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A Manhattan appellate court has thrown out a law firm’s defamation suit against a former client whose husband wrote a letter and copied to others questioning the competence and honesty of lawyers at the firm.

New York firm Sexter & Warmflash was hired by Elizabeth Margrabe in 2001 to represent her and her brother, Anthony Rusciano, in a Westchester County lawsuit against a cousin to whom the siblings wanted to sell their interests in a family business. The retention agreement provided that the firm would work at a reduced rate until the case was resolved, after which it would be entitled to a 50 percent premium over its total bills.

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