The finding came in a malpractice case against law firm Fox Rothchild by Robert Cottone who was advised by the firm when he was negotiating the sale of his company to an insurance brokerage firm in 2000. The New Jersey Superior Court, Appellate Division, said that if a lawyer failed to explain unambiguous terms to a seasoned businessman, even if the lawyer was merely rubber-stamping the agreement, s/he could still be accused of malpractice.
Standards of care
The brokerage, NIA Group, put in a clause regarding buying back shares if the company wanted to merge as well as a 'Warrant' to buy additional shares. The insurance company offered a 'kicker' on Mr Cottone's equity if redemption was agreed before the merger. However, the 'kicker' did not apply to 'Warrant' rights. Mr Cottone claimed that Fox Rothchild was negligent in alerting him to this even though he was the sole negotiator of' the deal and only asked Fox Rothchild to review draft agreements without specifically instructing on the 'kicker' provision. The court laid out a number of factors to determine whether standards of care were breached in complex transactional matters. Source: Bloomberg
Email your news and story ideas to: [email protected]
