(Photo: Diego M. Radzinschi/ALM)

Just three days before a $22 million legal malpractice trial was to begin, Cadwalader Wickersham & Taft has settled with an investment entity run by Washington Redskins owner Daniel Snyder.

Late Tuesday night, attorneys for Cadwalader and Snyder-controlled Red Zone filed dismissal papers in Manhattan Supreme Court, citing a “confidential settlement agreement between the parties” that day. The case was settled and discontinued with prejudice, the parties said.

Red Zone was seeking more than $22 million in damages, including interest, against Cadwalader, represented by Cravath Swaine & Moore. The case, brought more than seven years ago, concerned advice Cadwalader gave on an investment bank's fee during a proxy fight at Six Flags Inc.

In settling, Cadwalader is cutting off what would have been an extraordinarily high-profile trial for a legal malpractice suit. According to court documents, Snyder was expected to testify, as was Dwight Schar, a part-owner of the Redskins, and David Pauken, a former chief operating officer for the team.

Other potential witnesses included Dennis Block, a former Cadwalader partner now at Greenberg Traurig, and William Mills, co-chair of Cadwalader's corporate group.

The parties' stipulated order of dismissal restricts the parties' discussion on the case, requiring that no party make any public statement about the settlement or the merits, other than to confirm the case was settled and discontinued.

The court papers were signed by Cadwalader's attorneys, David Marriott and Lauren Moskowitz, partners at Cravath, and Red Zone's attorney, New York solo practitioner Jeffrey Jannuzzo. The attorneys did not return emails about the settlement.

After some unfavorable court rulings this year for the law firm, Cadwalader in the last week sought the court's help in getting a mediator. On Friday, a week before trial was scheduled, Marriott, Cadwalader's attorney, told the judge that the parties had “recent” settlement discussions, but were unable to make progress.

In a Sept. 21 letter to Justice O. Peter Sherwood, Marriott  asked the judge to appoint a neutral to conduct a mediation and to order the parties to appear with “decision makers with authority” present.

But the parties apparently had settlement talks outside this process. A source familiar with the case said the judge did not order mediation.

The case's allegations go back to 2005, when Red Zone pursued a proxy contest at Six Flags to replace three of its seven directors. Cadwalader had represented Red Zone on its dealings with Six Flags, with then-partner Block advising Snyder. Red Zone also hired UBS Securities as a financial adviser.

In its malpractice suit, Red Zone alleged Cadwalader was negligent in advising on an August 2005 amendment that was supposed to limit UBS' fees to $2 million, and as a result, UBS ended up winning a $10 million judgment against Red Zone for fees.

The trial was expected to examine Block's advice on the amendment. During the malpractice case, Block claimed he explained to Snyder that the August 2005 amendment could not be read to cap UBS' fee. “I recommended that Snyder not accept the UBS draft,” Block said in an affidavit. “After some further discussion, during which I reiterated my concerns about UBS' language to Snyder, Snyder made the decision to sign the draft as proposed by UBS and executed the amendment letter.”

But according to Red Zone, Snyder and other witnesses swore that no such warning ever happened.

Trial was finally scheduled to kick off Friday after years of legal wrangling and appeals. Red Zone initially won a judgment in 2014 against Cadwalader before then Manhattan Supreme Court Justice Melvin Schweitzer, which was affirmed by the Appellate Division, First Department. But in 2016, the state Court of Appeals modified the ruling, stating that triable issues of fact exist over whether Cadwalader exercised “ordinary reasonable skill and knowledge.”

This year, Sherwood denied certain defense arguments by Cadwalader and ruled that the law firm couldn't present expert witnesses, a blow to the firm's defense before trial.

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