Lawsuits Against Attorneys

• The firm handles major lawsuits against attorneys for breach of fiduciary duty, conflicts of interest, and malpractice, including improperly favoring one faction in disputes between corporate shareholders.

When an attorney represents a closely-held company, the attorney usually interfaces with company management and takes ultimate directions from those running the company. When disputes arise among the owners of the company, including issues as to control of the company, the attorney may still side with company management and take actions to support management’s positions, but this is not proper. A corporation’s legal adviser must refrain from taking part in controversies among shareholders as to its control. A corporate attorney owes undivided loyalty to the corporation and cannot take sides in a serious dispute between its owners. The attorney must be able to advise the corporation without bias or prejudice. In litigation where the issue is whether one faction or another rightfully controls the corporation, the corporation itself should not assert a position in court, for the very purpose of the action is to determine who speaks for the corporation.

But these principles often are unheeded. When intracorporate disputes arise, corporate management frequently goes to current corporate counsel for advice; the attorney may naturally side with the corporate personnel with whom the attorney has previously dealt, and support their positions. Additionally, the faction running the company may want to utilize the corporate counsel in their dispute against the other faction, so that they can in essence shift their personal attorneys’ fees to the corporation. The faction in control may not retain an attorney to represent their personal interests at all, or may retain someone for appearance’s sake but still rely primarily upon the corporate counsel, who may then assert that the work he or she is doing is for the benefit of the corporation itself rather than for the faction actually being assisted.

Surprisingly, attorneys can often be tone deaf to their ethical and legal responsibilities in this regard, and very resistant to acknowledging the liability which can befall them. For example, in one such case of the Senkfor Law Office which went to trial, the only offer prior to trial was for $50,000; however, the jury awarded $3,100,000 in actual damages, $900,000 in punitive damages against the prominent law firm defendant, and an additional $23,000 in punitive damages against one partner of the defendant law firm.

The Senkfor Law Office has handled numerous other types of breach of fiduciary duty and/or conflicts of interest cases against law firms, and has also handled claims for attorney malpractice.