Legal Ethics
Media Company Blames Paul Weiss for Bankruptcy, Sues for $140M
Posted Jun 22, 2009, 04:09 am CST
By Molly McDonough
The same day MIG Inc., a media company in North Carolina, filed for bankruptcy, it filed a $140 million malpractice claim against its former outside counsel.
MIG claims that Paul Weiss Rifkind Wharton & Garrison made a costly error on an offering document in the 1990s, a mistake that cost the company $136 million years later, the American Lawyer reports.
Firm chairman, Brad Karp, tells the legal magazine that the claim is "stale and frivolous," and that his firm is looking forward to "a swift and favorable resolution."
MIG retained Paul Weiss in the 1990s as its lead corporate counsel and in 1997 relied on the firm to draw up documents when it was preparing to issue preferred stock. Citing the lawsuit, American Lawyer reports that MIG claims Paul Weiss erred by writing the documents in a way that a preferred stock shareholder, in some cases, could demand a cash payment equal to accrued dividends rather than to common shares.
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