An insurance company has accused law firm D’Amato & Lynch of depositing a client’s $1 million settlement check into its operating account and refusing to pay it back, the latest sign of trouble at the Manhattan law firm known for its work in the insurance industry.

D’Amato & Lynch, which was sued by its former landlord earlier this year amid a marked decline in its head count, now faces a lawsuit by an insurance company. The latter suit, filed Sept. 20 in Manhattan Supreme Court, alleges the law firm placed a $1 million check made out to its trust account into its operating account, instead of using it to fund a client’s settlement. The act took place amid “financial difficulties” for the law firm, the suit alleges.

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