Appellate Law & Practice of California reports this legal malpractice case:

"CA1: Legal malpractice claims by 3d-party based on defrauded ponzi scheme fail
International Strategies v. Greenberg Traurig, 06-1790. This case involves a lot of people and firms that I really don’t want to smear. Not because I don’t like smearing, but because I think that most of the defendants here were trying to represent their clients in a good way, but their clients did a lot of bad things. If any of the people involve want to chime in, send me an email and I will prominently post your version of events or the law, or correct anything I got wrong (based on the published opinion.)

The underlying transactions are quite complex. But they ended in their ex-client suing their lawyers. ISG “invested” money with Corporation of the BankHouse ("COB"), who seemed to promise the impossible, and, of course, was a ponzi scheme. COB claimed that it was the victim of another scheme, and its CEO declared that "I have chosen to move to prepare litigation against the parties utilizing the law firm of Greenberg & Traurig [sic]. I have utilized the law firm of Seamin Cherin & Melott [sic] for the criminal assistance against the parties." Specifically, A. John Pappalardo began representing COB, and somehow COB convinced ISG to not independently sue the people that “defrauded” COB, because they would take care of it. Therefore, “ ISG alleges that these representations, and other events that we detail below, led it to believe that Pappalardo was ISG’s legal representative and that an attorney-client relationship had been formed.”

Pappalardo kept telling everyone that he would recover the funds, but he never sued anyone. Eventually, “ISG finally retained outside counsel on November 7, 2001. Through counsel, ISG filed suit against COB and Pomeroy in March 2002. ISG obtained a $10 million judgment in that suit, but the award has proven uncollectible.” Then, ISG sued everyone.

The Story

"Four years of lawsuits and federal investigations had worn down the leaders of Jenkens & Gilchrist. Many of their biggest earners were leaving the law firm and taking their prized clients with them. And it had become hard to attract talent, with no end in sight for the firm’s problems.

Also Online
04/01/07: IRS cuts, growing wealth gave rise to questionable tax shelters

04/01/07: Jenkens’ collapse not an unusual case

03/30/07: Jenkens & Gilchrist closing after admitting role in tax fraud

03/23/07: Jenkens loses most of its Chicago staff

02/28/07: Jenkens & Gilchrist shrinking in wake of tax scandal

Graphic: Rise and fall (.pdf)
It was time to execute the last-ditch plan: dissolve the firm. Jenkens & Gilchrist couldn’t be saved. So the firm’s leaders had to try and save the people. "There is a timeline beyond which even the most loyal people say no," said former chairman Tom Cantrill. "It had just taken so long."

Founded 56 years ago and once the largest law firm in Dallas, Jenkens is closing its doors for good this weekend. What drove it to extinction was a combination of issues, including misjudgments tied to rapid growth and an aggressive drive to bring in business.

But above all, a risky tax shelter practice out of its Chicago office brought about the firm’s end. The tax scheme, which Jenkens long defended but wound up admitting was fraudulent, left a cloud that would not disperse, according to interviews with nearly three dozen people inside and outside the firm.

Anthony Lin in the NYLJ reports:

"Federal prosecutors in Manhattan have entered into a nonprosecution agreement with Dallas law firm Jenkens & Gilchrist over its past involvement in illegal tax shelters, a scandal that has already fatally crippled the once-thriving firm.

Between 1998 and 2003, the firm’s Chicago-based tax shelter practice provided hundreds of legal opinion letters in support of tax shelters the Internal Revenue Service subsequently deemed illegal. The criminal probe of the firm by the Southern District of New York U.S. Attorney’s Office followed several civil suits by tax shelter investors whose claims the firm has agreed to settle for $85 million.

As part of the agreement, Jenkens & Gilchrist will pay a $76 million civil penalty to the IRS, which estimates 1,400 taxpayers relied on the opinions. The firm also has pledged continued cooperation with an investigation of the firm or individual lawyers involved in the tax shelter practice "

Read thisarticle, if only for the photograph of Sgt. Schultz, and the "I knew nothing" tag.

"The case of Consolidated Sports Media Group v. Godwin Gruber, which is scheduled to go to trial next month, reads at times like a John Grisham novel, complete with allegations of malpractice, the aforementioned pump-and-dump stock scams, the destruction of documents, forgery, securities fraud, unauthorized “blast faxes,” insider trading, NASCAR lawsuits, breaches of fiduciary duty, conflicts of interest, perjury and, of course, fraudulent billing.

In its original petition, CSMG, distributor of sports instructional videos with Priest Holmes and Mia Hamm and a Racetrack Girls Go Nutz series similar to the popular Girls Gone Wild franchise, seeks unspecified damages, exemplary damages and disgorgement of profits. Most of the alleged improprieties center on Godwin Gruber attorney Phil Offill, though Jordan is implicated by his association, position and, ultimately, inaction.

Jordan spent the majority of his three-hour-and-33-minute deposition shrugging, in short: I dunno. The good news: Jordan is not a yes man. The bad news: He’s a No-It-All.

Over the course of his extremely hazy 167-page deposition, Jordan managed to utter “I don’t know” 86 times, “I don’t remember” 20 times, “I don’t think so” 17 times, “I don’t recall” 16 times, “I’m not sure” 11 times, “I guess” 11 more times, “Not to my knowledge” 11 more times, “I’m not aware” seven times, “I have no idea” three times, “I don’t have a real understanding” three more times, “I forgot” twice, “I’m not familiar” twice, “I don’t have any information” two more times and, once apiece, “I don’t believe so,” “I can’t remember,” “I knew nothing,” “I don’t have a specific recollection,” “I honestly don’t remember” and “I honestly don’t know.” It’s better than Hogan’s Heroes.

In some cases, Jordan’s selective memory would be understandable, even acceptable. After all, when you tell someone you don’t know something, they can’t hold anything against you. But he served as the managing partner of the firm during the alleged wrongful activities by Offill, and he was also executive committee liaison during the investigation into the incident at the heart of the lawsuit.

Jordan has been a trial lawyer in Dallas since 1964, and in ’95 he lost the mayoral election to Ron Kirk. Becoming managing partner for Godwin Gruber in the fall of ’04, he reduced his role and responsibility with the firm in December ’05 in order to accommodate his rekindled desire to seek political office. "

Hinshaw reports that there is no insurance coverage for this attorney-attorney law suit over referral fees. "The Louisiana Supreme Court held that a lawyer’s claims made policy did not require the insurer to defend an insured lawyer who was sued by another lawyer for allegedly fraudulently inducing him to accept a client whose claim was time-barred"

Here is a report of the case in which Reed Smith is accused of conflict of interest and legal malpractice.

"In Axcan Scandipharm v. Reed Smith, Axcan, a pharmaceutical company, claimed that the firm engaged in an impermissible conflict that led to disclosure of confidential information by the firm to a second client.

According to an opinion written by Philadelphia’s Commerce Case Management Program Judge Howland W. Abramson, Reed Smith represented Axcan in a patent litigation case brought against the company in federal court. Axcan was indemnified by American Home Products Corp. (AHP) — which is now known as Wyeth — and/or Eurand International, and AHP/Eurand paid Reed Smith for its representation of Axcan under that indemnification agreement, Abramson said. "

Long a question in legal fee cases is whether the cost of electronic legal research [monthly, or per case] is part of the general overhead of a lawfirm, or a cost which may be awarded to the successful attorney?

Here is a case: Insinga v. Cooperative Centrale Raiffeisen Boerenleenbank B.A., 03 Civ. 7775
Decided: March 12, 2007  District Judge Richard J. Holwell  U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK  [case viewable by subscription] which holds that electronic legal research costs are recoverable in the 2d Circuit.

Here is a quote from the case.  Note that the court also awards fees for bringing the motion for fees.

"With respect to costs, although plaintiff has outlined the types of costs for which he requests reimbursement, he has not yet submitted figures to the Court. Defendants have reserved their right to respond to plaintiff’s specific requests after he submits a bill to the Court. In the meantime, defendants object to one category of plaintiff’s request: reimbursement for electronic legal research. The Second Circuit has made clear, though, that "charges for such online research may properly be included in a fee award." Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 369 F.3d 91, 98 (2d Cir. 2004); see also James, 2005 U.S. Dist. LEXIS 5401, at *67 ("Legal research costs are recoverable in an application for attorneys’ fees."); Raniola v. Bratton, 2003 U.S. Dist. LEXIS 7199 (S.D.N.Y. 2003) (awarding cost of Westlaw research because, "absent the use of computer research, the awarded attorney’s fees would probably be larger" (internal citation omitted)).

The Court therefore directs plaintiff to submit a bill detailing the costs for which it seeks reimbursement, including electronic legal research, within thirty days of this Opinion. The Court also grants plaintiff leave at that time to submit a supplemental motion for the legal services rendered after the date this motion was first served, which, among other things, will presumably include records for time spent defending this motion and preparing plaintiff’s opposition to defendant’s unsuccessful motion for judgment as a matter of law. See also Weyant v. Okst, 198 F.3d 311, 314 (2d Cir. 1999) (permitting compensation for time spent after the initial fee application, including time spent in preparing and defending an application for fees). "

When we search the web for news and articles about legal malpractice, the term often pops up as a sort of generic "wrong" when it neen not really apply. This publicity release seems to be one of those instances. 

"High-profile United States Attorney Patrick Fitzgerald’s office is defending three employees of the Internal Revenue Service (IRS) and U.S. Attorney Lynne Murphy for their part in a purported $9 million tax fraud. They have been sued in the Northern District of Illinois for allegedly fabricating and falsifying IRS tax records.

Henry has sued the United States Department of Justice, the IRS and all individuals involved, for fabricating and falsifying this deficiency notice and for ignoring the Supreme Court rulings. Based on the evidence that the IRS claims it has in its possession Goldman Sachs, Cisco Systems and Henry Paulsen along with the IRS and the U.S. Government withheld records and evidence in the Delaware bankruptcy filing of American Metrocomm Corporation. Henry is claiming civil damages for legal malpractice, bankruptcy fraud and damages against the government and its individual employees for creating and falsifying government tax records and for withholding documents from the bankruptcy court. "

However, Ms. Murphy maintains that a U.S. attorney can commit fraud and ignore Supreme Court rulings while working for the U.S. Government, because the U.S. Government and its employees are immune to lawsuits under so-called “sovereign immunity.” In the meantime, Ms. Murphy continues to work on tax-related cases.

the New York Post is rarely a cite for us.  Here is a legal malpractice story from the Post about the subway hero and legal malpractice.  It can creep into almost any story.

"The Subway Superman who risked his life to save a fellow straphanger says he was taken for a ride and then thrown under the bus by a smooth-talking lawyer and her business partner"[The lawyers’] conduct in seeking to extract money from schoolchildren . . . is causing damage to his reputation and portraying him in a false light as a man of greed," the suit says.

His legal-malpractice suit seeks unspecified "damages for injury to plaintiff’s good name and reputation" from the pair’s conduct "in seeking to profit from his name."

Kleiman said her deal with Autrey was "very fair" – and she was just doing what Autrey and his family had asked her to do. "It’s very cut and dry," Kleiman said. "