R. Allen Stanford, who was chairman of Stanford Financial Group, arrives at the Bob Casey Federal Courthouse in Houston for a hearing in 2010. (photo by F. Carter Smith/Bloomberg) |

Defense lawyers for Proskauer Rose have lodged a late-stage request for a federal appeals court to shut down a case accusing the firm and a former partner of helping R. Allen Stanford to conceal his massive Ponzi scheme from regulators.

Ahead of an upcoming Dallas trial, Proskauer, through its defense team at Davis Polk & Wardwell, filed a notice on Thursday with the U.S. Court of Appeals for the Fifth Circuit as part of an effort to escape claims from an official committee of investors in Stanford Financial Group—a collection of companies that Allen Stanford used to perpetrate a years-long, $7 billion fraud that landed him in prison on a 110-year sentence.

The Official Stanford Investors Committee, or OSIC, has accused Proskauer and former partner Thomas Sjoblom, who worked at the firm from 2006 to 2009, of helping Stanford avoid regulatory scrutiny amidst his scheme. The appeal, which challenges an April 10 decision from U.S. District Judge David Godbey in Dallas that denied the firm's motion for judgment on the pleadings, comes less than two weeks before a trial is scheduled to begin on April 30.

Proskauer has been arguing since at least May 2016 that it should be shielded from the suit under the attorney immunity doctrine. Specifically, the firm maintains that the investor committee was never a client of the firm's or of Sjoblom's and that Proskauer should be immune from claims by non-clients under a Fifth Circuit ruling that arose out of another Stanford case.

“Courts applying Texas law have repeatedly rejected non-clients' attempts to assert claims that were purportedly assigned from clients because allowing non-clients to bring such suits would prevent attorneys from zealously representing their clients,” Proskauer's defense team wrote in a May 12, 2016, motion for judgment on the pleadings.

But on April 10, Godbey sided with the investors, holding that the investor committee—which was court-appointed in 2010 to represent the interests of people who held certificates of deposit or other investments with Stanford Financial—does have standing to pursue Proskauer in the suit.

“OSIC—which is assisting the [Stanford] receiver with prosecution of these claims pursuant to the court-approved agreement between both parties to jointly prosecute such claims[—]has standing as both an unincorporated association and as a representative of the Stanford investors,” the judge wrote on April 10. Godbey also allowed the investor committee to amend its complaint and kept Proskauer in the case as a defendant.

That decision is what Proskauer is now challenging at the Fifth Circuit. As of Friday, the firm had filed only a notice of appeal, as opposed to a substantive brief.

Davis Polk's head of litigation, James Rouhandeh, serves as Proskauer's lead defense counsel. He did not immediately respond on Friday to a request for comment, nor did Strasburger & Price's David Kitner, the lead lawyer for the investors. Castillo Snyder also represents the plaintiffs.

The investor committee's claims against Proskauer are part of broader private litigation that arose from Stanford's fraud. Previously, Chadbourne & Parke—where Sjoblom practiced between 2002 and 2006, before he joined Proskauer for a three-year stint—paid $35 million to settle claims that had been brought against it. Hunton & Williams also settled a Stanford-related suit, agreeing in September 2017 to pay $34 million.

Sjoblom, who now has his own securities litigation and criminal defense firm, was also named a defendant in the investor committee case, but the two sides reached an agreement in late 2016 to dismiss those claims. He was represented in the Stanford litigation by Dentons.