Ex-Cadwalader Clients Lose Bid for Legal File in Criminal Case

Cadwalader, Wickersham & Taft LLP doesn’t have to turn over files related its representation of two former clients now facing criminal fraud charges who it says owe it at least $760,000 in legal fees.

Even assuming an urgent, particularized need for the file, the defendants haven’t demonstrated any prejudice or their inability to either pay the outstanding fees or post security, the US District Court for the Eastern District of New York said.

The defendants also have alternative means of obtaining the file, so denying the motion isn’t the equivalent of denying them access to the information they seek, Magistrate Judge James M. Wicks said.

Adam and Daniel Kaplan were charged in a 16-count indictment alleging conspiracy to commit wire fraud, wire fraud, investment advisor fraud, and money laundering in July.

Cadwalader represented the twins in multiple relevant preindictment matters from August 2021 through November 2022, when a disagreement over billing and nonpayment ended the relationship.

The firm asserted a retaining lien on the client file for the outstanding fees owed. The Kaplans, in turn, sued the firm in state court for legal malpractice and breach of fiduciary duty. That matter remains pending, but no application for a provisional remedy for return of the file had been made there, Wicks said.

Although the Kaplans asked the court presiding over a parallel civil SEC matter to compel the firm to produce their file, the motion was denied. Among other things, the Kaplans hadn’t served a subpoena on Cadwalader, so the court said it lacked jurisdiction to enforce the discovery demand.

The materials the Kaplans want include documents related to Cadwalader’s communications with the SEC, the US Attorney’s Office, and IHT Wealth Management LLC, where the Kaplans used to work.

Wicks rejected the argument that the court could rely on its inherent power, as courts only have inherent authority to control those who actually appear before it. Cadwalader has never appeared as counsel of record in this criminal proceeding, Wicks said.

The magistrate also rejected the argument that the court should rely on the All Writs Act. It’s a source of “extraordinary relief,” which isn’t “ordinarily called upon for routine matters,” and because there’s no prior order of the court that has been ignored, it’s not necessary to enforce any legally mandated directive, he said.

The court also rejected the Kaplans’ reliance on the Sixth Amendment.

“Defendants cannot through their own action or inaction create the constitutional issue,” Wicks said.

The Cadwalader file isn’t “wholly unavailable” and there are reasonable steps that the Kaplans could take to obtain it, he said.

Adam Kaplan is represented by Morrison Cohen LLP. Daniel Kaplan is represented by Sher Tremonte LLP.

The case is United States v. Kaplan, E.D.N.Y., No. 23-CR-00293, 9/6/23.