Lawyer Ken Bailey: Honey, Here’s Our $3.3M Home for Ten Bucks. That’ll Keep the Zombie Warrior Away

Houston plaintiffs lawyer Adam Peavy is at odds with his former partners, Ken Bailey and Camp Bailey, alleging in a newly filed lawsuit that he was promised millions in fees that his former firm never paid.

“Peavy was involved in cases that generated hundreds of millions in fees for the firm, but the Baileys have cheated him out of the compensation he was owed—like so many other lawyers the Baileys have stiffed or cheated the past few years,” Peavy alleges in a petition he filed on Monday in state district court in Houston.

Peavy, now a solo practitioner in Houston, alleges that the Baileys shortchanged him for his tort litigation work, including his work on a case involving the antidepressant Paxil.

Camp Bailey is a founding partner of Bailey Cowan Heckaman, and his father, Ken Bailey, a former partner in the firm, is now of counsel. When asked to respond to the allegations in the suit, Camp Bailey said the suit is “wrong, unfortunate and misguided” and they will defend it vigorously.

Alan Daughtry, a solo practitioner in Houston who represents Peavy, said Peavy is owed, easily, $5 million in fees or more.

Peavy alleges in Peavy v. Bailey that he entered into an agreement in 2008 with the firm, then called Bailey Perrin & Bailey, to work on Paxil litigation for 5 percent of gross recovery of the litigation, whether by settlement or judgment. Peavy alleges that he “took over complete control” of the firm’s Paxil docket, and did the bulk of the work on the litigation for a joint venture Bailey Perrin had entered into with another firm.

“Meanwhile, the Baileys did nothing,” Peavy alleges in the petition. “They never attended a hearing, deposition, client meeting, trial or settlement meeting.”

Peavy was involved in the first Paxil trial in September 2009, his petition said, and the plaintiff’s team won a multimillion-dollar verdict.

After the first group of Paxil suits settled, Peavy alleged, he was responsible for organizing the suits for settlement and payment, and “the Baileys did nothing.” Then, he said, in a “glimpse of things to come,” the Baileys failed to compensate him on $12 million of the fee income, which he didn’t learn about until 2018.

“At the time of the settlement, Peavy had no clue that the Baileys misstated the amount of recovery, and they never provided any accounting to substantiate the compensation he received,” Peavy alleged in the petition. “Peavy has been shorted (and damaged) by the Baileys for approximately $1 million from this misdeed alone.”

In 2011, Peavy alleged, the Baileys made him a nonequity partner in the firm, and agreed to pay him a 7 percent “profit” from the Paxil litigation and other cases. In 2013, the Baileys made him a name partner in Bailey Peavy Bailey, giving him a 10 percent interest in the firm for all litigation.

But, Peavy alleged, “during this whole period of time,” the Baileys were not sharing fees with him. Instead, they promised to “make it up to him” on future settlements, he said.

“Unfortunately, the Baileys did not live up to their rosy promises and representations of income. Instead, the Baileys gave Peavy his same old draw,” Peavy’s petition said.

Just months after he was made a name partner in the firm, the Baileys took out a loan in March 2014, borrowing against Paxil fees, Peavy alleged. “Apparently, the Baileys pocketed a loan of $17 million for themselves,” the petition said, adding that the loan was taken out in the firm’s name without informing him.

Peavy also alleged that the firm failed to pay him after getting $40 million in fees from a vaginal mesh litigation.

The Baileys agreed to give Peavy 20 percent equity in a newly created firm, Bailey Peavy Bailey Cowan Heckaman, in 2015.

In 2016, Peavy was involved in two trials that led to a global settlement in Paxil litigation, his petition said, and to get payments he had to secure approval from “hundreds of clients.” Despite that work, Peavy alleged, Camp Bailey took 20 percent off the top of the Paxil income for “referral fees.”

Later, the Baileys claimed that the $46 million in fees and expenses the firm was paid in 2018 for Paxil litigation was “all gone” and the litigation was not profitable, the petition said.

In his petition, Peavy alleged the Baileys failed to pay him what he is due, even though they claimed they would. His causes of action include breach of fiduciary duty, fraud, fraudulent transfer, and conspiracy, and he seeks more than $1 million in actual and exemplary damages.

“They refused every last chance to do right by him. They short-changed him on fees by millions of dollars, stopped his draw, and canceled his medical benefits,” the petition said.

Texas Lawyer magazine annually recognizes lawyers who made their mark on the legal profession through their extraordinary careers. The publication’s September issue will include full profiles of the honorees, and they will be honored with an awards ceremony at the Belo Mansion in Dallas on September 13.

Bailey was one of only 18 lawyers named to 2016’s list of Lifetime Achievers. “I want to thank Texas Lawyer for this recognition,” Bailey said in a written statement. “I am honored and humbled to be included in a list of distinguished legal colleagues who I know either personally or professionally.”

Bailey founded the law firm that is now Bailey Peavy Bailey Cowan Heckaman (BPB) in 2005 after spending years representing victims suffering from cancer and other lung injuries caused by asbestos exposure, persons injured by explosions and prescription drugs, and representing state governments against companies attempting to fleece state coffers. Most notably, Williams Bailey Law Firm, of which Bailey was a founding partner, represented the State of Texas against Big Tobacco along with four other law firms in 1997. The legal team successfully secured the then-largest multi-billion dollar settlement in the history of the United States, totaling $17.3 billion.

“Over the past 44 years, I have met so many good and wonderful people who needed assistance,” said Bailey. “My life, both legally and personally, has been driven by the motto that when someone says ‘I need help,’ that is a call to action. I hope I am being honored with this recognition for my assistance to those who have asked me for help. I also hope that my relationships, both as a lawyer and a friend, were beneficial for the people I have counseled throughout my career.”

Bailey’s success continues at BPB, having secured hundreds of millions of dollars in settlements and verdicts since the firm’s doors opened over a decade ago, including the recent recovery of hundreds of millions of dollars for victims injured by false and misleading antipsychotic drug marketing practices. His firm continues to litigate against major drug companies and others that profit from selling dangerous products to unknowing consumers. BPB is also a nationally leading firm representing injured and dying victims of asbestos exposure.

BPB is a trial-ready and tested firm passionate about fighting for the underdog. With decades of experience, the attorneys at Bailey Peavy Bailey Cowan Heckaman have built a reputation of grit and tenacity in the courtroom, as well as care, concern, and quality service for its clients.

Contact Bailey Peavy Bailey Cowan Heckaman directly by calling us at (888) 367-7160, or visit our website at https://www.bpblaw.com.