March 5, 2012 1:25 PM
Presenting the Latest Am Law Daily Law Firm Lawsuit-Palooza
Posted by Sara Randazzo
It’s been nearly two months since The Am Law Daily’s last exhaustive look at lawsuits in which law firms are named as defendants.
In the interim, we’ve written about the latest twists in several such suits, including a ruling allowing a former Mayer Brown associate’s racial bias suit against the firm to proceed and Edwards Wildman Palmer’s response to a complaint brought by two former partners who claim the firm’s now-former managing partner put his love affair with the wife of one of the plaintiffs ahead of the firm’s interests in negotiating a merger last year.
Now comes our latest roundup of dispatches from the law firm-as-defendant docket. And no story on the subject, it seems, would be complete without the inclusion of Greenberg Traurig. Indeed, the Florida-based firm is a party to no less than four suits to cross our radar lately.
In one of those cases, the owner of a New York-based jewelry manufacturer filed a 64-page complaint (PDF) in New York state court February 2 accusing Greenberg and two of its lawyers of deliberately working against her and for her sister in a intrafamily trademark dispute in which the firm represented both siblings. A Greenberg spokeswoman said in a statement that the plaintiff’s claims have no merit and that the firm will “fully defend” against them because “we are confident that our attorneys acted appropriately.” Beyond that, the statement said, “It is unfortunate that this involves a family dispute with one sister turning on the other.” Greenberg also characterized the plaintiff’s damage demands of more than of $100 million as “plainly unrealistic.”
In a second New York case, a state court judge ruled on February 28 that a malpractice claim filed against Greenberg real estate chair Robert Ivanhoe by NAMA Holdings can proceed over the firm’s objections that the suit should be dismissed in light of a related arbitration decision. (The plaintiff alleges that Ivanhoe, who also chairs the firm’s New York office, failed to disclose a personal financial stake in a multibillion-dollar real estate project that he was working on.)
A third suit targeting Greenberg finds the firm at the center of an emerging trend examined in the March issue of The American Lawyer: financial crisis victims seeking to blame their woes on law firms that represented them. (The same topic was on the agenda at a conference dedicated to legal malpractice and risk management issues last week in Chicago). In Greenberg’s case, an investor in a now-bankrupt private mortgage broker and real estate loan provider filed a proposed class action in Alameda County Superior Court on January 30 in California over the firm’s alleged role in covering up more than $700 million in losses suffered by the company. The firm says it “acted properly and in no way wrongfully.”
On a separate front, Greenberg also continues to fight claims made against it by the bankrupt Heller Ehrman estate over alleged missteps by the firm that allowed Heller’s bank to seize tens of millions of dollars in assets after it dissolved. In its January 26 response to the suit, Greenberg argues that it only acted as directed amid an effort by Heller to unwind outside of bankruptcy, sibling publication The Recorder reports.
Other firms enmeshed in litigation include:
Adams and Reese: The New Orleansâ€“based firm has been accused, along with Baton Rougeâ€“based Breazeale, Sachse Wilson, of playing a role in R. Allen Stanford’s $7 billion Ponzi scheme. The suit, filed February 16 in Dallas federal court, was first reported by Legal Newsline. (Stanford’s trial concluded in Houston February 29, and awaits the jury’s decision). In a one-page statement (PDF), a Breazeale spokeswoman noted that allegations contained in what she called the “frivolous” lawsuit mimic those found in a 2011 suit filed as a purported class action. The statement said Breazeale represented Stanford Trust Company on a limited basis over the years, but that neither the firm nor its lawyers “had any knowledge of any illegal or unethical conduct on behalf of Allen Stanford.” An Adams and Reese spokeswoman echoed those comments, adding that the firm “looks forward to the Court considering its defenses to this suit.”
Akin Gump Strauss Hauer Feld: The firm and Akin Gump New York securities partner Douglas Rappaport are accused in a pair of lawsuits in Los Angeles state court of libeling Southern California lawyer John Kirkland and business consultant Charles Arnold. The suits, filed by Kirkland on January 24 (PDF) and Arnold on January 25 (PDF), claim that a January 26, 2011 letter sent by Rappaport to thenâ€“U.S. Aerospace CEO James Worsham made it appear that the two men had lied, committed crimes, concealed conflicts of interest, and violated fiduciary duties. The plaintiffs each seek more than $100 million in damages. A third, related suit (PDF), brought by U.S. Aerospace and Precision Aerostructures, accuses Akin Gump, Rappaport, and several other firm lawyers of concocting a scheme along with U.S. Aerospace executives to take over the company. The complaint’s dramatic language includes the following passage: “Defendants functioned together as a Trojan horse, secretly making their way into the inner sanctum of the corporation, then using their positions of trust and confidence to weaken the corporation and its defenses from the inside, and assist the onslaught of the barbarians at the gate.” An Akin spokesman said the firm does not comment on pending litigation.
Coudert Brothers: The law firm may be long dead, but an $85 million malpractice suit against Coudert brought by former client Statek Corporation gained new life on February 28 when a three-judge panel for the U.S. Court of Appeals for the Second Circuit ruled (PDF) that a lower court had erred in tossing the suit on statute-of-limitation grounds. In the ruling, Judge Peter Hall said the lower court should have relied on Connecticut’s statute, rather than New York’s, in rendering its decision. The suit, initiated prior to Coudert’s 2006 bankruptcy filing, accuses the firm of helping a top Statek executive hide and launder assets. David Tannenbaum of Stern Tannenbaum Bell, who represents Coudert plan administrator Development Specialists, did not return a request for comment.
DLA Piper: Courthouse News details a lawsuit filed in San Diego state court that accuses the megafirm and litigation partner Brian Foster of having a conflict of interest in representing two different parties for more than a decade in the development of a gated golf community in Rancho Santa Fe. The malpractice suit was filed February 23 by Nicholas Marsch and Briarwood Capital. DLA has already paid $37.5 million to settle a separate suit filed against it by its other client on the deal, Lennar Corporation, according to Courthouse News. DLA Piper’s press office did not return a request for comment on the new suit. On February 23, meanwhile, DLA Piper was hit with a $1.29 million jury verdict in an unrelated negligence case brought by a former shareholder in a now-defunct security technology company, sibling publication Texas Lawyer reports. The firm got better news related to a third active suit, when a former secretary who filed a $1.8 million sexual harassment complaint against DLA two years ago requested its dismissal in late February, according to Massachusetts Lawyers Weekly.
Fish Richardson: Texas Lawyer reports on a suit that accuses the firm, along with Dallas principals M. Brett Johnson and Geoffrey Harper and firm client H. Jonathon Cooke, of fraud for allegedly failing to disclose a relationship between Johnson and an arbitrator who awarded Cooke $22 million in a dispute with three former business partners. (The trio filed the suit on February 22 in Dallas federal court.) The U.S. Court of Appeals for the Fifth Circuit later vacated the award, ruling that Johnson’s social relationship with JAMS arbitrator Robert Faulkerâ€”the former bought the latter sports tickets and expensive dinnersâ€”should have been disclosed. Baker Botts partner Rod Phelan, who is representing Fish, Johnson, and Harper, said via e-mail that the firm is committed to having the case rearbitrated quickly and that the suit is an example of what he called a common phenomenon: “Facing a second day of reckoning, losing litigants are desperate.” Phelan also said that because attorneys are human and don’t take vows of “lawyer chastity,” it is unreasonable to think that those in a position to adjudicate disputes won’t have relationships with anyone who appears before them. “Judges and arbitrators aren’t born in those jobs,” he said.
Fox Rothschild: Thanks to a New York judge’s ruling, the firm is facing narrower claims in a malpractice suit alleging that Fox Rotshchild caused the estate of Renee Allmen to endure excessive federal taxes and decreased charitable contributions by botching the creation and execution of Allmen’s will. On January 31, a state court judge ruled that the statute of limitations, which commenced upon Allmen’s death in June 2006, had expired by the time the estate sued Fox Rothschild on February 16, 2011. The Allmen estate’s complaint (PDF)â€”which seeks $575,000 and also includes allegations that Fox Rothschild erred during a 2008 audit of the estateâ€”will continue, but without mention of any work done in 2005. A hearing in the case is set for March 7.
Fulbright Jaworski: The firm’s work on a land development deal involving Texas AM University is being challenged in a malpractice suit brought January 30 in Nevada state court by two investors in the deal, Vegas Inc. reports. The investor group, Verano Land Group, says it spent $65 million and donated 694 acres of land to develop the area surrounding a new branch of AM’s campus, but that Fulbright and others conspired to “pursue their own agendas.” Fulbright partner Jane Macon in San Antonio and former managers of the project are also named as defendants. George Scofield, the partner in charge of Fulbright’s San Antonio office, told the San Antonio Express News that the allegations are “frivolous, baseless and completely unfounded.”
Mayer Brown: A disgruntled former client sued Mayer Brown and Silicon Valley patent boutique Feinberg Day Alberti Thompsonâ€”a Mayer Brown spin-offâ€”on February 3 in San Francisco state court for what the plaintiff claims was the firms’ failure to give adequate legal advice in connection to a lawsuit brought after a failed patent sale. ILeverage, a self-described “patent brokerage firm” that says it stood to gain $2.4 million from the patent auction in question, is the plaintiff in the suit (PDF). A Mayer Brown spokesman said the firm does not comment on pending litigation.
Orrick, Herrington Sutcliffe: Like Greenberg, Orrick faces litigation related to the financial meltdown. Dallas-based investment company Highland Financial Partners filed a $95 million malpractice suit against the firm on January 25 in Texas state court over losses from a failed collateralized debt obligation transaction. Orrick denies any wrongdoing in the Highland matter. In a second recent litigation, Orrick took the plaintiff’s role, suing former Republican presidential hopeful Jon Huntsman’s campaign over $42,000 in allegedly unpaid rent for space it was subleasing in the firm’s Washington, D.C., offices. The Washington Post reports that Orrick and the Huntsman camp settled the dispute in late January.
Paul Hastings: A fatal car crash in Los Angeles is being tied back to the firm in a lawsuit (PDF) filed in L.A. state court January 31. The family of Alva Agnes Whyte Garcia, who died in November on the 110 freeway in Los Angeles, is suing the firm for negligence on the grounds that the 2004 Toyota Sequoia that hit Garcia was “owned, leased, managed, maintained, repaired, entrusted, [and] used for company business” by Paul Hastings and driven by a firm employee at the time of the fatal accident. The plaintiffs allege that the firm knew the employee had medical conditionsâ€”including the sudden onset of seizures, dizziness, and blackoutsâ€”that made it unsafe for her to drive. A Paul Hastings spokeswoman said the firm does not comment on pending litigation. In an unrelated matter, Paul Hastings is off the hook for a malpractice suit brought in New York that claims the firm’s actions cost a real estate company $20 million. A judge threw out the suit February 16.
Seyfarth Shaw: In a rare instance of a malpractice case going to a jury trial, Seyfarth Shaw and Boston partner Richard Alfred won on all counts January 30 in a case brought by former client PCG Trading in Massachusetts state court, sibling publication The National Law Journal reports. PCG, a supply chain management company, alleged that Seyfarth lawyers didn’t adequately protect it from liability against court judgments in employment cases filed against a company whose assets PCG acquired.
Squire Sanders: The firm, Los Angeles managing partner James Broderick, and paralegal John Kimble are named as defendants in a discrimination suit filed Friday in Los Angeles state court. The suit (PDF), brought by former legal secretary Vicki Scott, alleges that Broderick “continuously exhibited a pattern of harassment” against Scott, who is black. That harassment included Broderick purportedly speaking to her “as if she were a child” and yelling at her for alleged mistakes. Scott opened a complaint against the firm with the Equal Employment Opportunity Commission in 2010; the commission closed its inquiry in August 2011 and gave Scott the right to sue the firm herself, according to the complaint. Scott was subsequently fired in October, the suit alleges. A Squire Sanders spokeswoman said the firm has no comment.
Vinson Elkins: The Texas firm is defending itself against allegations that it caused former client Precash International to lose several million dollars on a joint venture with a Chinese gaming company by failing to understand which corporate laws were enforceable in China when structuring the deal. The malpractice suit, filed February 2 in Los Angeles state court, also names Vinson partners David Blumental, Boyd Carano, Margaret Sampson, Chuck Ebertin, and Matthew Jacobs, and associate Qianqian Wang. A firm spokeswoman did not return a request for comment.
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