Posted Aug 10, 2009 05:14 pm CDT
Without admitting liability, Blank Rome has agreed to settle for $20 million a malpractice claim brought by a former client’s trustee in bankruptcy.
Trustee George Miller, who also sued the company’s former officers and directors, was reportedly seeking more than $700 million in compensatory damages from the law firm and other defendants in related litigation, plus punitive damages and attorney fees, reports the Legal Intelligencer.
The Philadelphia Common Pleas Court case alleges that American Business Financial Services engaged in financial manipulations that misled investors and the U.S. Securities and Commission about the subprime mortgage lender’s financial viability with the “active participation and substantial assistance of Blank Rome.” Blank Rome represented ABFS in a number of matters between 1995 and 2005.
In deciding to settle, Blank Rome considered the “protracted, expensive and distracting” nature of the ongoing litigation, as well as “the uncertainty and risks inherent in any litigation, especially in complex cases,” the settlement agreement states.
A lawyer for the law firm notes that it is common for law firms and accountants to be sued along with officers and directors when a corporation has problems, and says that the possibility of joint and several liability made the more than $700 million being sought by Miller a big number that would concern any defendant.
Officers and directors of ABFS reportedly settled both Miller’s suit and another one brought by a group of investors for a little over $30 million. Both that settlement and the law firm settlement will be paid by insurance, the Legal Intelligencer reports.
Hat tip: Am Law Daily.