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Manhattan Federal Court Judge Refuses to Dismiss $10M Legal Malpractice Suit

A law firm's broad retainer agreement has come back to haunt them. A seller of a business purchased for $7.5 million ($5 million of which was collateralized by the buyer's restricted common stock) hired Seward & Kissel as "lead transaction counsel". As per a letter of intent concerning the sale, each party was allowed but not required, to conduct a due diligence exam of the other. There was no discussion between the seller and its law firm as to who should or would undertake the due diligence exam of the buyer. It was a big mistake not to carve out any duty to perform the due diligence exam from the retainer agreement if that was the understanding between the attorney's and client.

Days before the closing the buyer reported it was $1.5 million short on the cash requirement resulting in a closing with only $1 million of the $7.5 million sale in cash. Shortly after the closing the buyer's principal was arrested for securities fraud, the buyer was served with a securities fraud class action and was thereafter delisted from public trading. The buyer's collateral was worthless. The law firm claims that it was not retained to perform due diligence and filed a motion to dismiss. Last week, the Federal Court Judge in Manhattan denied the law firm's motion and stated it: "may have had a duty to conduct due diligence." Based on the client's claim that it relied on the law firm in all respect's to the sale, this case may be decided by a jury. 

Ronald C. Burke, Esq

Trial Attorney with 30+ Years of Experience Attorney Ronald C. Burke, Esq. has more than 30 years of experience and has focused his career on representing clients in cases involving personal injury, medical malpractice and legal malpractice. He is a seasoned trial lawyer and has won many seven-figure settlements and verdicts for his clients over the years, including many case victories listed among the largest in the history of the New York State. He has been featured in the news and is a regular lecturer for the New York County Lawyers Association, as well as having lectured before the New York State Bar Association. Ron is also an attorney with Kelner & Kelner, a New York personal injury law firm. Awards and Accolades Mr. Burke's awards and accolades are many. Among them, he has been included in New York Super Lawyers® each year since 2010, and he has received the highest-possible AV® Rating from Martindale-Hubbell®. Verdict Search, a part of the New York Law Journal, frequently recognizes his notable successes after winning some of the highest settlements and verdicts in past years. He was also featured in their list of the "Top New York Verdicts of 2011" and "Top New York Settlements of 2012." He is a member of the New York State Bar Association and is licensed to practice law in the U.S. District Court for the Southern and Eastern Districts of New York, as well as before the United States Supreme Court. When Attorney Burke is not handling legal malpractice cases, he is highly involved in the local community. He is a member of the Village of Rockville Centre Volunteer Fire Department, has served on the local school board and as Chairman of the local Zoning Board. Learn more about Attorney Burke and how he can skillfully handle your malpractice case by contacting the Law Offices of Ronald C. Burke, Esq. right away to schedule your complimentary case evaluation. Our firm is here to help! Contact a New York Legal Malpractice Attorney Our firm provides each client's case with thorough preparation and aggressive representation, ensuring that you win the best possible results for your case whether it is settled or goes to trial. As a seasoned trial lawyer, Mr. Burke can provide the strong and relentless representation you need to establish negligence in a legal malpractice case and to recover any damages you may have suffered. Our firm can recover compensation for pre-trial and trial malpractice, violations of fee arrangements, loss of income, pain and suffering, and much more. Contact us today!

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