Hospital Sues Law Firm For Losses Related To Lehman Brothers
This is a case alleging legal malpractice in the context of corporate law. Passavant Memorial Hospital has sued a law firm that allegedly provided negligent legal advice concerning a commercial transaction. The Hospital, acting on advice of the lawyers, attempted to terminate a bond interest swap. The notice of termination was sent by fax, not by regular mail. Lehman Brothers claimed it had no record of receiving notice. Litigation ensued and the Hospital was required to pay $2,975,000 to settle the litigation. The lawyers were negligent because they sent the termination notice by fax, instead of by mail.
The Central District of Illinois held that the complaint stated a claim for legal malpractice. The court noted that the lawyer had a duty to read the swap agreement, which set forth the proper manner of giving notice, before he sent the termination notice.
Edward X. Clinton, Jr.