Top Lawyer's Abusive Language Costs Client Tens of Thousands

The Israeli Supreme Court has ordered businessman Eli Kahana and two companies he owns to pay 75,000 shekels in legal costs due to "abusive language" used by his senior lawyer, Gilad Waksman, against a lower court judge. Waksman, head of litigation at the Herzog law firm, had harshly criticized District Court Judge Yardena Sarusi during an appeal hearing in February 2025.

The case stemmed from Kahana's sale of his electronic microscopes business, "Eisenberg," to Philips Electron Optics in 2014. Kahana received $3.3 million for the business operations and an additional $2.2 million for a three-year non-compete agreement. Kahana argued the latter payment was a capital gain taxed at 25%, while the tax authority classified it as ordinary income subject to a 50% marginal tax rate.

Judge Sarusi had rejected Kahana's appeal, expressing significant doubt about the authenticity of splitting the sale into two agreements and ruling that the non-compete payment was indeed ordinary income. Kahana then appealed to the Supreme Court, where his legal team, led by Waksman, allegedly used "shameful claims" against Sarusi.

During the Supreme Court hearing, Waksman initially defended his language, stating he was presenting a statistical fact about Sarusi's past rulings. However, Justices Yigal Khasher and Ya'el Viner strongly rebuked him, calling the language "extreme" and "sharp." Justice Viner questioned if this was the proper way to present errors made by a lower court, suggesting it implied bias. Waksman eventually apologized, but the justices indicated the apology should have been directed at the District Court.

While the State requested the appeal be dismissed outright due to the abusive language, the Supreme Court ultimately decided not to, citing Waksman's apology. However, they warned that such language in future appeals could lead to outright dismissal. Justice Khasher, in his ruling, noted that while the appeal was rejected, the abusive style violated civil procedure rules requiring pleadings to be respectful. The court upheld the principle that payments for non-compete agreements constitute ordinary income, not capital gains, as they restrict only the "fruits" of one's abilities, not the "tree" itself.