Alleged Conflict of Interest Leads to Malpractice Suit

A prestigious and well regarded Philadelphia based law firm was recently named in a multi-million dollar malpractice lawsuit arising from an alleged conflict of interest. The plaintiff alleges that the firm’s relationship with her ex-husband’s employer resulted in a less than favorable outcome in her divorce proceedings.  In 2009, the plaintiff wife retained the law firm’s matrimonial group to represent her in divorcing her husband who held a high position at Morgan Stanley. While the divorce case was proceeding, the law firm was retained by Morgan Stanley to represent it in an unrelated transactional matter.  According to the malpractice complaint, this potential conflict of interest of simultaneously representing the wife and her husband’s employer was never disclosed and allegedly negatively influenced the manner in which the law firm handled the matrimonial case.

The plaintiff now claims that the firm put its interest in developing the client relationship with Morgan Stanley above hers thereby causing her to unknowingly give-up certain rights in the divorce proceedings.  The plaintiff is seeking to recover $25 million from her prior counsel.  

The appearance of a conflict of interest may, at the very least, anger a client and prompt them to reconsider the allegiance of all classes of professionals.  Conflicts of interests come in all shapes and sizes, but the best practice is to openly disclose any possible conflict and allow the client to decide how to proceed.  Of course, this open dialogue must continue throughout the representation and, perhaps, after the representation has ended. As exemplified here, a failure to disclose a potential conflict may result in malpractice.