This year hasn’t been a fabulous one for Blank Rome. They’ve had to cut both salaries and headcount. The firm also pushed back start dates for first-year associates, until “at least” January 2010, and the 2009 summer program was a brief six weeks.
This latest news doesn’t improve matters. From the Legal Intelligencer, via Am Law Daily (and also a commenter):
Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.
The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28. Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.
Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.
Of course they don’t admit liability. Still, $20 million is a lot of dough. Who’s on the hook for that?
Fortunately for the firm, they’re not paying out of pocket:
The $20 million settlement will be paid to the trustee by Blank Rome’s insurers 10 days after whichever of the following happens last: the execution of the agreement, the approval of the agreement or the receipt by Blank Rome insurers of payment instructions, according to the agreement.
Blank Rome’s insurance carriers can’t be happy campers. But that’s what insurance is for, right?
The settlement has a small silver lining for the firm:
As part of the settlement agreement, Blank Rome maintains its ability to collect on fees it was owed through its representation of ABFS. Those fees are now under the control of the bankruptcy proceedings. Through the settlement agreement, Blank Rome agreed to cut its claims to those fees by 40 percent and cut its deferred compensation portion of the fee claim by 40 percent, according to the agreement.
Since ABFS is in bankruptcy, this route might not be very promising — but it’s better than nothing.
Blank Rome Settles Malpractice Claim for $20 Million [Legal Intelligencer via Am Law Daily]