The $100 Million Botched Divorce
Despite all his money—or maybe because of it—Ed Bailey had a hard time ending his marriage.
Bailey claims his lawyer ran up the bill into the millions on a divorce that wound up costing about $80,000.photography by Kevin Marple
Divorce cases rarely go all the way to a jury trial, especially when there’s not much for a jury to decide. But there they were, restaurateur Ed Bailey and his wife, Lee, married for more than 30 years, sitting in a courtroom, ready to part ways. Attorneys for both sides had been working on the case for a year and a half. On that day in March 2010, it looked like the divorce would soon be final. At stake was an estate valued at nearly $100 million, largely amassed when Ed sold his 63 McDonald’s restaurants. Texas is one of nine “community property” states, so the marital assets would almost certainly be divided equally.
The jury had just filed in. Ed’s lawyer, Don Godwin, leaned over and reminded his client that if opposing counsel said anything out of line in front of the jury, he would move for a mistrial. Ed thought nothing of it at the time. Then, less than five minutes into his opening statement, Lee’s attorney did something that was either very dumb or very devious.
For years, Ed had regularly signed his wife’s name to business documents. He claimed he did it so his wife wouldn’t have to come to the office. The court decided that Ed’s actions benefited both parties but, since bringing up the matter could bias a jury, the signature issue was not to be mentioned at trial.
The court order didn’t stop Lee’s attorney. He brought it up in his opening statement.
As soon as Godwin heard the words, he objected. Objection sustained. Then he moved for a mistrial. Granted. And, just like that, the trial ended. Together, the Baileys had spent $7.4 million on legal fees, and now they still weren’t divorced.
After the mistrial, Ed Bailey, a cunning businessman with a history of litigiousness, started to wonder if maybe he’d been taken. Maybe those two divorce attorneys had planned the mistrial just so they could continue to rack up legal fees. Ed hired another lawyer and suggested that his estranged wife do the same. The new attorneys decided to work out the divorce using collaborative law. Soon, both parties were in the same room, working through the details of the divorce with a psychologist on hand to keep everyone levelheaded. For about $80,000, the divorce was final, with husband and wife splitting the assets pretty evenly.
But that $7.4 million was a big chunk of the estate (roughly $3.6 million for Ed’s attorney and $3.8 million for Lee’s), and now Ed wanted it back. He hired another attorney, Bob Hinton, and after some back and forth, he sued Godwin, alleging a civil conspiracy to defraud the husband and wife of millions of dollars. If the matter goes to trial, it would be the first case of its kind in Texas. And if the allegations prove true, Don Godwin—a man who has represented Halliburton, Jerry Jones, Ross Perot, and several other Dallas icons—could face disbarment.
The suit claims, among other things, that Godwin used “disastrously onerous financial arrangements” that required Ed to pay in full all invoices from both his and his wife’s attorneys within five days of receiving them, “without regard to any question or objection he might have had.” The suit also alleges the attorneys worked together to churn and agitate their clients against each other to generate legal fees, and that the mistrial was planned, to make sure the steady stream of cash didn’t stop—taking advantage of clients at a time when they were most vulnerable emotionally.
Of course, two experienced attorneys with large law firms, it stands to reason, would intuit that angry, wealthy clients would naturally generate billable hours. The lawyers wouldn’t need to conspire. They could both just file legal briefs and jargon-heavy letters back and forth for months, prolonging the divorce as long as possible. Lee’s first attorney isn’t a party in the suit against Godwin, which is why D Magazine is withholding the identity. Citing attorney-client privilege, that lawyer wouldn’t comment on the Bailey divorce case and claimed to be unaware of Ed’s allegations.
In a twist, before Hinton could file the lawsuit on behalf of Ed against Godwin, Godwin sued Ed, his former client. After the millions in legal fees (and no divorce), Godwin’s law firm alleged that Ed still owes about $40,000. Hinton says Godwin’s attorney, Larry Friedman, knew that the civil conspiracy suit was coming and that Friedman’s filing first is nothing but a gambit.
“They wanted to be the plaintiff so they could present their case first,” Hinton says. It also allowed Friedman to file the case using only the initials of his client, decreasing the chances that the lawsuit would make headlines.
Friedman, who is also representing Pilar Sanders in her divorce from her husband, Deion, says that this case is “all overblown.” This is really about his client, Don Godwin, trying to collect a debt from Ed Bailey. “The reality is, Ed could have complained about every bill every time he got one,” Friedman says. “He could have complained about it at the end of the case, too. But there were no complaints about the work when it was done. Every month he got a bill, he had an opportunity to say, ‘I don’t want this. I want a different lawyer.’ And when he wanted a different lawyer, he got one.”
Friedman agrees that, in court, Godwin told Ed he might move for a mistrial right before the other lawyer gave him the opening to do just that. “But that’s a standard-procedure talk any good lawyer has with his client,” Friedman says. He maintains, without equivocation, that there was absolutely no collusion between attorneys in this divorce case. He says it was a very contentious divorce—“They didn’t need any churning”—and the attorneys were only doing what their clients wanted. “Don worked long and hard to keep private, potentially embarrassing matters that could be damaging to his client out of the public record,” Friedman says.
Whatever that work entailed, it apparently wasn’t helpful to those involved with the divorce proceedings that actually produced a result. Hinton, Ed’s current attorney for the civil conspiracy claim, says the work done by Godwin, Ed’s original attorney, was “completely useless” in the final divorce.
“That’s a ridiculous claim,” Friedman says. “That’s like running a marathon and changing shoes 25 and a half miles in, and then saying you ran a marathon in those new shoes. My guys did the work that got them to the finish line.”
Kevin Fuller was Ed’s second divorce attorney, the one who represented him in the collaborative law proceedings. Offered Friedman’s marathon analogy, he chooses his words carefully in response. He’s a lawyer after all. He cares about his clients, but he has to work with his fellow attorneys. He says he used some of the final values of the estate that the first lawyers agreed upon, but he didn’t use much else. Then he returns to the running analogy. “This maybe should have been a 5K to start with,” he says. “It didn’t need to be a marathon. Not all races need to be 26 miles.”
Both sides—Friedman on one, Hinton on the other—say that the other side will write a check when all is said and done. But most of what will be said won’t likely be a matter of record. Both sides also believe the matter will be settled out of court. So we may never know for certain what happened. The one thing we do know: the Baileys are divorced, but the billable hours are still piling up.
WRITE TO MICHAEL.MOONEY@DMAGAZINE.COM.