Ex-Client's Bankruptcy Trustee Seeks $25M from Former Powell Goldstein Lawyers
Reviving a malpractice claim against attorneys at the former Powell Goldstein that could potentially cost as much as $25 million to $30 million if it is successful, a federal district court judge decided last month that an ex-client of the firm had not had enough opportunity to present its side of the case to a bankruptcy judge.
The case is being pursued by a Chapter 11 bankruptcy trustee for the ex-client, Verilink Inc. Darryl Laddin of Arnall Golden Gregory contends in pleadings that Powell Goldstein bears responsibility for a disastrous acquisition of another company by the Alabama-based telecommunications parts manufacturer, explains the Daily Report in an article reprinted in New York Lawyer (reg. req.).
In addition to making mistakes in its representation of Verilink, Laddin alleges, Powell Goldstein also helped officers and directors conceal Verilink’s fiscal failings from shareholders of both companies and even attempted to conceal documents that demonstrate participation in civil wrongdoing by firm attorneys along with Verilink’s officers and directors, the legal publication reports.
The former Powell Goldstein lawyers defending the action are represented by Daniel Reinhardt of Troutman Sanders. He says the allegations against his clients are “completely without merit” and will be vigorously fought by the firm. He declined to comment more specifically to the Daily Report, or to say whether Bryan Cave, with which Powell Goldstein merged earlier this year, could be potentially liable for pre-merger conduct by PoGo attorneys.
In addition to malpractice, Laddin has asserted civil conspiracy, breach of fiduciary duty and aiding and abetting claims, and is seeking $25 million to $30 million in compensatory damages plus disgorgement of almost $900,000 in legal fees and costs that the firm billed Verilink in the Chapter 11 case.
The trustee is represented by Page Perry and Dietrick Evans Scholz & Williams.
Related earlier coverage:
ABAJournal.com: “K&L Gates Missed ‘Massive Fraud’; Its Probe of Co. a ‘Stunning Failure,’ Suit Says”
ABAJournal.com: “Client Sues Bryan Cave for $10M, Says Prenup Silent on Capital Gains Tax”
ABAJournal.com: “Powell Goldstein to Merge with Bryan Cave and Give up its Name”
