Washington divorce attorney Rita Bank has been litigating unhappy break-ups for more than a quarter-century. But next month, the family law heavyweight will find herself in court over an unamicable split with a renowned former client.
Bank is facing a $5 million legal malpractice lawsuit from Nobel laureate Joseph Stiglitz, who is claiming that Bank botched his divorce, gave him counsel that left him financially vulnerable in the proceedings and failed to promptly tell him about merger discussions she was having at the time with his ex-wife’s attorney.
Bank, a co-partner at Ain & Bank, has denied any wrongdoing. She referred questions to her attorney, Richard Simpson of Washington’s Wiley Rein, who called the lawsuit “meritless.” “Everything was handled exactly as the ethics rules say they should be handled,” he said.
The case was supposed to go to trial before U.S. District Judge Richard Leon in 2008, but was rescheduled a half-dozen times during the past three years because of scheduling conflicts and motions detours. For instance, Stiglitz, a Columbia University economics professor, unsuccessfully argued that he should be allowed to testify as a damages expert, given his background.
The trial is scheduled to begin June 21 in U.S. District Court for the District of Columbia.
Advice and Consent
Stiglitz hired Bank in 2000, shortly after he had separated from his second wife, Jane Hannaway. At the time, Bank was with Washington’s Feldesman Tucker Leifer Fidell.
From the beginning, Stiglitz claims that Bank failed to follow his wishes to file suit as soon as possible. Stiglitz notes in his complaint that when divorce negotiations began, he knew that he was under consideration for the Nobel Prize in economics and wanted to prevent Hannaway from laying claim to any subsequent award or income.
Stiglitz has accused Bank of giving him misinformation throughout the divorce negotiations. At the onset, Stiglitz claims that Bank failed to tell him that in the District of Columbia assets can be considered part of the marital estate until the divorce trial. Instead, he alleges, she told him that if he deposited new income in a separate bank account, it would be off limits when it came time to divide the estate.
When Stiglitz relocated from Wash­ing­ton to New York in 2001, he claims Bank then failed to advise him on differences in matrimonial law between the two jurisdictions that might have led him to reconsider the move. After Stiglitz received the Nobel Prize in 2001, he says Bank failed to tell him that his “celebrity status” could open the door to larger earnings claims from Hannaway if the case proceeded in New York.
Besides receiving the Nobel Prize, which carried a financial award worth about $300,000, according to his complaint, Stiglitz has also authored several best-selling books on economics.
Stiglitz declined to comment. His attorney, David Whitworth Jr. of Crofton, Md.-based Whitworth Smith, was unavailable for comment.
In court filings, Bank notes that, although she did discuss certain advantages and disadvantages to living in Washington or New York with Stiglitz, she disputes that his complaint “adequately and accurately characterizes either New York or D.C. law.” She also maintains that she followed “the express instructions of Stiglitz” in handling the proceedings at all times.
The final straw for Stiglitz came in fall 2002, when Bank told him that she was discussing a business partnership with Hannaway’s attorney, Sanford Ain; the two eventually formed Ain & Bank.
Bank and Stiglitz offer conflicting accounts of the merger’s timing — Stiglitz charges that Bank and Ain had been discussing the new partnership months before he was told, but Bank maintains that she told Stiglitz about the discussions as soon as they began.
Hannaway filed for divorce in New York in 2002. Stiglitz retained new counsel and ultimately settled with her in 2004. In the complaint, he claims that he ended up paying far more in the settlement and legal fees than he would have had the case proceeded in Washington.
Pretrial filings indicate that Bank plans to call several Washington-area divorce attorneys during trial to challenge Stiglitz’s contention that he paid far more by settling in New York than if the divorce had been litigated or settled in Washington.
Washington divorce attorney Robert Liotta, who said he knows and has respect for Bank, said legal malpractice suits in divorce cases can be tricky because the attorney-client relationship is often far more collaborative than in other civil matters. Liotta has testified as an expert on several occasions in legal malpractice suits involving divorce attorneys.
“What you do is largely judgment-oriented,” Liotta said. Compared to a vehicle tort lawsuit, for instance, where a plaintiff might leave much of the legal strategy up to the attorney, he said that in divorce cases, “it’s your family and you need to be part of the decision.”
Zoe Tillman can be contacted at email@example.com.