Legal Malpractice

Bankruptcy Legal Malpractice in McDermott Case

By (Andrew Lavoott Bluestone)

Bankruptcy legal malpractice is again in the news.  As the economy cycles through bankruptcy issues, attorneys advising large corporations become targets for the trustees as well as the creditors.  Latest in the news is the Catholic Medical Center and McDermott, Will & Emery.

From Law.Com: "A bankruptcy trustee for Saint Vincent's Catholic Medical Centers of New York has sued McDermott, Will & Emery for legal malpractice, charging that partners at the Chicago-based law firm "put their personal relationships and selfish economic concerns above the interests of the charitable institution they were entrusted to protect."

The 75-page complaint, filed Monday in Manhattan Supreme Court by trustee Richard Gray, alleges McDermott Will put off a much-needed Chapter 11 filing to facilitate self-dealing by two other members of the hospital group's restructuring team. As a result of the delay, the trustee claims, Saint Vincent's incurred greater operating losses, paid more professional fees and took longer to emerge from bankruptcy after it finally did file.

The suit is requesting $1.2 billion in damages for legal malpractice, fraud and breach of fiduciary duty, among other claims, as well as disgorgement of $4.5 million in previously paid legal fees. In addition to the firm itself, partners William P. Smith, Stephen B. Selbst and David D. Cleary are individually named as defendants. "

Full post as published by New York Attorney Malpractice Blog on April 17, 2008 (boomark / email).