Blank Rome’s Massive Malpractice Settlement
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]
(32) Comments
Comments
100th!
well done 1.
-2
This sort of thing would never happen at Clifford Chance.
1 - Wrong post, doofus.
Do you work at Blank Rome?
Looks like DFG picked the wrong drone to succeed him. High school students should not be managing large law firms (even though guys in my high school did it all the time and it was no big deal).
4-YOU'RE the doofus.
1
Yikes! Tough year to practice law in Filthadelphia.
PE would never settle a malpractice case. He is a Rambo litigator.
Excuse me, but can anyone tell me if this would happen in Texas?
Anyone know who Blank Rome's insurer is? Please, oh please tell me it's AIG.
who cares - i made law review
Good for you, 11. In just 5 or 6 short years of penury and loan default, you might get a job. Yahoo!
11: who cares - you're a douche
crappy firm, crappy result. Next thread please.
12/13 -
there is no need to be jealous of my superior intellect and writing skills
- 11
ABFS Bankruptcy is a giant cluster-f***. Blank Rome is lucky to extract themselves for that small a price given what that company did and that BR signed off on much of it.
11 -
Not jealous, and you deserve better than what you're going to get. Just letting you know what to expect.
Cheers,
12
You could tell this was a Lat post because 1, it actually involved law firms and not just students, and 2, it's too intelligent a post to have been written by that stupid fat fuck.
yeah how about something on jeff randy, allan shuebert and jeff payne going from skadden to paul hastings (italics added)
There's no doubt that BR's insurance will cover the $20 mil.
Hey 3: We know that's really you, John Candy! But... aren't you dead?
This seems like a great deal for the firm-- the money doesn't come from their pocket, and the estate was so insolvent that a claim worth sixty cents probably isn't much different than a claim worth a dollar. How you spin this as bad news for BR is beyond me.
how about the trustee in the chapter 7 case? he pulls 3% of the settlement, and he's the biggest a-hole, douche bag around
This is why they call insurance, ... wait for it...
"In case shit happens."
C. Rock
What they cut in associate salaries could more than be offset by increased insurance premiums.
Hey, how many firms haven't cut headcount (whether officially or not), cut salaries, pushed associates back several months (some even more), or shortened their summer program. Sounds standard to this one. While BR may not be the best firm, it beats many other AmLaw 100 firms from what my contacts there say. Also, I gather the parties to the litigation wanted BR out, which probably says something. This, of course, does not mean BR did everything right.
Hey, how many firms haven't cut headcount (whether officially or not), cut salaries, pushed associates back several months (some even more), or shortened their summer program. Sounds standard to this one. While BR may not be the best firm, it beats many other AmLaw 100 firms from what my contacts there say. Also, I gather the parties to the litigation wanted BR out, which probably says something. This, of course, does not mean BR did everything right.
22, This is bad for BR because it's a complete admission that the deals they DESIGNED for ABFS (not just signed off on) were complete scams from Day One. They will never get any major banking clients again.
All those deferred fee agreements they did with the sleazeballs at ABFS made the deals more like joint ventures than arm's-length attorney-client relations.
Blank Rome will be the next Philly firm to disband. The over-under is one year.
Also.
28-- What part of "does not admit any liability or wrongdoing" is unclear?
-- 22.
I agree with 27. Both 28 and 29 are both too much. BR will survive, though what settlement does not include the language 29 quotes. BR apparently is doing just fine, and its NYC office is reasonably busy, even the corporate side.
I agree with 27. Both 28 and 29 are both too much. BR will survive, though what settlement does not include the language 29 quotes. BR apparently is doing just fine, and its NYC office is reasonably busy, even the corporate side.
Sorry I'm so late to this party. But rumor had it that all the partners with portables were already looking. DG-D, former chair, is undoubtedly working the phones to get clients over to his new shop. So, add market stress to what sounds like a "tender the policy limits and pray it gets over" malpractice case, and having lost for good your charismatic former head to another firm, and the partner defections, and you have yourself one seriously bad problem. They won't do a Wolf Block, but they will probably shrink by 50%.