Law firm Morgan Lewis must face revived lawsuit from investment company

Prospect Capital

27/10/2023 15:47

By Mike Scarcella
       Oct 27 (Reuters) - Morgan, Lewis & Bockius must face an
investment company's $12 million legal malpractice claim, after
a New York judge reinstated a lawsuit against the U.S.-based
global law firm that had been dismissed earlier this year.
    In a ruling made public on Thursday, Justice Margaret Chan
in New York Supreme Court granted a request from former Morgan
Lewis client Prospect Capital  PSEC.O  to revive its complaint
alleging the law firm was liable for negligence for
transactional legal services.
    Chan in May had dismissed New York-based Prospect's lawsuit,
saying it had failed to adequately allege that actions by Morgan
Lewis on a loan agreement damaged the investment firm.
    Prospect's attorneys persuaded Chan to reconsider, and the
judge's new order acknowledged she had "overlooked" part of
Prospect's complaint.
    Chan's new opinion, which rejected another effort from
Morgan Lewis to dismiss the case, was not on the merits of the
dispute. Morgan Lewis has denied any wrongdoing.
    "It is of course Prospect's burden to ultimately establish
the requisite elements of legal malpractice, including causation
and damages, and whether it will be able to do so remains to be
seen," Chan wrote in her latest decision, dated Oct. 25.
    A representative from Morgan Lewis and the lawyers defending
the firm in the litigation did not immediately respond to
requests for comment on Thursday.
    An attorney representing Prospect did not immediately
respond to a similar request.
    Prospect's website said that as of March it had assets of
$11.5 billion under management.
    Prospect sued Morgan Lewis in October 2022, alleging that
the firm, founded in Philadelphia and employing more than 2,200
lawyers, botched its work on a $17 million loan that Prospect
made in 2014 to a company that recovers unclaimed property.
    Prospect said Morgan Lewis failed to flag a key change in
loan subordination agreement and made other errors that limited
the company's ability to respond to an alleged breach of its
loan to non-party Venio LLC.
    Lawyers for Morgan Lewis in July had urged Chan not to
reinstate Prospect's case.
    The firm said Prospect had "full and fair opportunity to
present all of its arguments." The firm also said Prospect was
unfairly trying to lodge new allegations too late.
    Chan set a preliminary hearing in the case for Nov. 29.
    
    The case is Prospect Capital Corp v. Morgan, Lewis &
Bockius, Supreme Court of the State of New York, No.
653941/2022.
    For Prospect Capital: Adam Burton and Abraham Shaw of
Prospect
    For Morgan Lewis: Nicholas Cutaia and Richard Zielinski of
Goulston & Storrs
    
    Read more:
    Law firm Morgan Lewis squelches $12 million malpractice case
    Law firm Morgan Lewis sued by investment company claiming
$12 mln in damages

    

 (Reporting by Mike Scarcella)
 ((Mike.Scarcella@thomsonreuters.com;))