Peterson v. Winston & Strawn LLP

Federal 7th Circuit Court
Civil Court
Legal Malpractice
Case Number: 
No. 12-3512
Decision Date: 
September 6, 2013
Federal District: 
N.D. Ill., E. Div.
Dist. Ct. did not err in dismissing for failure to state cause of action, plaintiff-bankruptcy trustee’s lawsuit alleging on behalf of debtor that defendant-law firm committed legal malpractice when, upon learning that third-party blocked debtor’s ability to verify that third-party had used money from debtor’s investors to purchase inventory, as debtor promised its investors in debtor’s sales circular, defendant failed to alert debtor’s directors about third-party’s misconduct or reveal truth about said misconduct in text of circular that had been drafted by defendant. While debtor’s investors may have claims based on content of circular, trustee did not have valid legal malpractice claim where: (1) publishing truth about third-party’s misconduct would not have benefited debtor; (2) debtor, as opposed to defendant, vouched for truth of statements contained in circular; and (3) plaintiff failed to allege that debtor’s directors would have acted on any notice of third-parties’ misconduct had they been alerted to such conduct.