Morgan & Morgan's Florida Business Trial Group has hit Tampa-based Am Law 200 firm Carlton Fields and four of its attorneys with a legal malpractice lawsuit claiming Carlton Fields betrayed a client by representing a company on the opposite side of a transaction.

The complaint claims that after years of representing Orlando title insurance trust Attorneys' Title Insurance Fund, defendants Nathaniel L. Doliner, Marty J. Solomon, William G. Giltinan and Christopher W. Smart began simultaneously representing its business partner Old Republic National Title Holding Co. in a deal that worked against the plaintiff's interests.

Attorneys' Title Insurance Fund was a service aimed at helping Florida lawyers write real estate title policies. But it was on the brink of insolvency, according to the complaint, which alleges the defendants realized title company Old Republic ”would be the more lucrative client going forward.”

“Sadly, Carlton Fields made the conscious decision to put cash ahead of the duties it owed to ATIF,” the complaint said.

The lawsuit accuses the defendants of professional malpractice and of breaching their fiduciary duty.

Carlton Fields has denied any wrongdoing.

“We have acted in accordance with our ethical and fiduciary duties. We believe that the claims are baseless and will vigorously defend ourselves,” Carlton Fields spokesperson Kate Barth said in an emailed statement.

Damien H. Prosser, Keith W. Meehan and Jessica L. Thorson of Morgan & Morgan represent plaintiff Daniel Stermer, who is creditor trustee for the Attorneys' Title Fund Inc., which filed for bankruptcy in 2017.

“Lawyers owe a duty of loyalty to clients,” Prosser said. “And if they believe they have conflicts then they ought to pass on the representation and not be clouded by the fact that you just want to keep billing the next client at the expense of the old one.”

The two companies signed a joint venture agreement that saw the plaintiff pledge certain assets in exchange for a promise that Old Republic would guarantee title policies that had been written.

Carlton Fields represented Attorneys' Title Insurance Fund in this deal among others and billed at least $1.4 million in fees in four years, according to the lawsuit. The agreement went through various amendments until it become a master agreement—which Carlton Fields allegedly worked with Old Republic to draft without getting a conflict waiver from their client first.

They did eventually get a conflict waiver, but the lawsuit claims that was invalid because it wasn't approved by the plaintiff's board or shareholders and waived only “potential” conflicts and not “actual conflicts.” An employee from the Attorneys' Title Fund signed the waiver, according to Prosser, which was sent to Carlton Fields from the general counsel of Old Republic.

Before the plaintiff went out of business, Old Republic allegedly used the master agreement to obtain its interest in the joint venture, taking Attorneys' Title Insurance Fund's income and employees with, and leaving them with about $500,000 in assets.

The lawsuit stems from clawback litigation in the bankruptcy case.

“While Attorneys' Title Fund may be no more, they want to not see this conduct happen in the future, but primarily they just want to make sure that the creditors who otherwise would have had something by selling off these assets would be able to recover money,” Prosser said.

Client loyalty conflicts aren't as unusual as they might seem, according to Prosser, who said he once represented a California company that had received a cease and desist letter from the same law firm that represented it, but from an office in another state that hadn't ran a conflicts check.

“My view is that law firms know no conflicts provided they can somehow think of a way to get around it,” Prosser said. “If they can think of any way that something is not a conflict, whether or not it really is, but they can keep billing the client, law firms will try to look the other way on conflicts in my experience.”

The plaintiff seeks millions in damages for its alleged loss of its assets, value, business opportunities and the worsening of its insolvency and liabilities.

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