Risk Update

Firms Fighting (Part 5) — Conflicts & Extortion Accusations (And Potential Lateral Lessons)

Ex-Sichenzia Ross Partner Sues Baker Botts for $35M, Alleging Extortion on Behalf of Ex-Client” —

  • “Harvey Kesner, a former partner at New York-based securities litigation firm Sichenzia Ross Ference, is suing Baker Botts and one of its partners for $35 million, accusing the Am Law 100 firm of extortion for its threats to sue on behalf of his former client, who is separately suing Kesner for alleged conflicts and fraud.”
  • “The allegations center on Shapiro’s work for Kesner’s former client, California biotech company MabVax. That company is now represented by a different law firm, Block & Leviton, in ongoing litigation against Kesner and Sichenzia Ross.”
    Asked for comment on Kesner’s suit, Baker Botts denied the allegations, also noting the litigation currently pending against Kesner and Sichenzia Ross. ‘This complaint has no basis in fact or law,’ a Baker Botts spokesperson said in a statement Friday.”
  • “Kesner, after being sued separately by MabVax in California without Baker Botts representation, lost his partnership at what was Sichenzia Ross Ference Kesner, the complaint said. The punitive damages Kesner is seeking stem from him being forced out of his firm.”
  • “MabVax sued a group of defendants including Kesner, Sichenzia Ross Ference and other lawyers from the firm in September 2018, alleging that they failed to disclose conflicts of interest, failed to maintain client confidentiality, and failed to provide proper legal advice on financial reporting requirements.”
  • “This is not the first time Kesner’s removal from a law firm led to litigation. He sued Haynes and Boone in federal court in 2010 after he was asked to leave the firm, and the firm struck back by suing him in Texas state court. They later settled the dispute.”

And for more historical detail and context on the issues and players: “Judge says Honig’s attorney Harvey Kesner can be Sued for Fraud and Malpractice” —

  • “A California federal judge has ruled former Sichenzia Ross Ference LLP attorney Harvey Kesner can be sued for fraud in a malpractice suit filed by biopharma firm Mabvax. Mabvax says whiles attorney Kesner was working for them he didn’t disclose a conflict of interest in his role advising Barry Honig who was an investor in MabVax.”
  • “On top of that Kesner stands accused of leaking confidential company information that benefited Honig financially and for charging MabVax to help them in their SEC investigation while recommending decisions that benefited Honig who was also being investigated. The fraud claim against Sichenzia Ross Ference also survived the motion to dismiss.”

And more at: “Haynes and Boone Dueling with Former Partner” —

  • “When Haynes and Boone hired Harvey Kesner for its fledgling New York office in 2006, the firm welcomed his corporate group as an illustration of its ‘careful selection’ of laterals who shared its ‘collegial and entrepreneurial spirit.’ Relations between the law firm and Mr. Kesner can hardly be called collegial these days.”
  • “Haynes and Boone asked Kesner to leave last year. Kesner sued the firm last month in New York federal court for wrongful termination, demanding $15 million in damages. Haynes and Boone then filed suit in Texas state court last week accusing Kesner of breaching firm policy. In its complaint, the firm accuses Kesner of accepting stock and other benefits through an undisclosed business.”