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Philadelphia-based Duane Morris has been hit with a legal malpractice suit by a former corporate executive who says he lost his position and was forced into bankruptcy when the firm dropped him as a client “at the most critical point in his life.” Attorney Stephen L. Braga of Baker Botts in Washington, D.C., filed the suit in U.S. District Court on behalf of John Joseph Edwards of Hilton Head, S.C. Edwards, the former president and one-third owner of Pilot Air Freight Corp., claims that Duane Morris told him it was forced to drop him as a client because Mellon Bank had asserted a conflict of interest. But the suit says Edwards recently learned that Mellon never asserted any such conflict. “Duane Morris thus apparently lied to Edwards in order to further its own interests, instead of protecting Edwards’ interests as the firm was hired to do,” the suit alleges. Duane Morris’ general counsel, Gene E.K. Pratter, said Monday that the firm is familiar with Edwards’ allegations and that his suit is “completely spurious.” Pratter said the trustee in Edwards’ bankruptcy has effectively rejected Edwards’ claims by declining to pursue the lawsuit as a potential asset in his estate. “We tried to help him and, in the course of helping him, made no errors,” Pratter said. In the 17-page lawsuit, Edwards outlines a complicated series of dealings with lawyers and banks that began in the late 1980s when he hired attorney Richard G. Phillips to serve as both his personal lawyer and counsel to Pilot Air Freight. The suit says Phillips introduced Edwards to Mellon Bank in 1993 to secure financing for Pilot Air Freight. As a condition of an $8 million loan, the suit says, Mellon insisted on a mortgage on Edwards’ $2 million residence in Merion, Pa., and that Pilot Air Freight restructure its board. Edwards stayed on as president, but Phillips became chairman of the board. Mellon also insisted that all payments to Edwards be approved by the bank, the suit says. Soon after the restructuring, Edwards claims he began to experience “escalating difficulties” with Phillips. In May 1994, Edwards hired Duane Morris partner Don Auten. The suit says that although Mellon is a “very prominent” client of Duane Morris, Auten never told Edwards that there could be a problem with the firm’s representation of him if his interests conflicted with Mellon’s. Later that year, Edwards claims that Phillips insisted that Edwards immediately sign a series of documents related to refinancing. Edwards claims he had no time to read some of the documents and didn’t realize that he was giving Phillips the power to control the affairs of his partnership. By the end of 1994, Edwards claims he was looking to get out and asked Duane Morris to negotiate a severance. At the time, he says, Mellon was aware that Duane Morris was representing him and raised no objection. In April 1995, the suit says, Phillips “summarily fired” Edwards as president of Pilot Air Freight and he was evicted from company offices — even though he was still a co-owner of the building. But Duane Morris continued to represent him, the suit says, and went so far as to draft a complaint demanding that Edwards be paid monies that were withheld when he was fired. Edwards claims the draft complaint “aggressively sought to take control of Pilot away from Phillips” and also outlined the role that Mellon had played in the transactions. But in July 1995, Edwards claims that “a series of surprising events transpired at Duane Morris” that led to the firm’s dropping him as a client. Duane Morris managing partner Sheldon Bonovitz reviewed the draft complaint and later met with Auten and a representative from Mellon to discuss it, the suit says. Soon after, Edwards claims the firm “began to adopt a more passive approach” to his case, pursuing settlement discussions instead of filing the suit. Edwards claims Auten told him that he was fighting an “internal battle” at the firm to keep Edwards as a client. By October 1995, Edwards claims he was unable to make mortgage payments to Mellon, and the bank foreclosed on his residence. Soon after, Edwards says, Auten told him that Duane Morris was no longer able to represent him and advised him to hire another lawyer, Gary Schildhorn of Adelman Lavine, who could represent him in bankruptcy. Edwards claims the firm’s abandonment of his case led to complete financial ruin. “Left without the means of litigating the immediate battles that needed to be fought to protect his economic interests or of controlling his own destiny, Edwards remained stuck for years in the bankruptcy process where Duane Morris placed him,” the suit says. “During the course of that process, it is no overstatement to say that he lost everything he had.” Edwards claims the “crowning blow of indignity” came when Duane Morris filed a claim in his bankruptcy seeking its fees — “despite dropping Edwards as a client like a hot potato at the most important time of his life.” The suit says Edwards later learned that Mellon had never asserted the conflict of interest and that the firm’s explanation for dropping him was therefore pretextual. The suit cites claims for fraud, breach of fiduciary duty, breach of contract and legal malpractice. The case, Edwards v. Duane Morris & Heckscher, 01-cv-4798, has been assigned to federal Judge Petrese B. Tucker of the U.S. District Court for the Eastern District of Pennsylvania.

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