A $2.6 million verdict-the largest ever in a wrongful-death case by an Indiana jury-jolted.
Now, a second verdict, this one for $1.25 million in a related case of legal malpractice, has shocked Midwestern lawyers and raised questions about professional-liability coverage.
Both verdicts by federal juries in Hammond went against Frank Galvin, a name partner in a now disbanded Hoosier law firm. His mistakes as defense counsel for a trucking company in the wrongful-death case of motorist Virginia Dickinson, egregious as they were, led to the record verdict and its ugly aftermath: the malpractice lawsuit by his client's insurer.
The Valentine's Day verdict in the malpractice case, tried before Magistrate Judge Andrew Rodovich, exposed Galvin to potential loss of personal assets-beyond his $1 million coverage. Rodovich ruled as a matter of law that Galvin was negligent. The jury question was whether that neligence contributed to the high verdict in the wrongful-death case.
It wasn't close.
Galvin's gaffes included failures to determine the cause of Dickinson's death prior to trial and to preserve an appeal. He also stipulated to the admission of 126 unrelated accidents by his trucking-company client.
Chicago law firms William G. Stone, together with Robert P. Vogt of Bullaro Carton & Stone, representing American International Adjustment Co. in the action against Galvin, criticized the refusal of Galvin's provider, CNA Insurance, to settle for substantially less than the $1 million coverage. It offered $300,000; American International Adjustment had agreed to take $700,000.
CNA's refusal to settle, Stone said, exposed Galvin "unnecessarily" to personal loss. Given the $1 million coverage, minus $250,000 in legal fees, what's left is $500,000 less than the jury's award.
Change of guard: The chief judge of U.S. District Court since 1990, James B. Moran, has let it be known he will take senior status this summer, 11 days after his 65th birthday.
He does so after two personal setbacks: the death of his wife, Nancy, and a mishap that left him with a broken foot and lots of unfinished paperwork. U.S. District Judge Marvin B. Aspen is in line to succeed Moran by virtue of age and length of service.
The departure of Moran, a district judge since 1979, and the elevation of Aspen creates a vacancy that's bound to set off a scramble among judicial wannabes.
Insiders predict Moran's seat will go to Scott R. Lassar, U.S. Atty. James B. Burns' top aide, who was a partner with Burns at Keck Mahin & Cate. Lassar had sought a judicial appointment a couple of years ago, observers said. He became first assistant U.S. attorney on the understanding that Burns, a close associate of U.S. Sen. Paul Simon of Illinois, a fellow Democrat, would help him become a judge, observers said.
Lassar is known for his even temperament and legal acumen, as well as a droll wit and not-so-slight penchant for self-deprecation.
Interstate victory: Veteran Chicago defense lawyer Julius Lucius Echeles may be retired in Florida, but he is still winning back in Illinois.
The state appellate court, responding to Echeles' appeal for post-conviction relief in the case of James Files, has reversed Lake County Circuit Judge John Goshgarian and ordered a hearing before another judge on the would-be killer's alibi defense.
Files claims he and a colleague, admitted car thieves, feared they were being chased by mob hitmen when they fired on two plainclothes policemen, wounding one in 1991. Echeles, happy to get the case reinstated and away from Goshgarian, now hopes to get Files' 50-year sentence reduced.
Saturday, June 25, 2016
Wednesday, June 15, 2016
Most big Chicago Law Firms report revenue, profit increase in this year.
Almost all of Chicago's law firms outpaced the national increases in revenue and net operating income: 2.7 percent and 3.3 percent, respectively. The firm posted $24 million more in revenue in 2015 and, because of law's fixed-cost structure, that "falls to the bottom line."
Chicago law firms, said in a statement that the firm's profits resulted from "a combination of factors, including a focus on expense management, growth in strategic practices and an increase in the number of equity partners."
Chicago law firms, said in a statement that the firm's profits resulted from "a combination of factors, including a focus on expense management, growth in strategic practices and an increase in the number of equity partners."
Wednesday, June 8, 2016
Lawyer vs Lawyer becoming common corporate strategy
Now big Chicago law firms, which generate huge fees representing large corporations, have become prime targets for malpractice claims.
One of the biggest such cases recently involved Myron Cherry, representing health-care company Ventas Inc., taking on the prestigious New York law firm of Sullivan & Cromwell.
In late October, Louisville-based Ventas disclosed that its former counsel, Sullivan & Cromwell, agreed to pay $25.5 million to avoid trial in a 3-year-old malpractice suit alleging conflict of interest.
In an investor conference call a day after the settlement was made public, Debra Cafaro, Ventas' chairman and chief executive, would only say that the settlement "agreement includes confidentiality provisions, and, therefore, we cannot elaborate on our statement or answer your questions."
H. Rodgin Cohen, chairman of Sullivan & Cromwell, said he would not comment on the settlement, but contends that law firms are especially vulnerable to malpractice claims because dissatisfied clients take advantage of firms' eagerness to avoid potential damage to their reputations.
"There is a special vulnerability of having someone stand up in court for weeks or months and saying you are guilty of malpractice," Cohen said. "I would hope that most clients, the vast majority, would not look to the courts for a remedy for every perceived ill."
While the Ventas-Sullivan & Cromwell malpractice settlement was not the largest payment ever received by a law firm's former client, it fell well atop the highest category of payments cited in an April American Bar Association study.
That survey of legal malpractice cases showed that the number of payments for more than $2 million had increased to 19, compared with 10 recorded between 1996 and 1999. Payments included both out-of-court settlements and courtroom verdicts. Personal-injury cases comprised the largest number of legal malpractice claims, followed by cases involving family and estate law, and corporate transactions such as bankruptcy.
The fallout from high-profile corporate corruption cases, most notably Enron Corp. and WorldCom Inc., has placed greater scrutiny on executives to justify their actions, said Cherry.
Five or 10 years ago, Cherry said, corporate clients were unlikely to sue a large firm, especially one with which it had a long relationship.
"Now, shareholders are demanding that executives serve them," Cherry said. "Corporations, therefore, have a fiduciary responsibility to shareholders, and that could mean evaluating whether they have a claim against their own law firm."
In the Ventas case, the health-care company charged that it ran into severe financial problems specifically because of "incompetent and negligent" advice it received from Sullivan & Cromwell stemming from the company's 1998 spinoff of its hospitals and nursing home operations.
Ventas sued Sullivan & Cromwell for $186 million, alleging that it engaged in a conflict of interest by representing both Ventas, which became a real estate investment trust, and the spun-off health-care company, Kindred Healthcare.
After Sullivan & Cromwell repeatedly petitioned to have the case thrown out, a judge last year set a trial date. The settlement occurred several months before the trial was to begin.
The American Bar Association also revealed that claims against firms with more than 100 attorneys had more than tripled between the two time periods it studied.
"Quicker to sue lawyers"
"People are more cynical, they're quicker to sue lawyers and they think in larger dollar numbers than they ever had," said Thomas Browne, general counsel at Hinshaw & Culbertson often represents lawyers in malpractice suits.
Browne, who has represented lawyers for more than 25 years, said that until three years ago he had never been involved in a settlement for more than $1 million. Since then, he added, four of his legal malpractice cases have ended in settlements exceeding $1 million.
Browne and others point to corporate scandals and the Sarbanes-Oxley Act, which overhauled corporate governance rules, for making law firms more answerable to their clients' actions.
"When a big scandal occurs, the trend now is for board directors to see whether some big law firm handling its legal work may be to blame," said Stephen van Wert, an executive at Brown & Brown Inc., a Daytona Beach, Fla., insurance intermediary that offers legal malpractice coverage. "There's more scrutiny being placed on law firms."
At the same time, law firms usually want to minimize the time and money spent in a courtroom proceeding.
For that reason, "95 percent" of claims against law firms are settled before trial, van Wert estimated.
One of the biggest such cases recently involved Myron Cherry, representing health-care company Ventas Inc., taking on the prestigious New York law firm of Sullivan & Cromwell.
In late October, Louisville-based Ventas disclosed that its former counsel, Sullivan & Cromwell, agreed to pay $25.5 million to avoid trial in a 3-year-old malpractice suit alleging conflict of interest.
In an investor conference call a day after the settlement was made public, Debra Cafaro, Ventas' chairman and chief executive, would only say that the settlement "agreement includes confidentiality provisions, and, therefore, we cannot elaborate on our statement or answer your questions."
H. Rodgin Cohen, chairman of Sullivan & Cromwell, said he would not comment on the settlement, but contends that law firms are especially vulnerable to malpractice claims because dissatisfied clients take advantage of firms' eagerness to avoid potential damage to their reputations.
"There is a special vulnerability of having someone stand up in court for weeks or months and saying you are guilty of malpractice," Cohen said. "I would hope that most clients, the vast majority, would not look to the courts for a remedy for every perceived ill."
While the Ventas-Sullivan & Cromwell malpractice settlement was not the largest payment ever received by a law firm's former client, it fell well atop the highest category of payments cited in an April American Bar Association study.
That survey of legal malpractice cases showed that the number of payments for more than $2 million had increased to 19, compared with 10 recorded between 1996 and 1999. Payments included both out-of-court settlements and courtroom verdicts. Personal-injury cases comprised the largest number of legal malpractice claims, followed by cases involving family and estate law, and corporate transactions such as bankruptcy.
The fallout from high-profile corporate corruption cases, most notably Enron Corp. and WorldCom Inc., has placed greater scrutiny on executives to justify their actions, said Cherry.
Five or 10 years ago, Cherry said, corporate clients were unlikely to sue a large firm, especially one with which it had a long relationship.
"Now, shareholders are demanding that executives serve them," Cherry said. "Corporations, therefore, have a fiduciary responsibility to shareholders, and that could mean evaluating whether they have a claim against their own law firm."
In the Ventas case, the health-care company charged that it ran into severe financial problems specifically because of "incompetent and negligent" advice it received from Sullivan & Cromwell stemming from the company's 1998 spinoff of its hospitals and nursing home operations.
Ventas sued Sullivan & Cromwell for $186 million, alleging that it engaged in a conflict of interest by representing both Ventas, which became a real estate investment trust, and the spun-off health-care company, Kindred Healthcare.
After Sullivan & Cromwell repeatedly petitioned to have the case thrown out, a judge last year set a trial date. The settlement occurred several months before the trial was to begin.
The American Bar Association also revealed that claims against firms with more than 100 attorneys had more than tripled between the two time periods it studied.
"Quicker to sue lawyers"
"People are more cynical, they're quicker to sue lawyers and they think in larger dollar numbers than they ever had," said Thomas Browne, general counsel at Hinshaw & Culbertson often represents lawyers in malpractice suits.
Browne, who has represented lawyers for more than 25 years, said that until three years ago he had never been involved in a settlement for more than $1 million. Since then, he added, four of his legal malpractice cases have ended in settlements exceeding $1 million.
Browne and others point to corporate scandals and the Sarbanes-Oxley Act, which overhauled corporate governance rules, for making law firms more answerable to their clients' actions.
"When a big scandal occurs, the trend now is for board directors to see whether some big law firm handling its legal work may be to blame," said Stephen van Wert, an executive at Brown & Brown Inc., a Daytona Beach, Fla., insurance intermediary that offers legal malpractice coverage. "There's more scrutiny being placed on law firms."
At the same time, law firms usually want to minimize the time and money spent in a courtroom proceeding.
For that reason, "95 percent" of claims against law firms are settled before trial, van Wert estimated.
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