Former Client Sues Biglaw Firm Over $213 Million Judgment

Is this just sour grapes?

onJanuary 10, 2018 at 1:37 PM

When you have a client that is ordered to pay a $213 million judgment and all the appeals have run out, well, you’re going to have an unhappy client. And while malpractice lawsuits are a reality for any law firm, most clients that get a bad result are sophisticated enough to understand the risks inherent in litigation, and not sue their own attorneys when they lose.

Unfortunately for Biglaw giant Arnold & Porter Kaye Scholer, that is not what happened with their billionaire client Ira Rennert and his company, Renco Group Inc. Rennert and Renco were assessed liable for $117 million in damages for diverting money from Magnesium Corp. of America to build a mansion in the Hamptons. A trustee for MagCorp, which has since declared bankruptcy, argued massive environmental claims against the company were already piling up when the money was redirected to Rennert’s real estate project.

The $117 million verdict became the eye-popping $213 million when the judge ordered 14 years worth of interest to be paid on the award. After an appeals court upheld the judgment and the Supreme Court declined to review it, there was little left to do but sue the lawyers for “careless and negligent errors.” As Big Law Business reports, Rennert isn’t happy with having to pay $213 million — who would be? — and he places the blame squarely with the attorneys:

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From Elizabeth M. Bennett

In a lawsuit filed Monday in state court in Manhattan, Renco blamed the law firm, Arnold & Porter Kaye Scholer LLP, for mistakes that led to the verdict. The company said the firm failed to push for proper jury instructions and questions on the verdict form that would have resulted in a different outcome.

Which, while this litigation is very much in its earliest stages, seems to have the odor of sour grapes. Hopefully more details will emerge as the litigation unfolds. A&P hasn’t yet commented on the case.

headshot Kathryn Rubino is an editor at Above the Law. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).