The long, sordid tale of one of Biglaw’s biggest f**kups has come to a happy ending for Simpson Thacher. The venerable firm that signed away its client’s security interest in a $1.5 billion loan saw two putative class-action lawsuits over the affair dropped on Friday.
The controversy began back in 2008, when Mayer Brown — representing GM — asked a paralegal unfamiliar with the case to write up a closing checklist for an unrelated transaction and then rubber-stamped the erroneous inclusion of the interest securing the $1.5 billion loan from J.P. Morgan, which Simpson and its client accepted without so much as a cursory glance. Sure this was Mayer Brown’s mistake, but who’s the more foolish: the fool or the fool who doesn’t bother to check that they aren’t putting their client in a $1.5 billion hole?
As one might expect, plaintiffs came out of the woodwork in protest, and over the summer Simpson and J.P. Morgan were hit with two class-action complaints purporting to represent the interests of over 400 lenders.
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But it’s all water under the bridge, at least for now, as Law360 reports:
JPMorgan Chase Bank NA and Simpson Thacher & Bartlett LLP escaped two putative class actions Friday after lenders decided to voluntarily drop their claims that the law firm and bank negligently authorized the termination of security interest in a $1.5 billion bankruptcy loan to General Motors LLC.
The notice of dismissal filed in both class actions did not divulge any details of the termination and the parties were either not available or declined to comment Friday.
It’s a curious end to this saga. Perhaps a little too curious. Why just summarily dismiss such a potentially lucrative lawsuit before it’s even gotten rolling? Makes you wonder… has anyone checked to see if that Mayer Brown paralegal is now working for these plaintiffs’ firms?
Simpson Thacher, JPMorgan Ditch Suits Over $1.5B GM Loan [Law360]
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Earlier: Mayer Brown & Simpson Thacher Make Epic Screwup
Simpson Thacher Sued In Two Class Actions