Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A Manhattan judge has ruled that a law firm accused of legal malpractice over advice it gave clients on mutual fund “late trading” can seek discovery from two other law firms, one of which is now representing the same clients in ongoing government investigations of late trading. Supreme Court Justice Rolando Acosta ordered LeBoeuf, Lamb, Greene & MacRae and Seward & Kissel to turn over documents to DLA Piper Rudnick Gray Cary on the grounds that their clients’ malpractice suit against DLA Piper had also placed the other two firms’ representations at issue. “Here, since plaintiffs claim that their problems were caused by the actions or inactions of defendants, any legal advice they received from any other lawyer … on any subject related to the reasonableness of their reliance on defendants’ advice is not subject to the attorney-client privilege,” Justice Acosta wrote in Goldberg v. Hirschberg, 113217/05. Ryan Goldberg and Michael Grady, former brokers with Brean Murray & Co. sued DLA Piper last year after they became targets of investigations by the Securities and Exchange Commission and state Attorney General Eliot Spitzer. The government claims late trading — in which brokers permit certain large clients to buy and sell shares in mutual funds after the close of market, giving them an advantage unavailable to smaller investors — is illegal. Brean Murray had carried out late trades for a number of large institutional investors, including hedge fund Canary Capital Partners, which paid $40 million in 2003 to settle government late-trading charges. The Brean Murray brokers claim they received advice in October 2001 from Michael Hirschberg, a partner at the firm then known as Piper Rudnick, that late trading was legal. Hirschberg, now a partner in the New York office of KMZ Rosenman, is also named as a defendant in the malpractice suit. As damages, the brokers are seeking the $2 million in legal fees they have incurred in the course of the investigation, in which they have been represented by LeBoeuf Lamb. Justice Acosta said the damages request had weakened any claim of attorney-client privilege. “Indeed, by seeking as damages the legal fees paid to LeBoeuf, plaintiffs have put at issue LeBoeuf’s representation which, after all, is carried out solely to undo the damage allegedly done by defendants’ bad advice,” the judge wrote. DLA Piper has argued that it should have access to documents from the other firms because the brokers also received legal advice on late trading from those firms. Both LeBoeuf and Seward & Kissel have denied providing such advice, but Justice Acosta said DLA Piper had the right to inquire into their roles. “This Court cannot in all fairness permit plaintiffs to hold defendants wholly responsible for their predicament and then allow plaintiff’s attorney to deny defendants the opportunity to examine possibly exonerating documents, albeit, of a very sensitive nature given the ongoing investigations,” the judge wrote. He also pointed out that questions about LeBoeuf’s role in particular had emanated from another source. Former Canary Capital head Edward Stern, Justice Acosta noted, had recently testified that Goldberg and Grady told him they had relied on the legal opinion of LeBoeuf Lamb in carrying out late trades. The judge said the documents to be turned over would include work product detailing LeBoeuf lawyers’ “mental impressions, conclusions and strategic thoughts related to plaintiffs’ jeopardy from the investigations.” Though the judge denied the documents the protection of privilege, he said he would review them in chambers prior to disclosure. Rory Lancman of Benedict P. Morelli & Associates represented the plaintiffs in the malpractice action. Gerson Zweifach of Washington, D.C.’s Williams & Connolly represented DLA Piper. John Aerni appeared for LeBoeuf Lamb and M. William Munno for Seward & Kissel.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.