Two Duane Morris partners resign after malpractice suit alleges their own LLC collected fees
Updated: Duane Morris corporate practice chief George Nemphos and corporate partner Jay Cohen have resigned after a malpractice suit claimed they told a client to pay fees to a company they created.
The $10 million suit by Angela Singleton, the inventor of a high heel shoe insert, alleges Nemphos and Cohen told her to stop paying monthly retainer fees of $6,500 to Duane Morris and to instead make payments to an LLC called Smeyne Ross, the New York Law Journal (sub. req.) reports. Smeyne and Ross are the maiden names of the lawyers’ spouses, the suit says. The Baltimore Sun and the Baltimore Business Journal also have stories.
Nemphos and Cohen helped launch a Baltimore office for Duane Morris in 2006 after they left DLA Piper, according to the Baltimore Business Journal. Nemphos was managing partner of the Baltimore office.
Singleton’s suit (PDF), filed on March 3 in Baltimore court, says she was directed to pay the retainer to Smeyne Ross in May 2010, then was advised in March 2011 to split the retainer between Smeyne Ross and Duane Morris.
The suit alleges that the lawyers advised Singleton to transfer her intellectual property rights to a company called Pique Founders Co., which would be jointly owned by Singleton and two investors in her company who were Duane Morris clients. Singleton claims she emphasized that she wanted control of major decisions by the company, but Cohen didn’t notify her about a revision to a draft operating agreement that ended a requirement of unanimous consent for major business decisions when convertible notes matured.
As a result of losing control of the company, the suit alleged, Singleton was effectively frozen out of Pique and the company “spiraled downward,” filing for bankruptcy in November 2014.
The suit also claims that Nemphos and Cohen obtained a 3 percent equity interest in Singleton’s company through Smeyne Ross without compensating Singleton.
Nemphos was also a defendant in a prior malpractice suit against Duane Morris that alleged he represented the seller of a controlling interest in a credit card processing company without disclosing his long-standing relationship with the purchaser. The suit was dismissed with prejudice in January, according to the Baltimore Business Journal.
Duane Morris has named Chicago partner Brian Kerwin as the new chair of its corporate practice and partner Robert Hopkins as the new leader of its Baltimore office. A law firm spokesperson did not comment on the lawsuit when contacted by the publications.
Update: The New York Law Journal reported in August 2015 that a Baltimore judge dismissed Singleton’s suit against the firm and the partners. A confidential settlement resolved the claims against all of the defendants, Singleton’s lawyer, Andrew Hall, told the newspaper. The lawyer for Duane Morris, William Murphy of at Zuckerman Spaeder, confirmed the case had been settled and dismissed, but told the New York Law Journal that a confidentiality agreement prevented him from releasing further details.
Updated on Aug. 9, 2018, to report that the case settled.