Trustee Says Pillsbury Should Return $4M Fee

A bankruptcy trustee is recommending that Pillsbury Winthrop Shaw Pittman be forced to return about $4 million in fees to a former client because of an undisclosed conflict of interest.

Trustee Dennis Connolly also suggested that the San Jose bankruptcy court delay setting an amount so it could consider interest and even potential damages, the Recorder reports.

The law firm was kicked off the bankruptcy case of client SonicBlue because of allegations that it didn’t disclose a promise of indemnification it made to three hedge funds. A letter written to the funds investing in a $75 million bond issue promised they would be paid in full even if SonicBlue declared bankruptcy.