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Dewey & LeBoeuf Sued for $3 Billion in Insurance Company Failure
The American Lawyer
June 02, 2009
At least Dewey & LeBoeuf can look forward to the fat fees that will flow from the General Motors bankruptcy filing. The firm may need the money now that it's been named in a $3 billion -- yep, that's a "b" for "billion" -- malpractice suit for its role in the failure and subsequent sale of a St. Louis company called General American Life Insurance. Here's the story from the St. Louis Post-Dispatch, and here's the complaint against Dewey, filed by Armstrong Teasdale of St. Louis and Shaffer Lombardo Shurin of Kansas City.
General American was once the Show Me State's biggest insurance provider, with more than 4,000 employees. Then, in 1999, one of its short-term investment vehicles ran into financial difficulties. The company was placed under the protection of the Missouri Department of Insurance, then quickly sold to MetLife of New York.
General American's liquidators, who are plaintiffs in the malpractice suit, allege that Dewey & LeBoeuf's predecessor LeBoeuf, Lamb, Leiby & MacRae put the interests of other clients ahead of General American's. The complaint asserts, for example, that LeBoeuf never disclosed to General American that it also represented MetLife when it advised General American to accept MetLife's bid over offers by Lincoln National and Massachusetts Mutual. The suit, which also names former General American CEO Richard Liddy, claims that the MetLife deal shortchanged General American by $300 million to $700 million -- and allowed MetLife to raise money in a subsequent stock offering, in which LeBoeuf represented MetLife and earned big fees.
"Dewey & LeBoeuf categorically rejects the unfounded allegations in the complaint (which was given to the press before service on Dewey), involving its representation of General American in corporate matters some ten years ago," said the firm in a statment to us. "The complaint makes profoundly erroneous misstatements of fact and is little more than a misguided attempt by a liquidator to attract media attention. Dewey & LeBoeuf acted at all times in accordance with the highest professional standards and intends vigorously to defend these baseless and irresponsible claims."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
