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The Talent
July 25, 2011 6:25 PM
Duane Morris Hit with Malpractice Suit for Madoff Losses
Posted by Claire Zillman
A prominent Philadelphia couple filed suit against Duane Morris and two attorneys after their money ended up in the hands of convicted Ponzi-schemer Bernard Maddoff, according to a story in The Legal Intelligencer.
Developer Daniel Keating III claims that he and his wife suffered "substantial losses" after the lawyers allegedly ignored their requests for conservative investment strategies and their money landed in a Madoff feeder fund.
The Keatings name Duane Morris, partner Stanley Barg and former partner Stanley Joffe in the suit filed in June in Philadelphia Common Pleas Court. The Keatings allege breach of contract, professional liability, and quantum meruit, the Intelligencer reports. The Keatings are represented by Neal Jacobs and Gene Linkmeyer of the Jacobs Law Group.
The defendants, represented by Paul Troy of Kane Pugh Knoell Troy & Kramer, filed preliminary objections to the suit earlier this month, in an attempt to strike the breach of contract and quantum meruit claims and limit damages to only those attorney fees paid to Duane Morris.
"We strongly disagree with the allegations in the complaint, but we can't comment in detail on specific allegations in litigation that is pending," Troy told the Intelligencer. The defendants also argued that the Keatings selected the investment managers. They also said a breach of contract claim could not be grounded solely on a violation of the standard of care owed by an attorney, the Intelligencer reports.
According to the complaint, the Keatings came to Joffe and Duane Morris in 2004 looking for an asset protection plan and investment options that would ensure their family's financial stability. The Keatings hired Joffe as their international estate planning legal counsel; Barg worked with Joffe on ancillary tax matters, the Intelligencer reports.
The Keatings complaint alleges that Joffe suggested Notz Stucki & Cie as one of two managers for a trust established in 2008. According to the complaint, the Keatings thought that Notz would be instructed to allocate the assets into conservative investments, but nearly half of the sum was invested in risky equity and hedge fund investments, including feeder funds of Bernard L. Madoff Investment Securities, which they discovered in December 2008.
The Keatings allege in the suit that Duane Morris was aware of Joffe's "substantial performance issues," but the firm and Barg shielded Joffe's "incompetence" from them. Joffe was fired by the firm in June 2008, the complaint says.
The complaint did not specify how much money the Keatings lost.
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Once again, the dangers of working with those who merely dabble in asset protection rears its ugly head. Lawyers need to stop being "hogs" and refer planing that is not their daily bailiwick to those who know what they are doing. Unfortunately, merely hiring a big name firm is not enough due dilligence by the consumer.
Based on my reading of the issues here and in other places, the attorneys involved lacked the skill required on both the legal and investment advisory fronts, where they had no business being at all. To have suggested investment managers that did not know or care enough to avoid a strategy that did not utilize a third party custodian is shocking.
Ike Devji, J.D.
Comment By Ike Devji - July 26, 2011 at 4:21 PM