Posted Aug 03, 2010 11:11 pm CDT
An investor in Tyco International Ltd. has turned the tables on Grant & Eisenhofer, contending in a malpractice lawsuit seeking class action status that the plaintiffs securities law firm concealed a fee agreement with the lead plaintiff in an earlier case and took an excessive payout from its own clients.
The suit, which was filed today in federal court in Wilmington, Del., seeks $215 million in damages plus attorney fees. It attempts to represent the interests of some 300,000 Tyco shareholders that Grant & Eisenhofer formerly represented in a class action against Tyco, according to Bloomberg News and Forbes.
The magazine provides a copy of the complaint.
Specifically, the action by investor Richard Gielata alleges that the law firm concealed an agreement in which it promised to accept a fee of no more than $210 million in the Tyco case. But when the Tyco case settled in 2007 the firm “stole hundreds of millions of dollars from their clients” by accepting a fee award of nearly $500 million, the suit contends.
The firm’s two name partners didn’t immediately respond to requests for comment by Bloomberg, which notes that only Eisenofer is named as a defendant in the suit, along with the firm itself.
However, Forbes says the firm promises to “vigorously and vehemently deny” the allegations in the complaint.
Gielata is represented in the case by a relative, Delaware lawyer Joseph Gielata. And Joseph Gielata, the Forbes article recounts, himself formerly worked for Grant & Eisenhofer between 2002 and 2004. He declines to say how he got hold of the alleged secret fee agreement in the Tyco case.
A subsequent Am Law Daily article provides additional details about the case.
Updated on Aug. 5 to link to subsequent Am Law Daily article.