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Sued for not suing



Sigh of relief dept.: a three-judge panel of the Second Circuit has unanimously ruled that "two prominent New York plaintiffs firms are not liable to former clients for failing to sue accounting firm Arthur Andersen in a securities fraud suit stemming from the largest Ponzi scheme in U.S. history." Kirby, McInerney & Squire and Bernstein Litowitz Berger & Grossman had sued the Syracuse-based Bennett Funding Group over extensive frauds which victimized investors, but had not sued the now-defunct Andersen firm, which had served as Bennett's auditor in two years. The panel said the two law firms "acted reasonably in not suing Andersen," the availability of both liability and damages being uncertain. "They're usually accused of suing every deep pocket in sight," said the Proskauer Rose attorney who defended the two firms. "Here they're exercising restraint and they get sued for it." Compare the case discussed on Overlawyered Feb. 15-17, 2002, in which a New Jersey appeals court ruled that a law firm could be sued for legal malpractice for omitting a peripheral defendant from a pharmaceutical lawsuit.

 

 


Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Katherine Lazarski
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.