Scope of Discovery Limited for Sued Legal Counsel
The New York Law Journal reports on June 20, 2008 that the former legal representation for two former partners from a failed hedge fund has had their scope of discovery narrowed. The legal counsel is defending a $4 billion suit for fraud and legal malpractice filed by the two partners. This new ruling from an appeals court makes it harder for the law firm to defend itself in the suit.
The plaintiffs are accusing their former legal counsel of authorizing their practice of “late trading.” This advice prompted an investigation from former New York Attorney General Eliot Spitzer which ultimately led to a $36 million penalty for the former hedge fund, a $750,000 fine for each partner, as well as a ban from the industry.
The plaintiffs also claim legal malpractice, asserting that their legal representation pushed to settle on one occasion when the correct course of action was a defense.
The defense states that they have waivers from their clients for all actions taken and, therefore, are relieved of all responsibility.
