Biglaw, Legal Ethics, Screw-Ups

Another Client Controversy for Greenberg Traurig

There’s always something interesting going on over at Greenberg Traurig. Over the summer, we covered their capital call. Earlier in the year, we wrote extensively about the drama in Coquina Investments v. TD Bank, a case in which the firm got sanctioned. Last month, we mentioned in passing the firm’s quiet settling of claims brought by current and former NFL players alleging that the firm failed to warn them adequately about investing in an ill-fated Alabama casino project.

Today brings word of another client-related controversy over at Greenberg Traurig….

The story comes to us via the Palm Beach Post:

A former Greenberg Traurig lawyer, hired by West Palm Beach in 2010 to help the city decide whether to build a digital animation college downtown, issued a glowing nine-page report about the company being considered, Digital Domain, and its leader, John Textor.

But the lawyer, New York-based Steven C. Beer, did not disclose that Greenberg Traurig lawyers in Boca Raton had been suing Textor for years on behalf of an unhappy Textor investor.

Beer, an entertainment lawyer, wrote an analysis for the city that described Textor as imaginative, concept-driven and experienced within the worlds of corporate finance and banking. The city paid Greenberg Traurig $15,000 for Beer’s work.

So far, so good. But then there’s this:

Beer did not tell the city that pleadings signed by Greenberg Traurig’s Boca Raton lawyers, led by Marc Sinensky, were using other words to describe Textor, in lawsuits filed in 2004, 2007 and 2010.

In an Aug. 12, 2010, complaint — filed four days before Beer agreed to represent West Palm Beach — Boca Raton investor Jeffrey Kukes accused Textor of breach of fiduciary duty and fraud, according to the lawsuit filed in Palm Beach County Circuit Court.

Greenberg Traurig’s representation of Kukes and West Palm Beach has some legal experts wondering whether the firm did the right thing in taking on the city as a client back in 2010. This was when the city was trying to decide whether to pour millions of dollars in incentives, as well as deed over a prime piece of land, to Digital Domain Media Group for the creation of a film school collaboration with Florida State University.

Steven Beer, who is now a partner at Franklin Weinrib Rudell & Vassallo, did not respond to the Palm Beach Post’s requests for comment. But Greenberg Traurig did issue a statement:

We, of course, have a sophisticated conflict review system which was utilized in this matter, but commenting upon the details would require a prohibited breach of client confidentiality. However, let us be clear, there was no legal conflict. This was a very limited and brief engagement to produce a report summarizing the perception of the company in the entertainment industry, not a legal analysis nor adverse to any firm client.

But according to West Palm Beach’s contract with Greenberg Traurig, the firm was hired to provide legal advice and services “relating to media/entertainment matters for possible ‘tent site’ transaction.” It’s hardly surprising that one would go to a law firm for legal analysis.

And even if there was no actual conflict of interest, this doesn’t look great. The GT report could at least have included a disclosure or passing mention of the lawsuit by Jeffrey Kukes against John Textor, since the litigation by that point was publicly filed (as opposed to something merely being contemplated by a GT client, in confidential discussions with its counsel at the firm). From the Post:

Anthony Alfieri, law professor and founder and director of the Center for Ethics and Public Service at the University of Miami School of Law, said there are other issues [besides lack of a conflict of interest]. The lack of disclosure about Greenberg’s work for Kukes “fails to communicate relevant information to a client you know is not confidential or privileged.”

Other lawyers agreed. “There may have been a failure to disclose information … especially if it was public,” said West Palm Beach lawyer James Beasley. “You can’t represent a client and not tell them adverse information that you know of.”

It’s worth noting that Steven Beer worked out of Greenberg Traurig’s New York office, while the lawyers handling the litigation between Kukes and Textor were based in Florida. It’s possible that the New York team might have been unaware of what their Florida colleagues were up to. This is not uncommon at firms as large and as geographically spread out as GT.

Such are the perils of size. As we’ve said before, it isn’t easy being Green(berg).

Law firm hired to vet Digital Domain did not tell WPB it was suing company leader [Palm Beach Post]

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