Legal Malpractice

Supervision of Partners and Legal Malpractice

By (Andrew Lavoott Bluestone)

This holiday season has been one long story about bad economic news, swindles, bad investments, and hedge funds.  One meme of this blog has been that legal malpractice litigation is ubiquitous, and intertwined with all aspects of our world.  This is simply a reflection of the integration of law and lawyers in all aspects of our social and economic lives.

Here is another example.  An attorney is accused of pocketing $ 18 million.  The Kansas City Star reports:

"The trustee of bankrupt Ethanex Energy Inc. has sued a major multinational law firm over an alleged multimillion-dollar fraud scheme by a former partner that contributed to Ethanex’s demise.

The trustee, Eric Rajala, is seeking unspecified damages from 900-lawyer McGuireWoods, which is based in Richmond, Va., and has 17 offices worldwide. Rajala’s complaint says that McGuireWoods “was aware of, supported and profited” from the activities of the former partner, Louis W. Zehil.

"[Louis] Zehil, of Ponte Vedra Beach, Fla., was forced out of McGuireWoods in February 2007 after his alleged scheme was uncovered. Shortly afterward, federal prosecutors in New York brought criminal fraud charges against him, and the Securities and Exchange Commission brought parallel civil charges."

The criminal case is pending, with Zehil scheduled to make his next appearance in court in late April. The SEC case is also pending, awaiting resolution of the criminal case.

The SEC charged that Zehil made more than $17 million in illegal profits by selling the unregistered shares of seven energy companies, including those of Ethanex and Kansas City-based Alternative Energy Sources Inc.

“We believe that McGuireWoods is responsible for Zehil’s conduct,” said Kansas City attorney John M. Edgar, who filed the complaint on Rajala’s behalf.

William Allcott, a partner with McGuireWoods, said the firm did not believe the suit had merit."

Full post as published by New York Attorney Malpractice Blog on December 24, 2008 (boomark / email).