Posted Jul 18, 2012 03:45 pm CDT
A former chief executive officer of SecureNet has sued Duane Morris for malpractice, contending that a senior partner of the over 700-attorney law firm failed to disclose a conflict when representing him in his 2010 sale of a controlling interest in the credit card processing company.
Plaintiff Marc Potash says the partner, who is identified in the Maryland state-court suit as George J. Nemphos, didn’t disclose a “longstanding relationship” with the purchaser of a 52-percent share in SecureNet, the Sterling Partners venture capital firm, reports Reuters.
The suit, which was filed Monday in Baltimore circuit court, contends that Nemphos, when advising Potash about the sale, didn’t explain to him that he could lose his job as CEO, with or without cause, after the September 2010 transaction. After the deal closed, Potash was indeed stripped of the position and eventually fired.
Meanwhile, because a portion of the $56 million that Potash was to be paid by Sterling Partners for the SecureNet was tied to his future compensation as CEO, Sterling Partners took the position that Potash wasn’t entitled to the rest of the payments after he was removed as CEO. The Sterling senior partner who told Potash that he no longer had a right to the payments was reading from a Nemphos memo, the suit contends.
“Hired to do a major transaction, somewhere along the way the guy forgot to tell the seller that he was working with the buyer,” attorney Andrew Hall, who represents Potash, told Reuters.
Potash is seeking $92 million in compensatory damages and $100 million in punitive damages.
Nemphos did not immediately respond to a comment request from Reuters, but a spokesman for the law firm said it rejects the allegations of the complaint and expects court vindication.
The Sterling partner who allegedly read to Potash from a Nemphos memo declined comment.