A legal malpractice case involving $2.5 million dollars in legal fees survived a motion to dismiss, and will continue. Brendon Pierson of the  The NYLJ reported yesterday  that Justice Gische of Supreme Court, New York County decided motions.

"Winston & Strawn must face a $2.5 million malpractice suit from former shareholders of pharmaceutical company Biosynexus for allegedly botching the 2005 sale of the company, a Manhattan judge has ruled.

In OrbiMed v. Winston & Strawn, 13708/10, Supreme Court Justice Judith J. Gische (See Profile) allowed to go forward two of three claims in the suit, which was filed by medical investment firm OrbiMed on behalf of all Biosynexus’ former shareholders. The shareholders claimed Winston & Strawn failed to disclose details of Biosynexus’ licensing agreements while the shareholders were negotiating the company’s sale to the hedge fund QVT Fund LP. As a result of that alleged failure, the shareholders claim they spent $2.5 million suing QVT in order to get paid in full for the $56 million sale.

Biosynexus was a private, closely held company with about 35 shareholders, including OrbiMed, which also held a seat on the company’s board of directors, according to Justice Gische’s decision. The company licensed one of its key products, an antibody called A110 used to prevent bacterial infection, from the Henry M. Jackson Foundation. Under the terms of that license, Biosynexus was allowed to sublicense the product to other companies as long as the sublicense included a provision that the sublicensee agree to all the terms of the original license. In 2002, Biosynexus sublicensed the product to Glaxo Group Ltd., but did not include that mandatory provision, according to Justice Gische.

Both the license with the Jackson Foundation and the sublicense were drafted by Winston & Strawn through its attorney Gerald Farano, who is now a partner at Jones Day and is not a party in the lawsuit. Mr. Farano was also a shareholder in Biosynexus"