Surfing partners hit big payday with Sempra Energy settlement.

Having regularly body surfed and played football and hoops in the decade that they've worked together, this trio of lawyers understands the value of friendship.

As it turned out, Kent Baker, Brad Burton and Albro Lundy III found that a little help from a friend translated into a notable settlement with Sempra Energy, which could go as high as $1.9 billion and possibly bring millions of dollars to the casual beachside firm.

The settlement is well-positioned to be among one of the upper-echelon of class-action payouts and could go down as one of the biggest to date, excluding the tobacco industry's $10 billion settlement with the federal government.

The group, partners in the Hermosa Beach law firm Baker Burton & Lundy, became involved with the case in 1999 after receiving a tip from an old pal, Lance Astrella.

The Denver-based attorney represented a client who in the late '90s built pipelines for natural gas provider El Paso Corp. When El Paso dropped Astrella's client as a vendor with no explanation, the client sued--and lost. But the discovery documents El Paso produced for Astrella's firm, some 200,000 documents in about 60 boxes, contained a smoking gun that apparently had been overlooked.

It was an agenda from a 1996 meeting in a Phoenix hotel room attended by top executives of Sempra-owned San Diego Gas & Electric Co. and Southern California Gas Co. as well as executives from El Paso and several other energy companies. The companies agreed to divide up California and New Mexico markets in order to avoid competition that would drive consumer prices down. The agenda even had the signature of an El Paso senior executive doodled repeatedly in the margin.

Since the document implied collusion among the big companies, it was the key piece of evidence that led to a lawsuit against the energy companies.

"You never find evidence like that," Baker said. "They said it was just a regular meeting, but 11 guys in a hotel room?"

Big guns

Sensing the potential consequence and scope of the case, Baker Burton & Lundy needed a big gun, so the little firm partnered with Thomas V. Girardi's firm, Girardi and Keese. Girardi had scored high-profile class-action wins against energy giants Pacific Gas & Electric Co., Unocal Corp. and Exxon Mobil Corp.

Getting a big partner turned out to be a wise move for Baker Burton.

"Most tort lawyers who would consider taking on a big case have to turn to a larger firm for help," said Antony Stuart of Stuart Law Firm P.C., a past president of the Consumer Attorneys Association of Los Angeles, a local association of plaintiffs lawyers with 2,500 members. "It's about purse strings and about expertise as to how the case should be handled, down to the best experts to put on the case."

Bigger firms can provide loans to smaller firms during years of costly litigation, during which little or no money may flow to the little firm. And big firms often absorb the costs of experts and depositions. The larger, more well-known firm's name can become a decisive factor in a case, even if the managing partner of the bigger firm has little involvement. "The defendant knows that the big firm has the capability of prosecuting the case to an even higher verdict than the settlement," Stuart explained. "Then the small firm has done the best job it can for its clients and accomplished a larger settlement which it couldn't have done on its own."

Girardi's firm joined the team in August of 2000. Also coming aboard were Walter J. Lack of Engstrom Lipscomb & Lack P.C. and Pierce O'Donnell of O'Donnell Schaeffer Mortimer LLP. The suit was filed one month later.

Baker and Lundy worked on the Sempra litigation for six years. The case took all of Baker's time for the last two years and 15 percent of Lundy's caseload during the same period. They both credit Burton's work, mostly business litigation and real estate, with keeping the firm's doors open while they worked on the Sempra case.

"You know those Clint Eastwood spaghetti Westerns where Clint walks into a town and a mule is walking around a pole grinding corn?" Burton asked with a grin. "That's me. I just keep grinding the corn."

After all that grinding, a big payday appears imminent. Sempra and the other companies decided to settle earlier this month.

June 8 hearing will determine the final settlement amount and the attorney fees. The exact amount Baker Burton & Lundy stands to earn is difficult to predict because it is subject to a formula, but the entire legal team could make tens of millions of dollars. California utility customers will see their part of the settlement through slight reductions in their bills.

On the ball

Baker and Burton began their friendship more than 30 years ago, while they were attending UCLA Law School.

"We kept running into each other on the sports field instead of the library and we figured that was a good thing," Baker said.

The two set up a practice in Venice in 1976 taking on clients Lundy now refers to as "rejects from Legal Aid."

Lundy joined the firm in 1994, and has specialized in litigation and class actions. He has another major class action in the works, targeting Reliant Energy Inc. The three partners have since hired two more attorneys, Anne Williams (litigation and employment) and Layton Pace (tax and transactions).

The trio seems as proud of their athletic accomplishments--they won the L.A .County Lawyers League football and basketball championships in 1986--as they are of their courtroom victories. Their office is walking distance from the beach, and the three regularly body surf during their lunch breaks. And the office environment--with a custom-painted surfboard in the lobby--remains ultra-casual.

"When you get to the point where you're comfortable with your talent you can just relax," Baker said, explaining why he has forsaken ties and wears a signature Hawaiian shin.

And while they can use help from the big guys on major causes, they have no intention of turning into a large firm. They aren't even listed in the Martindale-Hubbell legal dictionary, although Burton vaguely recalls filling out the form one year.

"We stay busy enough as it is," Baker said.