Legal Malpractice and the Contract Lawyer: a Hypothetical Scenario - January 2008 - Whoops: Malpractice Minute
| Publication year | 2008 |
| Pages | 65 |
2008, January, Pg. 65. Legal Malpractice and the Contract Lawyer: A Hypothetical Scenario - January 2008 - Whoops: Malpractice Minute
January 2008
Vol. 37, No. 1 [Page 65]
Whoops: Malpractice Minute
Legal Malpractice and the Contract Lawyer: A Hypothetical Scenario
by Christopher M. Buckman
The Facts
Attorney John Adams has a small solo general business practice located in a suburb of Denver, Colorado. His practice is successful and established with many longtime clients. John's associate, Janet Smith, recently had a baby and transitioned to an independent contract lawyer arrangement with John's practice. The new firm setup provided John, Janet, and their paralegal a flexible structure and working relationship.
Bill Warren of Warren Industries is one of John's clients. Bill recently engaged John to assist with the sale of Warren Industries. At the time of the engagement, John did not inform Bill of Janet's new role as a contract lawyer.
Warren Industries received three offers of purchase: one from a Colorado-based company; a second from a publicly traded company's Western Division, which is based in Denver; and a third from an out-of-state privately held entity. The offers from the Colorado-based company and the publicly traded company were similarly priced at $2.5 million. The out-of-state private company, So Long Enterprises, LLC (So Long), offered $4 million, with a very quick closing time frame.
As John reviewed these purchase offers, he advised Bill that the out-of-state private company purchase offer appeared less genuine than the others. John told Bill he had concerns that this buyer may not have the financial wherewithal to satisfy its much higher purchase offer. However, the potential for an additional $1.5 million payout impressed Bill, and he instructed John to finalize a sale agreement with the private out-of-state buyer.
John and Janet worked with So Long's attorney to draft an acceptable sale agreement. John continued to advise Bill that more due diligence needed to be done on the private out-of-state buyer to ensure that their offer was solid and that they could close the deal. Bill agreed.
John and Janet made several requests for current financial statements and organization incorporation documents from So Long, to assist with the due diligence assessment. So Long was not forthcoming with the information and...
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