A Pennsylvania appeals court improperly dismissed a legal malpractice suit against Cozen O’Connor, the U.S. Court of Appeals for the Third Circuit has ruled in a precedential decision that sheds new light on standing principles in shareholder litigation.

Wading into an open question of law, the appellate court ruled Wednesday in Potter v. Cozen O’Connor that the U.S. District Court for the Eastern District of Pennsylvania improperly analyzed and dismissed the case on jurisdictional grounds, when in fact it should have viewed the defendants’ challenge as a merits-related standing issue.