A media company which went bankrupt last week has filed a $136m (£83m) malpractice suit against Paul Weiss Rifkind Wharton & Garrison, reports The Am Law Daily.

US company MIG has alleged that a mistake in an offering document written by Paul Weiss in the late 1990s ended up costing the company about $136m a decade later.

Paul Weiss chair Brad Karp called the claim "stale and frivolous" and says the firm looks forward to "a swift and favourable resolutuion."

MIG, which invests in media and communications businesses in Eastern Europe, hired Paul Weiss in the mid-1990s as its lead corporate counsel. In 1997, Paul Weiss write up documents for the company for the issuance of preferred stock.

The lawsuit claims Paul Weiss lawyers mistakenly wrote the documents in such a way that any holder of a preferred share could demand (in certain circumstances) a cash payment equivalent to all accrued dividends. But MIG believed that such shareholders would only be able to convert their preferred shares to common shares, the complaint states.

When MIG merged with another media company in 2007, preferred shareholders demanded the dividend-based payouts, which ended up costing the company about $136m more than they had anticipated, the complaint states. The offering document Paul Weiss drew up "contains numerous mistakes and errors in draftmanship, coherence and professionalism," the complaint says.

The preferred shareholders and MIG eventually battled in Delaware's Court of the Chancery, and the court twice sided with the shareholders in ruling that MIG was indeed required to make the dividend-based payments based on the paperwork Paul Weiss drafted. The last Chancery ruling was on 28 May of this year, and the company filed for bankruptcy on Thursday (18 June), citing the litigation as a major cause, according to court filings in the Chapter 11 case.

MIG's complaint cites a 2004 memo from Paul Weiss in which firm lawyers cited an "inconsistency" in the offering document that "may" give shareholders a chance to argue for a "double-dip" of common stock and cash pay outs. MIG claims the memo shows the firm knew about its alleged mistake and should have refrained from any further representation of the company.