Bar Buzz: Toymaker accuses Stinson of playing games with fees

Listen to this article

Seven years ago, business was going gangbusters for Cepia LLC, a St. Louis-based manufacturer of children’s toys. The company had a huge hit on its hands, as its line of robotic stuffed animals, Zhu Zhu Pets, emerged as the Tickle Me Elmo of the 2009 Christmas shopping season. To help with business deals, copyright protection and other legal matters, Cepia had the services of a storied local law firm, Stinson Morrison Hecker (now Stinson Leonard Street).

In a newspaper story published at the height of the craze and which is still linked on Stinson’s website, Philip Kaplan, legal adviser to Cepia, spoke enthusiastically about the prospects for future licensing deals for the fast-growing company. A photo that accompanied the article showed Kaplan at his desk, looking vaguely bemused as he examined one of the client’s toys.

These days, it’s safe to assume Kaplan is less keen on both the robotic hamsters and his former client.

In a pending lawsuit in Macon County Circuit Court in Illinois, Cepia claims that Stinson soaked the company by engaging in “systematic and conscious over-billing.” It wants the firm to disgorge the $3.4 million in attorney fees and $1.4 million in expenses collected between 2009 and 2015.

Among the allegations is that an outside auditor hired by Cepia determined that approximately 76 percent of Stinson’s invoices came in the form of “block billing” — a reference to the practice of billing multiple tasks under a single time entry. That, along with the use of “vague and incomplete billing narratives” and “a partner heavy staffing model,” was intended to make it harder for Cepia to know whether the charges were legitimate, the suit claims.

Cepia also takes more than a few personal swipes at Kaplan in the suit, asserting, among other things, that it got stuck with a $23,000 bill for what it describes as “Mr. Kaplan’s lavish San Francisco holiday.”

Kaplan didn’t respond directly to inquiry about the lawsuit. However, the firm pushed back forcefully in a written statement.

“Due to its ethical obligations of confidentiality, Stinson Leonard Street cannot respond in this public forum to Cepia’s over-the-top allegations,” the firm said. “Stinson denies Cepia’s complaint, which is riddled with errors, and will vigorously defend itself in court.  Stinson’s fees were fair, reasonable, and appropriate for the legal services that Cepia asked the firm to perform.”

Craig Ceranna, managing director at Cepia, did take a phone call from Minnesota Lawyer to offer his two cents. If Stinson’s billing practices were so egregious, we asked, how come it took so long for anyone to notice?

As Ceranna tells it, there was scant scrutiny of any invoices during Cepia’s financial heyday, as the company placed a lot of trust in its vendors, including its legal counsel. But when business slowed and the company took a closer look at its books, he said, “we realized that we had a serious problem.”

Ceranna said Cepia presented its complaints to Stinson but didn’t get the response it hoped for.

“I think the term ‘blown off’ would be appropriate. So they were terminated as our legal counsel and we scoured the country to find an attorney,” Ceranna said. “It was difficult because lawyers don’t exactly want to sue their own kind.”

Ultimately, however, the company landed a firm that was willing to go to toe-to-toe with Stinson: the Chicago-based behemoth Cozen O’Connor.