Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553 (2009)

Brief Summary
Held: a law firm that represented a limited partnership did not owe fiduciary duties to the limited partners.

Complete Summary
Law firm Seward & Kissel, LLP drafted the offering memorandum and regular updates for hedge fund Wood River Partners, LP (“Wood River”). Wood River’s general partner then violated the terms of the offering memorandum and was ultimately convicted of securities fraud. The fund’s limited partners then sued Seward & Kissel, alleging, inter alia, fraud and breach of fiduciary duty because the firm knew of and aided in the general partner’s transgressions.

The New York Court of Appeals sided with the appellate division in dismissing the plaintiff’s fraud claim for failure to plead with adequate particularity. The court held that the pleadings did not give rise to the requisite reasonable inference of fraud because plaintiffs failed to allege when Seward & Kissel became aware of the general partner’s wrongdoing.

The court also held that no fiduciary relationship existed between Seward & Kissel and the limited partners. The court noted that general partners are analogous to shareholders in a corporation and that a corporation’s attorney only represents the entity, not the shareholders. This finding was supported, according to the court, by the New York appellate division authority, federal courts applying New York law, and Mallen and Smith, Legal Malpractice § 26:8 (2009). The court also noted that other factors typical to a fiduciary relationship were missing, such as direct contact or a contractual relationship between the parties.

Significance of Opinion
This opinion continues the trend of insulating attorneys from direct fiduciary liability to non-client third parties.

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Register Today for the 8th Annual Law Firm General Counsel Forum: Risk Management in Troubled Times

Presented by Hinshaw & Culbertson LLP, The Hildebrandt Institute and WestLegalEdCenter

Date: December 2-3, 2009

Location

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Who Should Attend?

• Law Firm General Counsel
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Topics Include

• Managing opportunities and risks in the current economy
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• Risks of disagreeing litigation services
• Implications of abandoning the hourly fee
• Legal issues surrounding laterals

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$1,495 for Law Firm Registration

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Receive a 10% discount off the registration fee for all participants if you send three or more people from the same organization to the Forum.

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REGISTER NOW for the Ninth Annual Legal Malpractice & Risk Management Conference and receive a 10% Early Bird Discount before December 1, 2009

Attend the industry's premier annual event focused on current and important developments in the law and litigation of malpractice claims, legal malpractice insurance and risk management strategies. Each conference panel examines recent case law and significant developments throughout the last year. One and one-half days will be devoted to legal malpractice (March 3-4), and one and one-half days will be devoted to risk management (March 4-5). The conference will be held in Chicago at The Westin Chicago River North Hotel.

Earn up to 15 hours of CLE credit, including up to 6.50 ethics credit!

Conference Topics

Legal Malpractice Sessions (March 3-4)

• Standing to Sue, Privity and Duty of Disclosure
• Litigation/Litigation Attorney
• What's Your Little Secret? They Want to Know 
• Judgmental Immunity
• Insurance Coverage Update: The Year in Review – Prior Knowledge Redux and the Definition of Professional Services
• 2009 Updates and Statutory Causes of Action
• Stump the Panel

Legal Malpractice/Risk Management Cross-Over Sessions (March 4)

• The Insurance Marketplace and Considerations
• Who is the Client and Standing to Sue – Successor Entities, Affiliates and Subsidiaries
• Advance Conflict Waivers, Screening and How to Do It

Risk Management Sessions (March 4-5)

• The General Counsel Forum
• Suits for Fees/Mandatory Fee Arbitration
• Risk Management Considerations in Restructuring and Winding-Up Law Firms
• Managing Client and Law Firm Data, and What Gives When Client and Firm Policies Conflict?
• On the Horizon – The Slow Motion Revolution

Registration Fees

$1,300 for the Entire Conference - March 3-5
$925 for the Legal Malpractice Sessions Only - March 3-4
$925 for the Risk Management Sessions Only - March 4-5

Discounts (maximum 15% discount per registration)

Returning registrants receive 5% off the conference price
Multiple registrants receive 15% off when two or more colleagues from the same company register for the conference
Early birds receive 10% until December 1, 2009

For more information, please visit www.LMRM.com or click here to Register Now!