Greenberg Traurig is facing a malpractice investigation by the Heller Ehrman estate, according to court filings and a lawyer representing Heller's creditors committee, writes The Recorder.

At issue is Greenberg's apparent failure to discover that Heller's biggest creditor, Bank of America (BoA), had terminated its security interest in the firm. Lawyers familiar with the matter say that Heller, which retained Greenberg last summer, would have had much better leverage with its banks and other creditors if it had known BoA was not a secured creditor and may have even been able to avoid bankruptcy.

BoA's termination – which it has since characterised as a "clerical error" – should have been found in a routine search of public documents typically done within days of being retained by a distressed client, according to bankruptcy lawyers.

Instead it was unearthed by lawyers for Heller's San Francisco landlord just weeks before the defunct firm's 28 December bankruptcy filing.

BoA has been sued by Heller's other creditors, who want the bank to return $51m (£31m) Heller paid to it in the 90 days leading up to the bankruptcy filing.

Heller's dissolution plan predicted a 90% success rate collecting on $174m (£105.7m) in accounts receivable and work in progress. Since the bankruptcy, Heller has only been able to collect $8m (£4.9m). If the investigation leads to a malpractice suit, Greenberg could face tens of millions in damages if Heller successfully argues Greenberg's failure hurt its collections.

More than 1,100 creditors have filed claims totalling $376m (£228.4m) in the Heller bankruptcy. Hundreds of former employees who were not paid severance or accrued vacation have filed a claim for $30m (£18.2m). Former Heller partners could eventually be sued for fees they earned while at the firm.

Thomas Willoughby, a lawyer representing Heller's creditors committee, said in February that he was "thinking about people way beyond shareholders". The creditors have since filed the suit against BoA, and have said they will go after former Heller shareholders next if attempts to work out a deal fail.

The estate and the creditors have hired US firm Lovitt & Hannan to investigate potential claims against third parties, which include the Greenberg issue.

Legal and professional fees relating to Heller's collapse have already hit $1.8m (£1.09m).

Lawyers last week filed their first fee requests, covering work from when the firm filed for bankruptcy on 28 December through to 30 April.

The fees total more than $1m (£607,000) for those representing the bankrupt estate. The requests include $680,000 (£413,000) in fees and $66,000 (£40,000) in expenses for Heller's counsel, Pachulski Stang Ziehl & Jones, and $415,000 (£252,000) in fees and $14,000 (£8,500) in expenses for co-counsel Greenberg.

The creditors have spent far less on legal counsel. Willoughby has asked for fees of $331,000 (£201,000) and $7,000 (£4,250) in expenses. The fees will be reviewed at a 26 June hearing.

The Recorder is a US sister title of Legal Week.