Legal Malpractice: Breach of Fiduciary Duty, Intentional Misrepresentation, Failure to Supervise

Parties: Plaintiff: Sports Merchandise Company; Defendant: Law Firm and Solo Attorney.
Jurisdiction: St. Louis City, Missouri
Special Damages: $15 Million
Settlement: Confidential

W. Morris Taylor (St. Louis) and Geoffrey Gitner (Washington, D.C.) for Plaintiff. Plaintiff, a defunct company, sued a law firm along with an individual/independent attorney for legal negligence. Plaintiff claimed Defendant had billed inappropriately and had committed legal malpractice by failing to protect the company in seeking venture capital financing. Plaintiff sought financing from an investment fund, now defunct, and Plaintiff alleged that the investment fund directed Plaintiff to Defendants to act as its lawyers in the financing transaction.

Plaintiff alleged that when the investment fund was ready to make a financing commitment to Plaintiff, Defendant demanded $25,000.00 and threatened to "kill the deal" if Plaintiff didn't' pay up. Plaintiff paid the $25,000.00 to Defendant. Plaintiff alleged that Defendant's demand was inappropriate because of the threat attached to "kill the deal" and because the records clearly showed Defendant had been charging on an hourly basis. Plaintiff further alleged that Defendant caused delays in obtaining the financing by his failure to act and further caused the company to flounder because of missing significant time lines in the apparel industry. Ultimately, Plaintiff received less money than Defendant had assured them of and the company was not able to meet its operational expenses.

Plaintiff also alleged that Defendant had made misrepresentations to his client in order to induce it to enter into a transaction with the investment fund. The Plaintiff further contended that Defendants were experienced in venture capital transactions and that Defendant either intentionally or negligently advised Plaintiff regarding its financial options and the structuring of the term sheet of the loan. After four days of trial, the case was settled on behalf of both Defendants in an amount that is confidential.

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