Jul 20, 2010
Filing Involuntary Bankruptcy Against Ex-Client Gets Law Firm Sanctioned
A law firm must pay punitive damages, attorney fees and costs for its bad-faith filing of an involuntary bankruptcy petition against a former client as a “tactical maneuver,” a federal bankruptcy judge in New Jersey has ruled. Scarola Ellis claims Skyworks Ventures owes it $200,000 in fees, while the former client says in a related suit that the firm engaged in overbilling and malpractice. The judge ruled that Scarola Ellis filed the involuntary bankruptcy petition against the company to pressure a settlement.