"A Massachusetts judge has refused to toss a $636 million malpractice lawsuit contending that a botched contract drafted by Proskauer Rose caused its client’s loss of a minority interest in a hedge fund.

Judge Kenneth W. Salinger of the Suffolk County Superior Court in Massachusetts ruled for former Proskauer Rose client Robert Adelman in a May 16 opinion.

Law360 and Reuters have coverage.

Adelman alleges that Proskauer Rose mistakenly copied a provision from a prior contract and pasted it into a contract governing his spinoff hedge fund. The “strategic transactions” clause allowed the manager and majority owner of the hedge fund, Behzad Aghazadeh, to engage in a financing, acquisition or asset sale without the consent of a minority partner and without appraisal rights.

The clause included a provision that allowed Aghazadeh to redeem Adelman’s minority interest in connection with the strategic transaction, causing Adelman to lose his share of the profits, according to the suit.

As evidence of negligence, Adelman pointed to a document produced in discovery in which a Proskauer Rose partner circled the provision at issue and wrote the F-word in the margin with two underlines.

Proskauer Rose had argued that the hedge fund manager violated his fiduciary duty to Adelman and breached other contractual provisions, which “severs the chain of causation” between the alleged negligence and Adelman’s injury. Salinger disagreed.

“The summary judgment record suggest that Aghazadeh would not have been able to redeem Adelman’s interests and put him in the position of having to try to enforce these provisions but for Proskauer’s alleged negligence,” Salinger wrote.”

This article was originally posted in the The ABA Journal

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