Chris Wingard, an Associate in Kleinbard’s Business & Finance Practice, authored a post on alleged legal malpractice, for the National Center for Employee Ownership (NCEO)’s Employee Ownership Legal Digest. The NCEO’s Legal Digest provides summaries of key cases, rulings, and legal developments impacting employee ownership. In this case update, a district judge granted summary judgment for defendant, attorney Greg Hansen.
The case arose after the Department of Labor (DOL) initiated a lawsuit contending that a Hawaii based architecture firm’s ESOP overpaid for the company’s shares. The architecture firm successfully defended against the DOL’s suit; however, it incurred significant litigation costs which it could not recover from the DOL. The company subsequently brought this legal malpractice suit against Hansen, to recover its litigation costs on the theory that Hansen must have acted improperly because the court found that the DOL was justified in bringing the lawsuit. The judge ruled in favor of Hansen.
This judgement is significant because it demonstrates that when ESOP companies incur significant costs from DOL investigations or litigation, it does not imply that there are grounds for malpractice claims against the ESOP attorneys who worked on the deal.
