(J. Albert Diaz)
A state appeals panel has denied Greenberg Traurig’s bid to upset a lower court’s refusal to dismiss a malpractice complaint against the firm and its former partner.
Greenberg was sued by its former client, attorney Allen Roberts, who is represented by Epstein Becker & Green, the firm that served as Greenberg’s co-counsel in representing Roberts in an arbitration.
Justices Angela Mazzarelli (See Profile), Dianne Renwick (See Profile), Paul Feinman (See Profile), Judith Gische (See Profile) and Barbara Kapnick (See Profile) sat on the panel that released the unsigned decision in Roberts v. Corwin, 115370-2009.
Greenberg Traurig and Corwin, then a Greenberg partner, represented Roberts in an arbitration against the firm he founded, Roberts & Finger.
In May 2006, an arbitration panel issued an interim award finding Roberts had failed to establish that he suffered any damages, as Roberts’ legal team did not provide expert testimony on the value of Roberts’ firm.
Roberts, with Greenberg’s knowledge, hired Epstein Becker as co-counsel to help obtain relief from the interim award, including trying to negotiate a settlement with Roberts’ former partners.
The settlement efforts failed. Later in 2006, the arbitration panel issued a final award against Roberts.
After the unfavorable interim award, and as early as May 2006, Roberts was seeking advice from John Sacks, then another Epstein attorney, about a potential malpractice action against Greenberg.
In 2009, Epstein Becker, on behalf of Roberts, filed the malpractice case against Greenberg and Corwin.
Roberts claimed he “went from being in the position of recovering more than $5.2 million,” plus fees and costs, “to paying approximately $1 million.” Roberts sought damages of $6.6 million.
In 2013, Manhattan Supreme Court Justice Marcy Friedman denied Greenberg and Corwin’s motion to dismiss the complaint or to disqualify Epstein Becker. In a separate ruling, the court also denied Greenberg and Corwin’s summary judgment motion.
The appeals panel affirmed on both decisions.
On appeal, Greenberg and Corwin argued Epstein Becker’s failure to disclose its dual role was unethical, and that their rights in the malpractice suit were substantially prejudiced because Epstein Becker surreptitiously developed a record against them while simultaneously acting as co-counsel in the arbitration.
Greenberg and Corwin claimed that if they had known Roberts intended to bring a malpractice action against them, they would have been ethically obligated to stop representing him.
The First Department panel noted there was no disciplinary rule expressly prohibiting Epstein Becker from giving Roberts legal advice about a malpractice claim while working with Greenberg and Corwin at the same time to obtain a better result for Roberts.
“While we share the motion court’s concerns about [Epstein Becker's] failure to disclose that a malpractice action was being considered, those concerns do not support the sweeping remedies” of either dismissing the suit or disqualifying Epstein Becker, the panel said.
Greenberg and Corwin have not identified any particular information or confidence Epstein Becker gained after being brought into the arbitration, the panel noted.
It also said all work product knowledge in the arbitration belonged not to Greenberg, but its former client, Roberts.
Roberts “was free to disclose that information to [Epstein Becker] or any other attorney he might have hired to pursue a malpractice suit against defendants,” the panel said. “[Epstein Becker's] conduct did not involve the procurement of confidential or privileged information, and defendants have failed to show any other basis for prejudice.”
The panel said it also rejected Greenberg’s contention that Epstein Becker’s failure to disclose its dual role prejudiced the firm because it would have withdrawn as counsel.
The adverse interim award, largely based on the failure to call an expert witness for damages, and the communications with Roberts afterward “should have alerted the defendants about potential malpractice exposure and possible conflicts in continuing to represent [Roberts],” the panel said.
Addressing Greenberg’s appeal of the summary judgment decision, the panel said Greenberg failed to establish that, even in the absence of their alleged negligence, Roberts would not have prevailed at arbitration.
A trial in the malpractice case against Greenberg and Corwin is scheduled in October.
A Greenberg spokeswoman said, “We continue to believe this case lacks merit and we will pursue our defense of it.”
Roy Reardon, a partner at Simpson Thacher & Bartlett, represented Greenberg and Corwin, who is now a partner at Blank Rome.
John Houston Pope, an Epstein Becker member, represented Roberts, who is now a member of Epstein. The firm’s general counsel, James Flynn, declined to comment.