Principals David Bub and Jeff Lester, along with Senior Associate Grace Olson, recently secured a complete defense victory on summary judgment in a high-exposure legal malpractice action arising out of a complex business dispute involving the ownership and buyout of a closely held company. The case involved multiple prominent law firms and attorneys and was brought by one of Missouri’s leading legal malpractice plaintiffs’ lawyers.
The claims stemmed from an underlying lawsuit in which our client, a local law firm, along with other firms, represented a closely held business (the “Business”) and its owner (the “Ex-Husband”) in a dispute with his former spouse and co-owner (the “Ex-Wife”). The dispute involved allegations of financial misconduct and ultimately resulted in a mediated settlement requiring the Ex-Wife to sell her ownership interest in exchange for a multi-million-dollar payout structured through installment payments.
A subsequent dispute arose regarding interpretation and performance of the settlement agreement, leading to additional litigation. Although the trial court initially granted summary judgment in favor of the Business and the Ex-Husband, that ruling was reversed on appeal, resulting in a substantial judgment against them.
Following the judgment, the Business and the Ex-Husband entered into an agreement with the Ex-Wife that limited her collection efforts and required that any recovery on potential legal malpractice claims be applied toward satisfaction of the judgment. The Business and the Ex-Husband then filed a legal malpractice action in the Circuit Court of St. Louis County against our client, along with the other attorneys who represented them in the underlying matters, alleging damages in excess of $15 million.
The defense team’s motion for summary judgment advanced a novel legal argument focused on the structure of the post-judgment agreement. Although framed as a “lien,” the team argued the agreement functioned in substance as an impermissible assignment of a legal malpractice claim or its proceeds, an arrangement prohibited under Missouri law as a matter of public policy.
The Court agreed. It was found that the agreement went beyond a permissible lien and instead conferred a present right and interest in the proceeds of the malpractice claim, effectively constituting an assignment. The Court further held that such an arrangement is invalid under Missouri law because it implicates core public policy concerns, including the integrity of the attorney-client relationship and the improper transfer of malpractice claims to third parties.
Based on these findings, the Court granted summary judgment, thereby disposing of all Plaintiffs’ claims and eliminating substantial potential exposure for our client.