Legal and Accounting Malpractice--Growth Areas?
According to the NLJ, lawyers and accountants are increasingly being sued by bankruptcy trustees for malpractice (in connection with misrepresenting a bankrupt company's true financial position.) In Boston, we are still waiting for a wave of bankruptcy and litigation to replace the heavy deal flow that was fueling law firm profits for the past several years. It hasn't happened yet, though bankruptcy practice is on the rise in New York. Could this signal a new wave of litigation?
Labels: trends in the legal profession
posted by Stephen Seckler, Esq. at 10:15 AM
1 Comments:
It is coming. We have seen professional liability premiums rise for bankruptcy practitioners (once not considered a risky business). Further, the trend in the latest decisions is to cut back on the more powerful defenses such as in pari delicto. Finally, a must read is the recent In re Brown Schools case out of the Delaware BK Court. It dismisses "deepening insolvency" as a cause of action, but not as a theory of damages for breach of fiduciary duty. These cases are attractive to BK trustees and contingent fee counsel because they are very expensive to defend and carry enough risk to incentivize settling earlier than late. All Plaintiff's counsel has to do is plead it in a manner that survives 12(b)(5), which is not difficult under recent case law in this area.
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