Legal Malpractice

The Difference Between Breach of Fiduciary Duty and Legal Malpractice

By (Andrew Lavoott Bluestone)

Gina Passarella of the Legal Intelligenser reports on a case from Philadelphia that illustrates the difference between Breach of Fiduciary Duty and Legal Malpractice involving  Cravath, Swaine & Moore.  and Airgas, inc.

From the article:  'U.S. District Court Judge Eduardo C. Robreno ruled that under Pennsylvania law, Airgas sufficiently showed that Cravath had a fiduciary duty to Airgas and sufficiently supported its four damages claims for attorney fees, cost of obtaining new financing counsel, inability to obtain new financing and disgorgement of fees paid to Cravath. Robreno also upheld, at this juncture, Airgas' claims for punitive damages.

Airgas sued Cravath after the firm decided to represent other longtime client Air Products & Chemicals in Air Products' takeover bid for Airgas. Robreno had said the Delaware Chancery Court, which was overseeing litigation between the two companies regarding the takeover bid, should be the one to decide whether Cravath can represent Air Products or if it is barred by a conflict of interest.

The Delaware court in March ruled Cravath could continue in its representation, finding Airgas didn't show how it would be harmed by Cravath's involvement. But Airgas' claims for damages based on an alleged breach of fiduciary duty have continued in the Eastern District of Pennsylvania before Robreno.

In his opinion Tuesday denying Cravath's motion for judgment on the pleadings, Robreno said the parties "hotly dispute" the nature and scope of Cravath's representation of Airgas and Air Products, when Cravath officially stopped representing Airgas and what Cravath learned while representing the company. He said he would treat the motion for judgment on the pleadings as a motion to dismiss.

"Airgas has pleaded its claim in detail and alleged facts that Cravath disregarded its duty of undivided loyalty to its client Airgas by accepting, without a prior disclosure, a representation of Air Products designed explicitly to help Air Products take over Airgas," Robreno wrote in a 23-page opinion in Airgas Inc. v. Cravath Swaine & Moore. "Airgas alleges that at the same time (August-October 2009) that Airgas had engaged Cravath and assumed its undivided loyalty, Cravath was covertly advising Air Products on how to end Airgas's independent corporate existence. This pleading sufficiently sets forth a claim for breach of fiduciary duty."

Full post as published by New York Attorney Malpractice Blog on August 05, 2010 (boomark / email).