In an unusual case, two plaintiff firms have been the subject of a suit alleging that they engaged in legal malpractice in their handling of a securities class action. The securities class action was brought against Bennett Funding Group (“BFG”) and settled in 1998 for a total of $139 million. Although no objections were raised to the settlement, members of the class later brought a malpractice class action against the plaintiff firms alleging that BFG’s auditor, Arthur Andersen, should have been named as a defendant.
The district court dismissed the malpractice claims. This week, in Achtman v. Kirby McInerney & Squire, LLP, 2006 WL 2720643 (2d Cir. Sept. 25, 2006), the US. Court of Appeals for the Second Circuit affirmed the dismissal, finding that the plaintiff firms’ decision not to sue Arthur Andersen was reasonable as a matter of law.
Quote of note: “[Counsel for the plaintiff firms] said yesterday he appreciated the irony of two class action firms being sued in a class action. ‘They’re usually accused of suing every deep pocket in sight,’ he said. ‘Here they’re exercising restraint and they get sued for it.'”
The 10b-5 Daily 