Justice March Friedman ruled last week that Wilson Elser must disgorge $ 3 Million + fees based upon a  breach of fiduciary duty, and faces $100 in legal malpractice damages as the case progresses.  The story goes on:

"Insurance defense giant Wilson, Elser, Moskowitz, Edelman & Dicker has been ordered to disgorge millions of dollars in legal fees paid by an insurance client who accused the firm of helping another client set up a competing business.

In a March 29 decision, Manhattan Supreme Court Justice Marcy S. Friedman granted summary judgment to trustee liability insurer Ulico Casualty Co. on its claim that former counsel Wilson Elser breached its fiduciary duty by participating in a scheme to transfer Ulico policyholders to another insurer.

The judge ruled that there was "no triable issue of fact" about Wilson Elser’s breach of its duty to Ulico and said the law firm had failed "to perceive its ethical obligation to Ulico."

"While Wilson Elser had the right to represent competitors … it did not have the right to represent competitors in setting up a competing business to which it was contemplated that Ulico’s accounts would be transferred," Friedman wrote in Ulico Casualty Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 602229/99.

"Put another way … Wilson Elser did not have the right to prefer one client over another when the clients’ interests diverged," the judge continued.

She ordered Wilson Elser to forfeit all legal fees it received from Ulico from Jan. 1, 1996, to June 30, 1999. Ulico has claimed it paid the law firm more than $3.4 million in fees during that time. The judge also permitted Ulico to go forward with other claims for legal malpractice and tortious interference with contract. Ulico has requested total damages from Wilson Elser of more than $100 million. "