Legal Malpractice

Blank Rome Settles $ 20 Million Bankruptcy Legal Malpractice Lawsuit

By (Andrew Lavoott Bluestone)

From Gina Passarella at  the Legal Intelligencer today:  Blank Rome settles a huge legal malpractice law suit brought by a bankrutpcy trustee.

"Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.

The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28.

Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.

Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.

"Blank Rome has expressly denied and continues to deny all allegations of any wrongdoing or liability against it whatsoever arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged by the Trustee," the settlement agreement reads.

"Nonetheless, Blank Rome has concluded that further conduct of the Blank Rome Litigation would be protracted, expensive and distracting and that it is desirable that the Blank Rome Litigation be settled. Blank Rome has also taken into account the uncertainty and risks inherent in any litigation, especially in complex cases such as the Blank Rome Litigation."

Blank Rome represented ABFS in a variety of legal matters prior to the company's January 2005 Chapter 11 bankruptcy filing and acted as debtors' counsel in the Chapter 11 proceeding. The bankruptcy was converted to a Chapter 7 in May 2005 and George L. Miller was named trustee of the ABFS estate, according to the agreement.

Miller filed suit — Miller v. Santilli — in Philadelphia Common Pleas Court against former officers and directors of ABFS in July 2006 as well as a number of financial institutions. Those financial institutions joined accounting firm BDO Seidman. [Read more in The Legal this week about BDO Seidman's defeat of a class action motion in the related federal court case.] "

Full post as published by New York Attorney Malpractice Blog on August 11, 2009 (boomark / email).