The Redskins! 6 Flags! Cadwalader, Wickersham & Taft ! Legal malpractice cases do not get much higher visibility than this case. Nate Raymond of the The New York Law Journal reports that "Redskins owner Daniel Snyder has sued Cadwalader, Wickersham & Taft for $13 million over advice it gave on an investment bank’s fee during a proxy fight at Six Flags Inc. in 2005." The legal malpractice claim, filed in Supreme Court, New York County "followed an October appellate ruling that the company owed UBS A.G. $8 million for its work on the Six Flags matter. While Red Zone said its lawyers at Cadwalader had claimed a contract they secured would limit the fee to $2 million, it did not."
"According to the malpractice complaint in Red Zone, LLC v. Cadwalader, Wickerham & Taft, 650318/2011, Red Zone hired Cadwalader in mid-2004 to advise it on its investment in and possible acquisition of Six Flags. Mr. Block, one of the top rainmakers at the New York firm and a veteran of mergers and acquisitions, was the partner in charge of the engagement, the complaint said.
At the start of 2005, Red Zone held 8.76 percent of the voting stock in the company with shares it purchased the year before for $34.5 million. Red Zone believed Six Flags was underperforming and wanted to see about raising money to take it over.
Red Zone brought in UBS to advise on the investment, with Cadwalader negotiating the engagement agreement. The contract called for UBS to receive a $10 million fee if the acquisition succeeded.
But Six Flags had an agreement with its bondholders that all of its $2.6 billion in debt would need to be paid immediately if someone acquired the company or more than 34.9 percent of its shares. UBS could not raise enough money to cover that payout.
Red Zone opted instead for a proxy contest. Before it moved, it told Mr. Block that it was unwilling to pay the $10 million fee to UBS if Red Zone could not secure a majority of the voting stock.
Instead, Red Zone told Mr. Block to have Cadwalader negotiate a new deal with UBS limiting the fee to no more than $2 million, the complaint said."