K&L Gates has agreed to settle a $500 million legal malpractice case filed against it by the trustee of defunct beverage manufacturer Le-Nature’s for $23.75 million, according to a proposed settlement agreement filed in the Le-Nature’s bankruptcy case.
Le-Nature’s trustee Marc S. Kirschner alleged K&L Gates and partner Sanford Ferguson failed to detect fraud in the beverage company when hired in 2003 to conduct an internal investigation of whether certain executives were mismanaging finances. Kirschner said that failure allowed the company to sink deeper into debt for the next three years until the fraud came to light and the company went bankrupt in 2006.
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