Dewey & LeBoeuf Sued for $3B on Behalf of Failed Insurer’s Policyholders
Dewey & LeBoeuf is facing a $3 billion suit that claims the law firm is liable for faulty legal advice given to General American Life Insurance when it was sold to MetLife—another insurer that soon became a law firm client.
The suit (PDF posted by the Am Law Daily) targets work by LeBoeuf, Lamb, Leiby & MacRae, a law firm that merged with Dewey Ballantine to become Dewey & LeBoeuf. The action claims LeBoeuf recommended the sale for the “substantially discounted price of $1.2 billion” and favored MetLife during the bidding process, the Kansas City Star reports. “Shortly after this sale, if not even prior to the closing of the sale,” LeBoeuf began advising MetLife, the suit says.
General American was sold after it experienced liquidity problems and a credit rating downgrade. The suit claims the sale enabled MetLife to raise more money in its own initial public offering, benefiting the law firm and its client Goldman Sachs in the form of higher fees, St. Louis Today reports.
Another law firm client, Morgan Stanley, was part owner of a company that owned investment products of the type that led to the cash problems for General American, the suit says.
Other General American suits have resulted in settlements of $95 million by Morgan Stanley and $100.5 million by Goldman Sachs, according to the Kansas City Star.
The new suit, which also targets former General American CEO Richard Liddy, was filed by the Missouri Department of Insurance and the liquidator of General American. The plaintiffs are represented by Armstrong Teasdale of St. Louis and Shaffer Lombardo Shurin of Kansas City, the American Lawyer reports.
The firm has released this statement: “Dewey & LeBoeuf categorically rejects the unfounded allegations in the complaint (which was given to the press before service on Dewey), involving its representation of General American in corporate matters some 10 years ago. The complaint makes profoundly erroneous misstatements of fact and is little more than a misguided attempt by a liquidator to attract media attention. Dewey & LeBoeuf acted at all times in accordance with the highest professional standards and intends vigorously to defend these baseless and irresponsible claims.”
