Law Firms

Judge OKs Law Firm’s $2.5M Malpractice Settlement in SonicBlue Case

  •  
  •  
  •  
  • Print

A federal judge has approved a $2.5 million malpractice settlement by Los Angeles law firm Levene, Neale, Bender, Rankin & Brill to settle a complaint by a trustee in the SonicBlue bankruptcy.

U.S. Bankruptcy Judge Marilyn Morgan said the settlement was “fair and equitable,” the Daily Journal reports (sub. req.).

The law firm, the former counsel for the creditors committee, did not admit wrongdoing. It was targeted for failing to disclose an alleged conflict by Pillsbury Winthrop Shaw Pittman, which had represented SonicBlue. Under the settlement, Levene Neale will keep $1.28 million in fees already collected but will not receive unpaid fees and costs totaling $2.2 million.

Pillsbury was disqualified last year for failing to disclose that some of its lawyers assured three hedge funds they would be paid ahead of other creditors if SonicBlue declared bankruptcy. Levene Neale contends its investigation showed Pillsbury had a valid defense to the trustee’s claims of a conflict.

The trustee contends Pillsbury could have been responsible for any shortfall in payment to the hedge funds, so it would have been motivated as SonicBlue counsel to make sure they were paid in full. Its complaint against Pillsbury has not been resolved, the story says.

Give us feedback, share a story tip or update, or report an error.