"Dorsey & Whitney failed to tell a corporate client that it may have given bad advice, even after it recognized the problem, a federal judge ruled Monday in a legal-ethics case that has Twin Cities lawyers buzzing.

U.S. District Judge Donovan Frank let stand most of a decision reached last fall by a U.S. bankruptcy judge who blasted Dorsey for alleged malfeasance while representing Miller & Schroeder, a bond underwriter that failed several years ago.

"The evidence in this case overwhelmingly supports the finding that Dorsey violated their ethical duties and acted in bad faith toward clients," said Ed Gale, the lawyer who brought suit on behalf of the bankruptcy trustee against Dorsey.

As did U.S. Bankruptcy Judge Nancy Dreher, Frank found evidence that Dorsey lawyers knew of a potential malpractice claim involving advice it gave Miller & Schroeder in an Indian gaming case in 1999 and chose not to disclose or investigate it further. Moreover, Dorsey lawyers failed to disclose a conflict of interest, which "constituted a breach of faith," in related litigation that began in 2000, Frank said."

Get the Story:
Neal St. Anthony: Dorsey loses ethics appeal as judge finds 'breach of faith' (The Minneapolis Star Tribune 4/10)
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