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November 4, 2011 6:04 PM

Law Firm Lawsuit-Palooza: From T.O. to Texas

Posted by Brian Baxter

The past two weeks have been busy ones for law firms getting sued or suing other firms over current and former client matters.

The Am Law Daily has touched on several such cases already, including a lawsuit claiming that Foley & Lardner helped perpetuated a $500 million Ponzi scheme, one filed by two former Watkins Ludlam partners suing that firm for leaving them out of a merger with Jones Walker, another brought by a former Quinn Emanuel Urquhart & Sullivan staff attorney accusing the firm of racial discrimination, and yet another brought by a former Sedgwick associate suing the firm for allegedly forcing him to resign, in part, over an interracial romance. (The New Jersey Law Journal, a sibling publication, has more on the Sedgwick suit.)

Another firm on the defensive of late: Greenberg Traurig. The firm, no stranger to sticky legal entanglements, was slapped with a suit this week by out-of-work NFL star Terrell Owens over $2 million in losses he suffered from an investment gone bad in an electronic bingo operation in Alabama. Courthouse News, which has a copy of the complaint, has more on the litigation.

Greenberg was also sued this week by Bay Area–based Trepel Greenfield Sullivan & Draa, which is serving as special counsel to the estate of the bankrupt Heller Ehrman. Trepel Greenfield claims in a multimillion-dollar malpractice suit that Greenberg concealed a conflict of interest over its dual representation of Heller and its largest lender, Bank of America, according to sibling publication The Recorder. Heller filed for bankruptcy in December 2008 when it realized that BofA had accidentally forfeited its secured creditor status, something the bank blames on a clerical error, according to our previous coverage of the matter.

Below is roundup of developments in some of the other recent cases to cross our radar involving law firms as parties rather than legal representatives:

Banner & Witcoff: The national IP boutique found itself on the receiving end of a suit seeking up to $40 million in actual and punitive damages for allegedly engaging in a conspiracy to force a client of plaintiffs firm Robbins Geller Rudman & Dowd into bankruptcy, according to sibling publication the Daily Report.

Chadbourne & Parke/Proskauer Rose: The Am Law 100 firms turned to Paul, Weiss, Rifkind, Wharton & Garrison and Davis Polk & Wardwell, respectively, to win the dismissal of a class action accusing them of enabling R. Allen Stanford's Ponzi scheme. Our former colleague Alison Frankel at Reuters had the story last week on how Davis Polk and Paul, Weiss lawyers succeeded in getting the suit filed by Stanford investors tossed. Proskauer and former partner Thomas Sjoblom, who gained notoriety for his "noisy withrawal" from Stanford-related legal matters two years ago, were hit with the suit in August 2009. Sjoblom resigned from the firm two months later, around the time Chadbourne was added to the case.

Cozen O'Connor: We reported earlier this year on Cozen's role advising Full Tilt Poker during a federal crackdown on online gambling. Federal prosecutors indicted 11 individuals and seized control of three sites in the sting, and in September raised the stakes by calling Full Tilt a Ponzi scheme. On October 17, a class of 20,000 online poker players sued Full Tilt's owners—including noted poker players Andy Bloch, Chris Ferguson, Phil Ivey, Howard Lederer, and Mike Matusow—and Cozen, claiming that the firm pocketed $2 million in fees that it knew came from illegal sources. Cozen has called the plaintiffs' allegations unwarranted, according to InsideCounsel.

Crowell & Moring: Last month we reported on the suit filed against Crowell by New York property manager Regal Real Estate, which claims a former lawyer from the firm misappropriated $6 million of its funds before fleeing to Hong Kong. The district attorney's office in Manhattan sought extradition for Douglas Arnsten, the Crowell counsel accused of the theft, and now Reuters's Leigh Jones has more on the Staten Island native's saga and the internal investigation being conducted by his former firm.

Fulbright & Jaworski: A wild week for divorce proceedings involving Am Law 100 partners took a different twist down in Texas, where a Houston man filed a malpractice claim against Fulbright and partner Stuart Gagnon over allegedly inflated bills related to a 2010 divorce, according to sibling publication Texas Lawyer.

Girardi & Keese: The Los Angeles–based plaintiffs firm was hit last week with a malpractice suit by a startup biofuel company for failing to file a malpractice suit against DLA Piper before the expiration of a one-year statute of limitations, according to Reuters's Frankel.

Linklaters: The Magic Circle firm has settled a professional negligence dispute with Credit Suisse over advice the firm gave the bank on a 2001 bond deal with Italian food giant Parmalat, according to U.K. publication Legal Week. Credit Suisse, which reached a settlement of its own with Parmalat in 2008, notified Linklaters and its former Italian ally Gianni, Origoni, Grippo & Partners earlier this year of its intention to file a $190 million claim against both firms over the deal, which went bad when Parmalat filed for bankruptcy in 2003. Both firms lawyered up, and Linklaters sued Gianni Origoni in the United Kingdom. Now the two are contributing to a settlement, the terms of which are undisclosed. Merger talks between Linklaters and Gianni Origoni broke down in 2004.

Locke Lord: The firm, which officially shortened its name in September, settled a claim by the Chapter 7 estate of defunct IP firm Morgan & Finnegan last week for $1.3 million, according to Law360. (Click here for the document detailing the settlement filed by trustee Roy Babitt, special counsel with New York's Windels Marx Lane & Mittendorf.) Morgan & Finnegan filed for bankruptcy in March 2009, two months after Locke Lord extended offers to the bulk of its partners in a move that helped hasten the demise of the 113-year-old New York–based boutique.

McDermott Will & Emery: The firm settled a dispute of its own in the U.K., reaching an agreement with ex-clients abroad claiming that former of counsel Alastair Wilson made a secret profit from their dealings, according to British publication The Lawyer. Wilson left McDermott in June 2009 for GSC Solicitors.

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