We have previously discussed in this Newark Litigation and Appeals Law Blog that a significant number of legal malpractice cases stem from real estate transactions. Earlier this month, the Federal Deposit Insurance Corporation won a real estate-related legal malpractice lawsuit against a prominent law firm in Florida.
A senior partner at the law firm had represented First Priority Bank in 2006 in a $5.3 million real estate deal. The bank was lending the multimilliondollar loan to a developer that planned to use it to build a community of luxury homes.
The bank apparently instructed this lawyer to make sure that an option contract secured 25 acres of property along the riverfront as collateral. The lawyer, however, did not tell the bank that the developer did not actually have the option contract, and he closed the loan anyway.
The developer did end up defaulting on the loan, which became one of many bad loans that contributed to the shuttering of the bank.
The FDIC accused the lawyer of representing the same developer and another lender, thus harboring a conflict of interest. The FDIC maintained that the attorney did not advise the bank on the option contract because of this conflict of interest.
Earlier this month, a federal jury found that the law firm and the lawyer that represented the bank in the real estate deal did commit legal malpractice. The FDIC was awarded damages of $1.2 million.
The law firm has filed a motion to ask the judge to overturn the jury’s verdict. A judge is expected to rule on that within 30 days.
This case is an example of the legal recourse that is available when an attorney harms a client by having conflicts of interest or committing another type of legal malpractice.
Source: Tampa Bay Business Journal, “FDIC wins legal malpractice case against Icard Merrill, senior partner,”Jane Meinhardt, May 24, 2013