Attorney Accused of Malpractice After Selling Company


Legal malpractice expert witnessThis case takes place in Virginia and involves an unauthorized change of the terms of sale and payment between a company and its shareholders. The defendant, an attorney, took a small ownership stake in the company in exchange for legal fees. The defendant then amended the purchase agreement for the pending sale of the company, which significantly reduced the previously agreed purchase price. As a result, the company was sold for substantially less than the previously agreed upon purchasing price. The plaintiff alleges that the defendant breached his fiduciary duty and duty of loyalty, as a shareholder of the company, to both the company and the plaintiff. In addition, the plaintiff alleges that the defendant failed to advise the plaintiff and the company about the changes that were made and having failed to properly advise the plaintiff, acting contrary to the plaintiff’s interests. The plaintiff further argued that the defendant negligently acted to deprive plaintiff, as the majority shareholder, of the opportunity to sell the business in a manner that would have benefited him.

Question(s) For Expert Witness

  • 1. Based on the brief case summary, did the defendant’s acts fall below accepted standards?
  • 2. Have you ever served as an expert witness on a case similar to the one described above? If so, please explain.
  • 3. Please tell us why you’re qualified to serve as an expert reviewer of this case.

Expert Witness Response E-008991

I would be happy to review the case on behalf of the plaintiff. As a professor of corporate law, I am qualified to review whether the defendant’s acts fall below accepted standards and examine this case as an issue on agency and corporation law. It would seem that the defendant went way out of bounds based on the contours of the state’s agency law. That being said, I would have to know the agreed distribution of authority between them before saying definitively. Additionally, I have both a Ph.D. in Economics and a Law degree. Attorneys have hired me to render an opinion as an economist on economic matters.  Perhaps similar issues are at stake in this case. I’m happy to explore that possibility.

Expert Witness Response E-009179

It does seem likely that there was a breach in the acceptable standards. The standards that were breached are RPC 1.7 (conflict of interest) and 1.8 (business transaction with client). The lawyer engaged in a “prohibited transaction” with the client and failed to apprise the client to seek advice of independent counsel beforehand. Moreover, the attorney exceeded his authority by unilaterally amending the purchase agreement in such a way as to prejudice the rights of his clients. These constitute breaches of fiduciary duty. You also have violations of 1.4 (failure to communicate material information relating to the representation). I am highly qualified to serve as an expert reviewer of this case. I have taught law malpractice at the law school level for 23 years. For the past 30 years, I have served as a certified civil trial attorney. Presently, I have limited my law practice to the law of governing lawyers, i.e. legal malpractice, legal ethics, attorney advertising and law firm billing.

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