Risk Update

Ex-Client Law Firm Conflicts Contentions — Contract Conflicts Claim Continues, IP Matter Disqualification Denied

Posted Dan Bressler

“Ex-Client’s Claims Against Buchanan, Royer Cooper Survive Motions to Dismiss” —

  • “Certain legal malpractice claims against Buchanan Ingersoll & Rooney and Royer Cooper Cohen Braunfeld will be allowed to proceed, a federal judge ruled this week, in a case stemming from alleged conflicts of interest in the partial sale of a vending machine business.”
  • “Former client and business owner Alan Simons sued the law firms in January 2021, alleging that he lost millions of dollars as a result of the firms allegedly concealing changes to a sale agreement that favored his business partner.”
  • “U.S. District Judge Cynthia M. Rufe of the Eastern District of Pennsylvania on Monday refused to dismiss Simons’ claim that Buchanan breached its fiduciary duty and engaged in professional negligence. But allegations that the firm committed a breach of contract, negligent misrepresentation and tortious interference with contractual relations were dismissed.”
  • “Brown had retained Buchanan to represent him in updating the agreement. But, Simons alleged, the firm had entered into a fee agreement with Simons in 2013 to provide legal services for RDS’ business ventures. Simons alleged in court documents that neither firm informed him of the potential conflict of interest.”
  • “Simons alleged the valuation date in the agreement that he signed in December 2015 differed from a prior draft and that both firms concealed this change to benefit Brown. As a result, Simons claims, he lost millions of dollars when he exercised his put option in March 2020. Simons said he became aware of the damage that the change in the valuation date caused in March 2020.”
  • “Since Simons’ amended complaint asserts he had an attorney-client relationship with Buchanan and Buchanan represented Brown in negotiating the update to the put-call agreement, Rufe reasoned that ‘these facts support an inference that the Buchanan firm was disloyal to Simons’ and denied Buchanan’s motion to dismiss the breach of fiduciary duty claim.”
  • “Buchanan is represented by lawyers at the firm. They did not respond to requests for comment.”

“Ropes & Gray Beats DQ Bid In Computer Network IP Suit” —

  • “A Virginia federal judge Tuesday refused to disqualify Ropes & Gray LLP from representing cybersecurity company Palo Alto Networks Inc. as it defends against a suit accusing it of infringing computer network patents held by rival Centripetal Networks Inc.”
  • “U.S. District Judge Roderick C. Young denied Centripetal’s bid to disqualify Ropes & Gray based on Centripetal’s claim that the law firm possesses the company’s confidential information from an earlier, separate transaction, saying there’s nothing to suggest that Centripetal and Ropes & Gray used to have an attorney-client relationship.”
  • “Centripetal contends that the parties discussed its patents, prospective litigation and other confidential and privileged information, while Palo Alto claims Ropes & Gray’s attorneys sought to confirm their understanding of the public record in the separate litigation, according to the order. Ropes & Gray’s attorneys said they didn’t recall future litigation being discussed.”
  • “Centripetal then set up a ‘data room’ to store confidential information and provided Ropes & Gray with access to it, the order states. Palo Alto said two Ropes & Gray attorneys tested their access to the data room, but never actually accessed any documents because Silver Point told the firm to stop working on the transaction.”
  • “In May, Ropes & Gray attorneys began representing Palo Alto in the current action and made appearances for the company in the inter partes review proceedings before the U.S. Patent and Trademark Office in July, according to the order. Centripetal asked Ropes & Gray to withdraw its representation, but the law firm declined, saying it didn’t possess any of Centripetal’s confidential information, the order states.”
  • “But in his order Tuesday, Judge Young disagreed with Centripetal, finding that a nondisclosure agreement it entered makes it clear there was no attorney-client relationship between it and Ropes & Gray. Centripetal had its own counsel when drafting the NDA and during negotiations in the Silver Point transaction, the judge said. Judge Young also noted that the NDA is not substantially related to the current dispute, according to the order.”