Are partners just puppets of their law firms’ clients?

Mr. Armstrong sat at the controls of Morgan Stanley, which employed and paid Blank Rome millions of dollars in fees, thus allowing Blank Rome to be the ultimate ‘puppet master,’ as Blank Rome could control Ms. Armstrong’s divorce litigation in a manner designed to protect Morgan Stanley.

Jonathan Sack, counsel to Kristina Armstrong, in a malpractice lawsuit that Armstrong just filed against her former divorce lawyers at Blank Rome.

(More about Armstrong’s allegations, after the jump.)

Here’s the gist of Kristina Armstrong’s lawsuit, as reported by Thomson Reuters:

The plaintiff, Kristina Armstrong, claimed in a lawsuit filed on May 24 in Supreme Court for the State of New York that Blank Rome partners Norman Heller and Dylan Mitchell committed legal malpractice when they failed to disclose that their firm represented Morgan Stanley in a $400 million transaction.

The plaintiff, a resident of Rye, New York, hired Heller and Mitchell in 2009 to represent her in her divorce from Michael Armstrong, who at the time was head of capital markets and international and domestic private wealth management at Morgan Stanley, her lawsuit states.

A Blank Rome spokesperson said the firm “considers the suit to be without any merit” and “intends to defend itself, and the individual lawyers named as defendants, vigorously.” Michael Armstrong no longer works at Morgan Stanley, according to a spokesperson for the bank.

As a matrimonial lawyer, Norman Heller rejects the scorched-earth approach. But according to Kristina Armstrong’s lawsuit, he went too far in the direction of friendliness to adversaries:

The lawsuit also claims that Blank Rome lawyers did not represent Kristina Armstrong’s best interests throughout the course of the divorce proceedings. Instead, the lawsuit claims, Blank Rome protected her now former husband and the firm’s relationship with Morgan Stanley….

For example, the lawsuit claims, the Blank Rome lawyers, without consulting Kristina Armstrong, agreed with the defense to not seek possession of Michael Armstrong’s securities licenses, which the lawsuit describes as the “single most important economic asset at play” in the divorce, with an estimated value of $12 million to $16 million.

Securities licenses: way more lucrative than a law degree.

Also potentially more profitable than practicing law: divorcing a Morgan Stanley husband, getting a settlement out of him, and then suing your former divorce lawyers for malpractice. If Krstina Armstrong prevails in her lawsuit — which seeks $8.3 million in compensatory damages, $25 million in punitive damages, and a refund of $240,000 in legal fees — she will be wealthier than many a Biglaw partner.

Blank Rome sued for malpractice in ex-Morgan Stanley executive’s divorce case [Thomson Reuters News & Insight]


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