Greenberg Traurig Faces Malpractice Questions in Heller Representation
Greenberg Traurig is reportedly facing malpractice questions over its representation of Heller Ehrman before that firm filed for bankrputcy.
At issue is Greenberg’s apparent failure to discover that Heller’s biggest lender had mistakenly terminated its security interest in the law firm before it dissolved, the Recorder reports.
Michael St. James, who represents 17 of Heller’s vested retirees, told the Recorder that lawyers for Heller’s landlord were the first to discover that Bank of America had failed to perfect its security interest because of a filing mistake that the lender later termed a clerical error. Lawyers who declined to be identified told the publication that a public records search that is routinely done after a law firm is retained in a potential bankruptcy should have turned up the problem.
Knowledge that the bank wasn’t a secured creditor would have given Heller more leverage in negotiations, the lawyers said.
A court filing (PDF posted by the Recorder) says Heller’s estate and the creditors’ committee will investigate whether legal services Greenberg provided to Heller before it filed for bankruptcy give rise to any claims. The filing says Greenberg “has strongly denied any liability arising from this.”
The document says Greenberg also represents Bank of America, and a separate law firm will represent Heller in any significant contested matters involving the lender. Greenberg was replaced as general counsel shortly before the bankruptcy filing and has mainly advised on overseas aspects of the bankruptcy, the Recorder story says.
The law firm provided a statement to the Recorder. “As previously disclosed in Greenberg Traurig’s retention papers, we were advised that the creditors’ committee believes there should be a review of the firm’s representation of Heller Ehrman prior to the bankruptcy,” the statement said. “We have not yet … been contacted … with respect to any investigation concerning the pre-bankruptcy services our firm provided. We are proud of the results we have achieved and the work we have done, and continue to do, for Heller Ehrman.”
