On April 6, 2023 Rick Righi and Benjamin Hodgson obtained a defense verdict on behalf of two security lawyers in a complex securities legal malpractice case . After a two week trial involving complex LEGAL issues, 1000s of pages of documents, and meta data analysis, the jury returned a defense verdict in 20 minutes. With this verdict, the firm has brought in 16 consecutive jury verdicts favorable to the firm’s clients in cases involving personal injury, product liability, professional liability, breach of contract, fraud, misrepresentation, indemnity and construction defect. You can read more about these results by clicking here.
The two week malpractice trial in Phoenix, AZ involved claims for legal malpractice, breach of contract , breach of fiduciary duty and a derivative claim brought by a shareholder on behalf of a corporation against two security lawyers. Righi Fitch was successful in achieving summary judgment on the breach of contract and fiduciary claims, leaving the legal malpractice and derivative claims for decision by the jury. In 2011, the two security lawyers prepared legal documents for a private stock sale for their client, a start-up technology corporation. The start-up ultimately failed, the investors lost their investments, and one of the investors submitted a claim against the corporate incorporators for alleged violations of federal and state securities laws. The Arizona Corporation Commission (ACC) prosecuted the incorporators and issued a Restitution Order for $526,500. Following the issuance of the restitution order, the incorporators sued the two security lawyers, seeking over $1 million in damages against them for total Restitution Order plus interest.
The time line surrounding the preparation of corporate documents by the law firm client and the unauthorized alteration of those documents by the plaintiffs, were central to the defense of the case. Rick and Benjamin worked with the clients to develop a comparison presentation of the native versions of key documents to prove that the documents ultimately used by the incorporators were not the firm’s work product. The case also involved a “case-within-a-case” surrounding the failure of the corporation. Rick successfully proved that the corporate incorporators fraudulently foreclosed on the corporate assets, causing the failure of the corporation and motivated the investor complaint to the ACC. Because the case centered on proximate cause, Rick was able to prove that the firm’s alleged involvement did not cause the plaintiffs’ alleged damages.
Rick effectively used the “case-within-a-case” time line to prove that the plaintiff did not have an interest in the start-up. This evidence was critical to the defense verdict on the derivative claim. Because attorney’s fees are available to the prevailing party on a derivative claim, Rick and Benjamin’s clients are now in a position to recover attorney’s fees incurred from the outset of the case.
We are especially proud of this trial result, and we are so pleased to have achieved a just result for our clients.