Federal Lawsuit Claims South Florida Firm's Negligence Caused Company's $4M Loss
A Kansas investment firm claims language in transactional documents prepared by West Palm Beach law firm Anthony LG PLLC caused serious problems with four different clients. But the defendant attorneys say the allegations are "spurious."
June 17, 2019 at 01:34 PM
3 minute read
The lawsuit alleges West Palm Beach firm Anthony LG PLLC was negligent in preparing financial documents for an investment firm. Photo: ktasimar/Shutterstock.com.
A Kansas investment company has accused West Palm Beach law firm Anthony LG PLLC and two attorneys of legal malpractice, claiming failures in preparing financial documents caused more than $4 million in losses.
When L2 Capital LLC opened in 2016, it hired the firm, formerly known as Legal & Compliance LLC, to represent it in investment transactions and to prepare its organizational documents. But instead, securities lawyers Laura Anthony and Chad Friend allegedly caused “substantial damage,” according to the complaint in the Southern District of Florida.
Anthony and Friend have denied the allegations.
“We are confident that the complaint is without merit and that we will prevail in this matter. We intend to defend vigorously against the spurious allegations,” Anthony said via email.
L2 Capital is headquartered in Puerto Rico and invests in companies across the United States, Canada, Europe, Australia and Hong Kong, according to its Bloomberg profile.
The lawsuit alleges L2 Capital lost $4 million in a transaction with digital payment services company MoneyonMobile Inc., which had asked L2 Capital to clear up ambiguous language in its documents. L2 Capital had loaned MoneyonMobile $1 million in exchange for warrants that allowed it to buy stock at fixed prices until a certain date.
MoneyonMobile sought a contractual provision to address how its shares might change in the event of a reverse stock split — a process that converts stock into a fewer number of shares that, individually, are worth more. According to the complaint, MoneyonMobile had publicly announced plans to do the split, but Friend failed to make appropriate adjustments in transactional documents. Without the provision, the split caused L2 Capital's share prices to drop, and the company incurred significant legal fees fighting MoneyonMobile in court.
Similar ambiguity in a transaction with commercial development company Amedica Corp. also caused a drop in shares, allegedly costing the plaintiff $75,000.
The complaint alleges the firm also mixed up due dates on a warrant with networking infrastructure company FTE Networks Inc., writing that it was due in three years and six months instead of six months. Friend claimed his clerk had made the error, according to the suit. But when L2 Capital tried to correct the due date, FTE threatened legal action and L2 Capital had to settle confidentially.
The complaint claims the firm “excessively charged” for work, and failed to disclose that it had been retained by prospective client, Biostem Technologies Inc. — killing a $1.5 million deal the plaintiff had negotiated with the company.
“The defendants acted with malice, moral turpitude, gross negligence, reckless indifference, wantonness, oppression and outrageous aggravation towards L2,” the complaint said.
The lawsuit seeks more than $8 million in damages for alleged professional negligence, breach of fiduciary duty and breach of contract. Plaintiffs lawyer Evan L. Frank, of Alan L. Frank Law Associates, in Jenkintown, Pennsylvania, did not respond to requests for comment by deadline.
Read the complaint:
More legal malpractice stories:
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