The Sham Wow sales pitch
The Sham Wow sales pitch ()

A company that imports Sham Wow towel products to the United States is suing Venable for alleged malpractice, accusing attorneys of giving bad advice on customs matters and a government investigation—forcing the company to hire other lawyers to clean up the mess.

Square One Entertainment Inc., whose chief executive officer Vince Offer was the public face of Sham Wow, says it faced a U.S. customs penalty of more than $700,000 due to the firm’s negligence. The company reached a $50,000 agreement only after bringing in other lawyers, it said.

Square One also accused Venable of taking on the “hopelessly conflicted representation” of Square One and another company, Fosdick Fulfillment, when both were facing an investigation by the New York State Attorney General’s Office into the direct-marketing industry.

The company is seeking at least $500,000 in damages, according to the lawsuit filed April 2 in District of Columbia Superior Court, along with an order that Square One doesn’t owe Venable any more money.

A Venable spokeswoman was not immediately available for comment. An attorney for Square One, Daniel L. Abrams, a solo practitioner in New York, declined to comment.

In the customs matter, Square One hired Venable to advise the company on whether its import activity complied with the law and on whether the company needed to make certain disclosures about previous imports, according to the complaint. The lawsuit named Lindsay Meyer, co-managing partner of Venable and head of the international trade practice.

According to the complaint, Square One received notices in 2009 and 2010 from the U.S. customs office about potential issues with how Sham Wow imports were classified and valued. Square One says it relied on Meyer and Venable to review and, if necessary, respond to the notices.

Square One says Venable failed to advise the company to make certain disclosures about imports between November 2008 and August 2009. In June 2011, according to the lawsuit, Square One learned it was facing misclassification penalties of more than $700,000.

The company said it hired Katten Muchin Rosenman to take over the customs matter and the penalty was eventually lowered to $50,000.

Square One said Venable also wrongfully represented both Square One and Fosdick in the New York attorney general’s investigation without a conflict waiver. Square One was in a position to blame Fosdick for any potential violations related to direct-marketing activities, the company alleged in its complaint, and the conflict was so pronounced the attorney general’s office raised it with Venable.

The direct-marketing investigation is still pending, according to the lawsuit. Square One said it hired new counsel, but the complaint didn’t list a firm.

The case is assigned to Judge Brian Holeman. A scheduling hearing is set for July 11.

Contact Zoe Tillman at ztillman@alm.com. On Twitter: @zoetillman.