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Malpractice Suit Against Proskauer Is Dismissed
New York Law Journal
October 26, 2009
Proskauer Rose has escaped a malpractice suit by a former principal at Oaktree Capital Management who claimed the law firm did not properly advise him on leaving the private equity fund. Manhattan Supreme Court Justice Richard Lowe last week dismissed the complaint by Russel Bernard, who left Oaktree in 2005 to form Westport Capital Partners. The judge also awarded Proskauer litigation costs and disbursements.
Bernard, who sued Proskauer in March, claimed that after following the firm's advice on how to leave the Los Angeles-based fund to start his own, Oaktree expelled him and filed an arbitration claim for breach of contract and fiduciary duty. Mr. Bernard said after months of representing him Proskauer refused to represent him in the arbitration because of a conflict it had not disclosed; Proskauer claimed it just did not want to litigate against a major fund like Oaktree.
The arbitration resulted in Bernard losing $51.5 million in fees and fines, which he sought to recover from Proskauer. But Lowe said that what Bernard did not mention in his complaint was that the arbitrator found Oaktree expelled him for a real estate investment he made using Oaktree's name and financial clout without its permission or intending to buy into it for the fund, among other things. "If ever there were an example of a person coming to this court with unclean hands, it is this plaintiff," the judge said. Even if Proskauer gave poor legal advice, he wrote, it would not have been the sole reason for Bernard's expulsion.
Bernard said that he had not seen the decision and would not comment. He was represented by David Deary of Loewensohn Flegle Deary in Dallas. Proskauer Rose was represented by partner Gregg Mashberg. The case is Bernard v. Proskauer Rose, 103456/09.
