Company sues former law firm, says failure to detect issues before IPO cost millions
Posted Apr 16, 2013 12:35 PM CDT
By Martha Neil
A Florida-based company that sells health products over the Internet has sued its former law firm, contending that it lost millions because Shefsky & Froehlich failed to detect and inform its leaders, prior to going forward with an initial public offering, of corporate governance and capital structure issues.
In the suit, Vitacost.com Inc. says the Chicago-based law firm's failure to warn management of the problems prior to an IPO in 2009 cost the company $8 million in regulatory and shareholder actions and plaintiff's attorney fees, Crain's Chicago Business reports.
“Had Shefsky exercised reasonable care in the performance of its legal services for the company, it would have detected the governance and share-issuance defects, and advised the company to take the appropriate steps to correct those defects prior to the IPO,” the suit contends.
Shefsky, which represented Vitacost.com from 2002 to 2010, according to the suit, declined to comment when contacted by Crain's.
The suit was filed in federal court in West Palm Beach, Fla., earlier this month.