Merger-Handshake

The new year has brought a fresh round of lawsuits brought by or against big law firms, including a $214 million malpractice suit against Arnold & Porter Kaye Scholer and a gender discrimination suit against Ogletree, Deakins, Nash, Smoak & Stewart.

But while such complaints always make a splash when they are filed, a look back shows that a number of similar suits were quietly settled, resolved or sent to arbitration in 2017, as they were in 2016, especially after the law firm failed to immediately dismiss the suit or lost on appeal.

Take Winston & Strawn's five-year legal battle with high-end women's clothing retailer Leggiadro Ltd. The store's high-profile 2012 legal malpractice complaint alleged the firm failed to advise that it would be subject to certain taxes, leading it to accept a lower-than-appropriate buy-out settlement with its landlord.

Last year, the Appellate Division, First Department, in New York denied the law firm's motion for summary judgment, ruling that the store had multiple avenues to pursue potential recoveries for Winston's alleged malpractice.

The case apparently settled. About six months after the appellate decision, attorneys for Winston and Leggiadro filed a stipulation of discontinuance with prejudice, signed by Lawrence Hirsh, Leggiadro's attorney and a partner at Robinson Brog Leinwand Greene Genovese & Gluck, and Winston's attorney, Robert Goodman, a partner at Mound Cotton Wollan & Greengrass. Hirsh declined to comment, while Goodman did not respond to requests for comment.

In another high-profile malpractice suit, attorneys for Herrick Feinstein and a property owner that sued the firm, in BLDG Christopher v. Herrick Feinstein, signed discontinuance papers at the end of last year.

That case also dated back to 2012, when the owners claimed Herrick's tax advice led to an expensive dispute with the IRS. In 2016, Manhattan Acting Supreme Court Justice Barry Ostrager narrowed the case, ruling that four plaintiffs' claims are time-barred, but allowed a fifth plaintiff's claim to proceed.

The parties agreed to discontinue the case without prejudice, according to court papers filed on Dec. 28 and signed by plaintiff's attorney, Pryor Cashman partner Todd Soloway, and Herrick's defense counsel Anthony Sylvester, partner of Sherman Wells Sylvester & Stamelman. Soloway could not immediately comment and Sylvester did not return a phone message for comment.

Meanwhile, by June last year, Pryor Cashman settled a legal malpractice suit brought by an entity tied to real estate investor David Lichtenstein. The suit, alleging $37 million in damages, was settled nearly seven months after an appeals court revived a claim in the litigation. Also by June 2017, Curtis, Mallet-Prevost, Colt & Mosle settled with a former client that claimed the firm's negligence from a late filing in a government investigation led it to lose $20 million. A Manhattan judge in 2016 had allowed the company's malpractice claim to proceed, while dismissing the malpractice claim of individual plaintiffs.

In another case, Richard Fields, a casino and resort developer tied to a Wyoming ranch valued at $175 million, sued Baker & Hostetler in 2015, alleging his longtime counsel at the firm committed legal malpractice by acting against his interests “in an effort to engineer a hostile takeover” of his assets.

By February 2017, the parties filed a stipulation of discontinuance, which said all claims by Fields were being dismissed without prejudice. A Baker Hostetler lawyer said in a statement that there was no settlement and Fields dropped the suit. But Fields' attorney, Steven Storch of Storch Amini, said “the dispute has not been resolved and Mr. Fields is exploring his options.”

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Discrimination Disputes

Meanwhile, several lawsuits brought by ex-employees of law firms were quietly resolved in 2017.

For example, Jodi Ritter, a former nonequity partner of Wilson Elser Moskowitz Edelman & Dicker, sued the firm in 2014, claiming she was subjected to repeated harassment and discrimination over having children. Wilson Elser at the time said the allegations were “baseless and lack any merit.”

In 2015, Manhattan Supreme Court Justice Nancy Bannon stayed the case and ordered arbitration, denying the firm's attempts to dismiss the suit. About two years later, by July 2017, the case was dismissed with prejudice. Marjorie Mesidor, Ritter's attorney and partner at Phillips & Associates, declined to comment, while Irving Hirsch, a partner at Wilson Elser representing the firm, could not immediately comment.

And also last summer, a former Goldberg Segalla associate's gender discrimination lawsuit against the firm was settled. Marissa Jones claimed that a firm partner repeatedly criticized and harassed her due to her gender and child care duties; and just days after reporting the partner's behavior to management, she was fired. The firm “strongly” denied the allegations in a statement.

In a June 2017 filed order, U.S. District Judge Katherine Polk Failla of the Southern District of New York said the parties settled the matter.

In an interview, Mark H. Moore, a partner at Reavis Page Jump who represented Jones, said “it was a strong case on the facts,” as the lawsuit claimed Jones was fired following her complaints of discrimination. “Retaliation for a complaint of discrimination gets someone in as much or more trouble than discriminatory conduct itself because it's often easier to prove,” he said. I. Michael Kessel, special counsel at Littler Mendelson representing Goldberg Segalla, declined to comment.

In another ex-employee battle, a lawsuit brought by intellectual property attorney Robert Gingher against Dickstein Shapiro, his former firm, resolved last year after an unfavorable ruling against the now-defunct law firm.

Gingher, in a suit filed in Suffolk County Supreme Court against the firm and several of its former partners, claimed he was mistreated when he left the firm and not paid the amount he was due in salary and bonuses. In 2016, Suffolk County Supreme Court Justice James Hudson allowed Gingher to amend his complaint and denied Dickstein's shot to dismiss the lawsuit.

Soon after, in February 2017, the parties filed to discontinue the case with prejudice. Gingher's attorney, Kyle Pulis, at Scott Michael Mishkin in Islandia, and Dickstein's attorney, John Jureller, at Klestadt Winters Jureller Southard & Stevens, did not return calls for comment.

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Fighting Over Fees

While law firms have a mixed record of beating back legal malpractice and discrimination cases, they often are successful in obtaining judgments against ex-clients for unpaid legal fees on a quantum meruit basis. For instance, Kasowitz Benson Torres, which has a history of going to court to get such fees, sued Patriot National Inc. in late May in Manhattan Supreme Court, seeking $1.097 million in legal fees.

The company, which provided back-office functions to insurance companies, then filed suit against the firm in Florida state court, alleging it engaged in fraudulent billing, malpractice and other misconduct that cost the company millions of dollars. The former CEO of Patriot also sued Kasowitz as well as Simpson Thacher & Bartlett in Florida state court.

Despite the malpractice litigation in Florida, Kasowitz prevailed in its New York collection fee suit: it obtained a $1.185 million judgment against Patriot National in December 2017, after a ruling from Manhattan Supreme Court Justice Gerald Lebovits.

Yet any immediate opportunity to collect the judgment is in doubt. Patriot National filed for Chapter 11 bankruptcy papers in late January in Delaware.

Kathryn Coleman, a partner at Hughes Hubbard & Reed representing Patriot in its bankruptcy, did not return a call for comment, neither did Kasowitz's attorney in the collection matter, partner Joshua Siegel.