Law Firms

Proskauer settles suit claiming 1 contract clause caused client's $636M loss

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Susman Godfrey partner Jacob Buchdahl has said a settlement has “completely and finally resolved all disputes” between ex-client Robert Adelman and Proskauer Rose. Image from Shutterstock.

Proskauer Rose has settled a lawsuit claiming that a clause that the law firm added to a contract in a “botched cut-and-paste” caused a client’s losses of around $636 million.

Proskauer Rose and the ex-client, Robert Adelman, have agreed to dismiss the malpractice case, according to a document filed Sept. 22 in Massachusetts state court.

Reuters and Bloomberg Law have coverage.

Susman Godfrey partner Jacob Buchdahl told Reuters in an email that a settlement has “completely and finally resolved all disputes” between Adelman and Proskauer Rose. Buchdahl represented Adelman.

The settlement was reached following a judge’s refusal to toss the case in May.

Adelman was a minority owner in a hedge fund and was supposed to share in the profits. He alleges that Proskauer Rose added a clause to a partnership agreement that allowed the newly installed majority owner to redeem Adelman’s interest in connection with “strategic transactions”—financing, acquisitions or asset sales that the majority owner could undertake without Adelman’s consent and without appraisal rights.

The majority owner engaged in such a transaction and redeemed Adelman’s minority interest.

As evidence of negligence, Adelman pointed to a document produced in discovery in which a Proskauer Rose partner circled the provision at issue and wrote the F-word in the margin with two underlines.

Proskauer Rose had alleged that the majority owner violated his fiduciary duty to Adelman and breached other contractual provisions, which “severs the chain of causation” between the alleged negligence and Adelman’s injury.

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