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The bankruptcy trustee of a major New York hospital system has filed a $200 million legal malpractice suit against McDermott, Will & Emery and three of its lawyers over advice given in the months before and after its 2005 bankruptcy. “This case is about deceit, divided loyalties, gross violations of fiduciary duties and breaches of professional standards of care committed by attorneys who put their personal relationships and selfish economic concerns above the interests of the charitable institution they were entrusted to protect,” the suit alleges. In the suit, filed on April 14, the trustee for Saint Vincent Catholic Medical Centers of New York alleges that McDermott and lawyers William P. Smith, Stephen B. Selbst and David D. Cleary teamed up with two consulting firms who were hired to help turn around the hospital system in order to unnecessarily delay its bankruptcy and generate more fees. The suit seeks punitive damages equal to treble the compensatory damages � which would add another $600 million � plus $4.5 million in legal fees paid to McDermott. Gray & Associates v. McDermott Will & Emery, No. 601108-2008 (New York Co., N.Y., Sup. Ct.). ‘Serious wrongs’ “We believe there are serious wrongs visited upon this charitable institution, and our lawsuit seeks redress,” said Richard Gray of Gray & Associates, the trustee. He declined to comment further. Daniel Archabal, chief communications officer at McDermott, in an e-mailed statement, said that “[b]ecause this is a pending matter, we are not at liberty to comment on the allegations.” Smith, a partner in Chicago, and Selbst, a partner in New York, referred calls to a press spokesperson. Cleary, now a partner in the Chicago office of New York’s Dewey & LeBoeuf, did not return a call for comment. At the time of its bankruptcy filing, Saint Vincent had more than 12,000 employees. The system, which re-emerged from bankruptcy last year, operated seven hospitals, plus other facilities. In 2003, McDermott advised Saint Vincent regarding the retention of a hospital turnaround consulting firm, Speltz & Weis, whose two principals became the chief executive and chief financial officer of the hospital system, according to the suit. Later, Smith, at McDermott, recommended that Saint Vincent hire a subsidiary of Huron Consulting Group Inc. as a financial advisor to guide the hospital system into bankruptcy. In the months preceding Saint Vincent’s bankruptcy, Smith helped engineer Huron’s acquisition of Speltz & Weis’ book of business, most of which consisted of consulting fees paid by Saint Vincent. No one informed Saint Vincent’s board of directors about the planned acquisition, the suit alleges.

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