Davis Wright Settles Malpractice Suit for $30M Despite 'Strong' Position
A major Pacific Northwest-based law firm has agreed to settle for $30 million securities fraud and legal malpractice claims brought by investors in a failed company that oversaw dozens of senior housing complexes.
Their Oregon state-court case contends Davis Wright & Tremaine and two other law firms prepared documents for private stock offerings by Sunwest Management that didn’t properly disclose to investors the risks they were taking, according to the Oregonian. The two other law firms remain defendants in the litigation.
Investors put a total of some $400 million into the company, which stopped paying them interest this summer. A complex mediation ongoing in U.S. District Court in Eugene is intended to restructure Sunwest’s operations into a viable company that will preserve as high a percentage as possible of investors’ money. However, plaintiffs attorney Mike Esler tells the newspaper that investors may get 10 cents on the dollar.
The law firm’s general counsel, John Reed, tells the newspaper in a written statement that Davis Wright stands by its work but decided it would be best to settle:
“As the Sunwest litigation proceeded, the facts of the case were unfolding in a positive way, which enabled us to settle the case quickly and to our satisfaction,” Reed writes. “Although our position was strong, it made more sense to resolve this now, given the inherent cost, disruption and uncertainty of complex litigation. We stand by the legal representation and advice we provided our client and are happy now to move on.”
Earlier coverage:
ABAJournal.com: “Davis Wright, K&L Gates, Thompson & Knight Sued in Sunwest Collapse”
ABAJournal.com: “Receiver Sues Davis Wright for $400M, Claims Firm Aided Client’s Ponzi Plan”
