A legal malpractice claim against Chicago-based McDermott Will & Emery can proceed to trial based on an opinion letter the firm provided to the plaintiff, an investor in one of the firm's clients.
As the New York Law Journal reports today (Wednesday 29 October), McDermott moved to dismiss the claim for lack of privity with the plaintiff, an investment partnership headed by former lawyer Ilan Reich.
Reich agreed to invest $1m in McDermott client SpectruMedix after receiving an opinion letter from the law firm. The investment subsequently ran into difficulties.
Manhattan Supreme Court Justice Sheila Abdus-Salaam rejected McDermott’s argument for dismissal. She said that courts had "clearly recognised ... that under certain circumstances, an attorney can be liable to third parties, not in privity, for harm caused by professional negligence."
Reich is a former Wachtell Lipton Rosen & Katz partner who was jailed and disbarred for participating in the 1980s insider-trading ring led by former Drexel Burnham Lambert banker Dennis Levine. Reich, who served eight months of a 366-day sentence for insider trading, was reinstated to the New York bar in 1995 and briefly worked as a partner at Olshan Grundman Frome & Rosenzweig before becoming a private investor.