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Monday, May 21, 2007

Ex-wife pursing $12M fraud claim vs. Rider Bennett

Minnesota Lawyer reports this week that the soon-to-be-defunct law firm of Rider Bennett faces a $12 million lawsuit over the representation one of its former attorneys provided in a divorce case. (See "Rider Bennett faces $12M fraud claim," password required.)

Former Rider Bennett partner Steven B. Schmidt represented the husband, who was a founder of The Tile Shop chain of retail outlets. The wife claims Schmidt helped the husband misrepresent the value of his business during the marital dissolution. She is suing both the lawyer and, under doctrines of agency and respondeat superior, Rider Bennett. (The wife has already obtained an additional $4 million from the ex-husband after the property settlement at issue was reopened.)

The wife alleges, among other things, that the attorney instructed the company to use a "doom and gloom scenario" when it provided the financial numbers used in the valuation. She is seeking treble damages against the lawyer and firm under the fraud statute.

The lawsuit was reportedly not a factor in the law firm's dissolution (which takes effect May 31) -- although the breakup might make any judgment difficult to collect.

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