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Sullivan & Cromwell Sued for Malpractice by Ex-Skadden Attorney

Dec. 20, 2019, 9:49 PM

A former Skadden attorney is suing white-shoe law firm Sullivan & Cromwell for legal malpractice, claiming that the firm represented a client in a matter for which one of its partners had once been an arbitrator, in violation of ethics rules.

Andrew Delaney alleged in a complaint filed with the N.Y. Supreme Court on Dec. 18 that Sullivan & Cromwell acted “unlawfully” and “unethically” in the international arbitration matter.

The Harvard Law School graduate’s complaint alleges that Sullivan & Cromwell partner James H. Carter chaired an arbitration panel that found in favor of Delaney’s clients, and the firm subsequently “proceeded to represent the losing party” to oppose enforcement of the award.

Carter is now senior counsel at WilmerHale in New York.

Delaney’s clients, two Laotian companies, entered into a joint venture in 2006 with a Thai company that ultimately failed. Delaney’s clients alleged the Thai company stole proprietary information. The parties agreed to arbitrate in Malaysia, and picked Carter to chair the arbitration panel.

Delaney’s clients were experiencing “serious financial problems,” so he agreed to represent them on a contingent fee basis, his complaint says.

His clients were ultimately awarded more than $56 million in 2009 but couldn’t collect the judgment, and tried to enforce it “all over the world,” according to the complaint. A Malaysian court ultimately vacated the arbitration, leaving Delaney without fees to collect.

Delaney alleges he later found out that other attorneys from Sullivan & Cromwell had been representing the opposing party “to fight enforcement of the very award that its partner had signed and ordered” in the U.S and the U.K.

He claims that Sullivan & Cromwell even submitted a friend of the court brief in a U.S. Supreme Court case, Republic of Argentina v. NML Capital, Ltd., 573 U.S. 134 (2014), opposing enforcement of foreign arbitral awards.

Sullivan & Cromwell didn’t immediately respond to a request for comment regarding Delaney’s complaint.

Delaney’s malpractice claim cites New York professional conduct rules, which prohibit a lawyer who has served as an arbitrator from representing a client in a matter in which the lawyer participated unless all of the parties to the proceedings give their informed, written consent.

His complaint also points to another ethics rule that imputes conflicts of interest from an attorney to the rest of the firm.

Delaney is asking for $13 million, including $10 million in punitive damages.

Causes of Action: Legal malpractice; collusion, conspiracy, and civil Racketeer Influenced and Corrupt Organizations Act violations

Relief: Compensatory, punitive damages

The case is Delaney v. Sullivan & Cromwell LLP, N.Y. Sup. Ct., No. 657556/2019, complaint filed 12/18/19.

To contact the reporter on this story: Melissa Heelan Stanzione in Washington at mstanzione@bloomberglaw.com

To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; Rebekah Mintzer at rmintzer@bloomberglaw.com

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