & Humbert, having prevailed in England, could use the English judgment to perfect a title to the U.S. trademark administratively in the U.S. Patent and Trademark Office. Amend advised that the Ruiz-Mateos family could intervene in the case in this Court and counterclaim on the theory that Spain's expropriation without compensation of the U.S. trademark, as distinguished from Ruiz-Mateos' other interests in Rumasa, violated the Due Process Clause of our Constitution. Amend cautioned that "the case will be a difficult one, because Spain is considered to be a friendly country" so that a U.S. judge "might be reluctant to rule that Spain had taken action which violates the rules of behavior prescribed by the United States." Nevertheless, Amend opined that "the equities appear to be quite favorable to the Ruiz-Mateos family if we are successful in separating the Williams & Humbert expropriation from the taking of the balance of Rumasa." Id. Amend again cautioned that "while success cannot be guaranteed, and an uphill battle is before us, default will result in abandonment of all U.S. rights in the marks" which rights, Amend was advised, "have significant value." Id. Amend's letter left it to Ruiz-Mateos and his family to "decide whether the costs of litigation . . . are warranted in an attempt to recapture these assets, as against the risk that these costs will be wasted." Estimating that "the time to trial from the date the case is reopened should be from one to two years," Amend further cautioned that "it is difficult for us to be more specific at this time . . . . [and] also difficult to estimate the cost to be incurred in such a litigation, because it can vary greatly depending upon the tenacity and ability of the opponent." Given these caveats, Amend offered as "guidelines" an estimate that "it will cost approximately $ 20,000 to $ 40,000 to reopen the case, undertake our own fact investigation . . . research and prepare an answer and counterclaim" over the next 30 to 60 days. Amend estimated that "the expense of litigating through a full trial and appeals could reach the $ 300,000-$ 500,000 range," with a $ 50,000 retainer or security deposit in advance. He expected an average hourly rate to be $ 125 for the lawyers (partners and associates) and paralegals involved. Finally, Amend stated, Kirkland "would send monthly statements for its fees and expenses, which it would expect to be paid within 30 days." There was no suggestion in the correspondence that Kirkland's fees would be contingent on success.
Despite the fact that, in the interim, two English courts had recently ruled against him, Ruiz-Mateos, through his representative, authorized Kirkland to move to intervene in the U.S. suit. Kirkland filed the appropriate pleadings on October 27, 1986. Judge June Green denied the motion, and Kirkland appealed. On February 23, 1988, the Court of Appeals reversed. Williams & Humbert Ltd. v. W. & H. Trademarks (Jersey) Ltd., 268 U.S. App. D.C. 192, 840 F.2d 72 (D.C. Cir. 1988). After extensive pretrial preparation in the United States and Spain, including retention of Gordon Smith (d/b/a Associated Valuation Technologies, Inc.), the case went to trial on October 9 and 10, 1990. On January 29, 1991, Judge Green ruled against Ruiz-Mateos on the merits.
Citing Ruiz-Mateos' failure to pay the monthly bills rendered by plaintiffs after April 1990, plaintiffs filed a protective notice of appeal on February 26, 1991 and withdrew from further representation in a letter dated February 27, 1991. See Def.'s Ex. 143. Judge Green granted plaintiffs' motion to withdraw on March 28, 1991. On April 6, 1992, plaintiffs filed this suit against Ruiz-Mateos and Rivero for unpaid fees and disbursements. An expert witness, Gordon Smith, retained for the Dry Sack trial and who remains unpaid, has joined in this action as against Ruiz-Mateos only. Ruiz-Mateos has neither moved, answered, nor made a special appearance to quash attempted service or to challenge this Court's jurisdiction over him. The Clerk has entered a default against Ruiz-Mateos. Rivero first answered pro se, but has since retained counsel.
From the outset of Ruiz-Mateos' engagement of Kirkland and as a part of the attorney-client arrangement, Kirkland sent its bills for services to Ruiz-Mateos' designated U.S. representative, and his predecessor representatives, each of whom in turn served as the channel for "all billing matters, strategy, all working relationships" with Ruiz-Mateos. March 12, 1996 Tr. at 32-33. After January 1989, Rivero succeeded his predecessors as Ruiz-Mateos' U.S. representative. Rivero is Ruiz-Mateos' nephew and had managed the Ruiz-Mateos' family relationship with lawyers in many countries since at least the mid-1980's. Rivero directed Kirkland to send all inquiries about the litigation including, particularly, billing, directly to him at his address in Madrid, an address different from that of Ruiz-Mateos.
Throughout the engagement, Kirkland and Ruiz-Mateos' representatives understood that Ruiz-Mateos would make the ultimate decisions on the payment of bills. Walsh, the partner who "handled the day-to-day operations for the case" and who was "basically the contact for billing," testified that it was Kirkland's "understanding  that [Ruiz-Mateos] would ultimately make the decision [with respect to payment of bills]." March 12, 1996 Tr. at 31-32, 57. As lead counsel in the Dry Sack case, Amend testified that he "was told by Mr. Rivero that on the subject of payment of bills, that this needed Mr. Ruiz-Mateos' authorization and approval." March 11, 1996 Tr. at 102. Rivero stated that when he received Kirkland's bill, "I will review the bill, and I will present the bill, if it was correct in my opinion to be paid, to Mr. Ruiz-Mateos." March 13, 1996 Tr. at 16.
According to Amend, the billing practice from 1986 and 1989 was "bills within 30 [days], payment within 30 [days], but sometimes, there was a week or two slippage on either the billing or the payment." March 11, 1996 Tr. at 39. However, Rivero often received Kirkland's bills later than 30 days after the close of the month and would "normally" be presented with more than one month's bill at a time. March 13, 1996 Tr. at 19. Kirkland's bill for May 1990 services is dated August 15. See Def.'s Exs. 1, 2. The June bill is dated September 7, 1990; the July bill, September 28, 1990; the August bill, October 20, 1990; and the September and October bills, November 28, 1990. See Def.'s Exs. 1-5, 7-8, 10.
Payments were similarly irregular. Amend testified that "the family had, on occasion, been somewhat slow paying, but by that I mean only 30 days at most." March 11, 1996 Tr. at 54. However, the evidence shows that Ruiz-Mateos had a history, which began at least as early as February 1987, of paying his bills much later than "30 days at most." On February 4, 1987, Walsh wrote Lacave, the first of Ruiz-Mateos' representatives, that Walsh was "unable to confirm with our account department that Mr. Ruiz-Mateos made payment for the September and October  bills in late-December." Walsh concluded his letter, "we look forward to prompt payment of the November and December  bills." Def.'s Ex. 127. On September 9, 1988, Walsh wrote to Peralta, the second of Ruiz-Mateos' representatives, that "it has been two months since we last received a payment for our services rendered on behalf of Jose Maria Ruiz-Mateos. We would appreciate payment of the outstanding bills." Def.'s Ex. 128. On June 6, 1990, Walsh telephoned Rivero about the January and February 1990 bills, which totaled $ 41,944.96, to remind him that as of June 6, "only a partial payment was made of $ 27,548.83" on the January and February bills. See Def.'s Ex. 130 (Kirkland's record of June 6, 1990 telephone call). On the March and April 1990 bills, Rivero questioned items pertaining to, inter alia, billing time for travel and the unnecessary and excessive use of "legal assistants, project assistants and clerical aides." See Def.'s Ex. 131. On June 26, 1990, Walsh wrote a memorandum to Kirkland's Billings and Collections Committee detailing Rivero's many questions and requesting authorization to reduce the March and April bills. See id. The parties resolved these disputes on July 5, 1990, when Kirkland reduced the disputed March and April bills by 22%. See id.; Pls.' Ex. 10. Ruiz-Mateos paid the April 1990 bill in August 1990. March 13, 1996 Tr. at 32-33. Rivero did not send his comments about a reduction proposal on the May and June 1990 bills to Walsh until October 22, 1990. Def.'s Ex. 102.
The simmering fee difficulties came to a head when Ruiz-Mateos and Rivero arrived in Washington a day or two before trial and met with Amend and Walsh. Amend asked Rivero whether there was a problem; "we have yet to receive a penny [since August 1990] . . . and we are about to incur a large amount of additional fees and disbursements on your behalf." March 11, 1996 Tr. at 56-57. According to Amend, Rivero replied:
there was not a problem. [Rivero] indicated to me that the reason that we had not been paid was that Mr. Ruiz-Mateos had been traveling throughout Europe on other business and simply had not gotten back to Madrid and had the opportunity to sit down and turn his mind to this particular matter, but that there was no problem . . . . [Rivero] assured me that the bills would be approved and paid and that there was absolutely no problem going forward that fees and expense incurred from that point on would also be paid.
Id. at 57 (emphasis added). Furthermore, according to Amend, during this meeting Rivero gave no indication that there was any problem in terms of the ability of the Ruiz-Mateos family to pay Kirkland's bills and stated that he "was pleased with the quality of service that he received." Id. at 59. Walsh corroborated: Rivero "assured us that he would get the bills paid." March 12, 1996 Tr. at 49. "He [Rivero] said that we'd always been paid in the past, there was no reason for us to be worried about payment now, and that it would be taken care of." Id. at 47.
According to Kirkland's witnesses, in reliance on Rivero's representations, they went forward with the trial and post-trial briefing, incurring in the process additional charges for services totaling $ 120,935.00, and paid out-of-pocket disbursements on behalf of Ruiz-Mateos totaling $ 61,862.29. See Pls.' Exs. 30, 32, 36. If they had not received and relied on Rivero's assurances on behalf of Ruiz-Mateos, they would have had available several measures to protect themselves. They could and would have requested a substantial retainer from Ruiz-Mateos before doing further work or making further disbursements; asked Judge Green to continue the case until they received the retainers; and, ultimately, sought to withdraw.
Rivero's testimony about the October 6, 1990 meeting differed materially from that of Amend and Walsh. As a preliminary matter, according to Rivero, this conversation occurred on October 8, not October 6. Rivero stated that on October 6, he and Ruiz-Mateos arrived in the United States in the afternoon after a flight from Spain and met with Amend and Walsh for dinner. March 13, 1996 Tr. at 20. On October 8, the day before trial, Rivero and Ruiz-Mateos met with Amend and Walsh. According to Rivero, "Mr. Amend and Mr. Walsh called me in one side of the conference room to discuss some bills with me." They
presented to me two bills, I think it was the May bill and the June bill. And they delivered to me the July bill [which] was prepared on the first of October 1 remember. And somewhere they asked me what -- what happened with these bills, and I think I have to review these bills, and I have to discuss this with Mr. Ruiz-Mateos, and after this discussion with Mr. Ruiz-Mateos, if they were correct, they will -- the bills will be probably paid.
Id. at 22 (emphasis added). This conversation lasted "ten or fifteen minutes." Id. at 21. Rivero testified that he was able to make this representation "based on my experience. Because Mr. Ruiz-Mateos was paying the bills since 1986, and we were in 1990, this is four or five years later, and during this time, Mr. Ruiz-Mateos paid twelve times -- twelve months, about fifty bills to Kirkland and Ellis." Id. at 52. Rivero further stated, "I am sure that I didn't give any promise at that time to pay the bills. I am sure of this fact." Id. at 23.
It is undisputed Rivero conducted no inquiry into whether Ruiz-Mateos intended to pay the May and June 1990 bills. Id. Although Ruiz-Mateos was in the conference room at the time of Rivero's conversation with Walsh and Amend, neither Rivero nor Walsh and Amend attempted to speak to Ruiz-Mateos about the past ...