Editor’s Note: From time to time, it is good for financial institution and other business executives to look at the world through from the point of view of their attorneys. In this context, we offer a recent experience of a Porter Wright attorney who is writing to reach other attorneys.
What could be a worse nightmare for an attorney and his client than the following scenario?
Because of a breakdown in communications between the attorney and the client during the sale of the client’s business, the client takes matters into his own hands, negotiates a few provisions in several agreements and closes the deal without seeking further advice from or telling the attorney. Shortly after the sale closes — and the client becomes an employee of the buyer — the seller is found to have breached the asset purchase agreement and, because of a cross-default provision in his employment agreement, is terminated for cause by the buyer. The seller turns around and sues the attorney for malpractice, claiming the attorney breached his standard of conduct. By the time the matter goes to trial, the claim for damages exceeds the attorney’s malpractice insurance coverage limits.
This nightmare was a four-year reality …