Plaintiff Blames Lawyer Over Tax on Settlement

An Orange County woman claims her attorney pushed her to settle her case against her former employer without properly notifying her of the tax ramifications of the settlement, which reportedly is worth millions of dollars.

Farideh Jalali sued Walter H. Root in Los Angeles Superior Court Wednesday for more than $19,000, the amount of tax she claims she had to pay on the attorney fees and was assured she would not incur. Jalali v. Root, BC205921.

Root said Thursday that Jalali knew of the tax consequences at the time she accepted the settlement.

"She was well aware, to the best of my knowledge, that the entire amount of the settlement would be taxable," Root said. "And it's a little hard to understand what she would have me do differently than what I did."

Jalali said Root telephoned her the night that the jury was to begin deliberating punitive damages, the same day it awarded her a favorable verdict for compensatory damages in her lawsuit against her former employer, a security industry company.

Root told her she must settle the case that night and had 10 minutes to decide and there was no time to consult tax professionals, the lawsuit states.

Jalali claims in her suit that Root told her she would be taxed only on the portion of the settlement she received - not the 40 percent she would be paying in attorney fees to him.

Root failed to properly advise her on the tax consequences of the settlement and put pressure on her to accept it, the lawsuit states.

The lawsuit, which alleges legal malpractice, breach of contract and breach of fiduciary duty, was filed by Laguna Hills attorney Michael J. Grobaty of McCauley & Smart. Grobaty declined to comment on the suit.