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Green Light for Legal Malpractice Suit

Charter Communications claims a law firm wrecked its purchase of another cable company and asks for $150 million in damages.
Stephen Taub, CFO.com | US
November 1, 2007

A federal judge ruled that Charter Communications can proceed with a lawsuit charging its former law firm, Irell & Manella, with botching the acquisition of a cable systems group in 1999, according to published reports.

Charter, founded by Microsoft co-founder Paul Allen, is seeking more than $150 million in damages against the Southern California law firm.

The Los Angeles Times reported that Irell sought to dismiss the case, arguing that it couldn't defend itself adequately because Allen is one of its clients. Allen, the paper noted, is not a party to the suit.

According to the lawsuit, an Irell associate “mistakenly deleted” critical provisions in a contract, causing Allen to purchase a different type of security than he had planned and wound up with a smaller-than-intended stake in Bresnan Communications Systems. This caused “serious legal, financial and governance problems for the company,” the lawsuit charged.

Charter also claimed that Irell failed to disclose its knowledge of the error, that Charter incurred substantial legal fees to rectify the situation, and that in fact Irell billed the company for time it spent trying to correct its own error.

”At all relevant times, one or more officers, directors or managing partners of Irell authorized the conduct,” the suit said.

U.S. District Judge Andrew Guilford said in his ruling that Irell "must show that it will not be able to mount a full defense without violating its obligations to Allen," The Times reported.




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