Lawyer Awarded $23.1 Million in Guess Suit : Courts: Panel orders Marciano brothers to pay Marshall B. Grossman, who represented them in battle for company.

By JIM SCHACHTER

April 26, 1994 12 AM PT

TIMES STAFF WRITER

Call it sweet revenge.

For five years, all-star Los Angeles attorney Marshall B. Grossman represented the mercurial Marciano brothers in their savage legal combat for control of Guess, the phenomenally successful jeans company that has been the brothers’ backdrop for one pitched battle after another--with investors and among themselves.

With the prize at hand--a negotiated settlement that stripped rival Jordache’s owners of their 51% interest in Guess--the Marcianos summarily dumped Grossman, paraded into court in May, 1990, with other high-priced litigators and declared that they would not pay Grossman the $10-million bounty they’d promised if he got them their company back.

Grossman will announce today that a panel of Los Angeles County Bar Assn. arbitrators has awarded him and his partners a huge, if belated, payday from the Marcianos: $17 million in legal fees, including the bounty, plus millions more in interest for a total of $23.1 million.

Grossman was seeking $34 million. Still, the sum he collected following six months of testimony is the biggest award in the history of the Los Angeles County Bar Assn.’s process for resolving fee disputes.

These days, the four Marciano brothers are enmeshed in a fresh set of squabbles. Georges, the designer, sold his interest last year in Guess--Los Angeles’ biggest garment maker--and now is suing his brothers over use of the family name.

But the arbitration award, everyone agrees, closes the book on the decade of lawsuits, countersuits, investigations, counter-investigations and unbridled name calling spawned by the Marcianos’ decision to sell a half-interest in their hot--but undercapitalized--company to the Nakash brothers of Jordache back in 1983.

“The Marcianos are pleased with the arbitration result,” said Century City attorney Dale F. Kinsella, who represented the brothers in the dispute over Grossman’s legal fee. Indeed, they have already paid as ordered. “The matter is behind them, as far as they are concerned.”

That stance was a long time coming.

The Marcianos and Nakashes slugged it out in proceedings that crisscrossed the globe, from Hong Kong to Los Angeles to New York to France. In essence, the Nakashes contended that the Marcianos suffered sellers’ remorse for giving up half of Guess for just $5 million. The Marcianos accused the Nakashes of fraud in making the investment.

In 1989, Grossman and his Century City firm, Alschuler, Grossman & Pines, won a jury verdict for the Marcianos.

A year later, as a second jury deliberated what damages to award the Marcianos, the brothers announced a settlement with the Nakashes. Georges, Paul, Maurice and Armand Marciano would get back their company, and the New York-based owners of Jordache would pay them a reported $40 million.

Grossman, the brothers said, could take a hike.

Paul Marciano, the force behind Guess’ distinctive advertising, charged that Grossman wanted to secure his bounty--and satisfy his ego--by holding out for a jury verdict in the second trial. The brothers came to court wearing buttons bearing the name of lawyer-to-the-stars Howard Weitzman, who represented the Nakashes, and vowed not to pay the $10-million fee.

“The pain was horrific,” recalled Grossman, who is more accustomed to unvarnished victory. He successfully defended Liberace in a palimony suit, for instance, and helped the Coliseum Commission stop the Raiders football team from leaving town.

“The pain is still there,” he said. “To that extent, the recovery of the funds is not a full victory.”

In the arbitration, the Marcianos alleged that the fee agreement put the interests of Grossman’s firm ahead of their own. Beyond the bounty, the package promised 20% of whatever damages the Nakashes paid and possibly millions of dollars more--depending on how the deal was interpreted.

Befitting the litigiousness of the whole affair, transcripts of the arbitration ran to 15,000 pages, and the lawyers offered more than 800 exhibits.

Said Kinsella: “A fair reading of the overall record is that serious questions were presented on these matters.”

Said Grossman: “The Marcianos accused us of everything other than inventing the rack and screw.” He plans to set up a charitable foundation with some of the proceeds from the settlement.