A New York financial services law firm convinced a federal court to narrow the scope of a claim brought against it in a legal malpractice action filed by an aerospace and defense company.
Applied Energetics Inc. sued Gusrae Kaplan Nusbaum PLLC in January 2021, alleging legal malpractice in connection to the firm’s representation of Applied in a proxy solicitation. The company said Gusrae didn’t disclose a potential conflict of interest stemming from the firm’s earlier representation of the company’s former principal executive officer and sole director, George Farley, in a shareholder derivative lawsuit.
Gusrae moved to dismiss the complaint, and U.S. Magistrate Judge Debra Freeman granted a small part of that motion on Wednesday. While the legal malpractice claim survived intact, the court trimmed a claim alleging Gusrae violated three rules under the New York Rules of Professional Conduct.
The lawsuit seeks to rescind the attorneys’ fee agreement and allow Applied to recoup the fees paid to date. It alleges that is justified when Rules 1.5, 1.7, and 1.8 are violated. Freeman noted that only Rule 1.5 covers excessive fee agreements, and she said Rules 1.7 and 1.8 are duplicative of the legal malpractice claim.
Applied Energetics is represented by Bond, Schoeneck & King PLLC. Gusrae is represented by Lewis, Brisbois, Bisgaard & Smith LLP.
The case is Applied Energetics, Inc. v. Gusrae Kaplan Nusbaum PLLC, S.D.N.Y., No. 21cv382, 3/30/22.