JDs Rising

One of Major League Baseball’s most valuable franchises, the Los Angeles Dodgers, is presently stuck in the middle of one of the most expensive divorce trials in American history. Due to an oversight on the part of the club owner’s Boston-based law firm, it could also develop into a legal malpractice action of massive proportions.

By brief way of background, Boston real estate mogul Frank McCourt purchased the Dodgers from Rupert Murdoch’s News Corporation in 2004. According to McCourt, his wife (and later club CEO) Jamie McCourt wanted no part of the risk of owning a major league baseball team. She wanted her own nest egg:

In early 2004, Jamie proposed that we execute a written marital property agreement that would expressly provide that the residential real property and all of the other assets held in her name [going back to the Boston days] would remain as her separate property (thereby protecting these assets from claims of my business creditors), and all of the assets held in my name [including the Dodgers] would remain my separate property.

The McCourts signed an agreement drafted by Boston lawyer Larry Silverstein and Frank purchased the club.
Last October, the couple separated. Frank fired Jamie as CEO and Jamie then filed for divorce, claiming that she never intended to transfer the ownership of the Dodgers to Frank under the agreement and, consequently, that she is an owner of the Dodgers under California’s community property laws. She requested that the agreement be thrown out.
(For all the details of the McCourt divorce, law student and Dodger fan Josh Fisher has a site dedicated to the matter in depth at DodgerDivorce.com.)

That should be a difficult hill for Jamie McCourt to climb. During discovery, however, Jamie’s attorneys learned that only three of the six copies of the agreement that the couple signed gave exclusive ownership of the Dodgers to Frank.

According to the Los Angeles Times:

The other three exclude the Dodgers from that property. The couple signed the copies without closely examining half of them. After they signed the agreement, the lawyer [Silverstein] who drafted it discovered the discrepancy, according to Frank McCourt’s divorce lawyers. That lawyer then switched in a document that said the Dodgers were Frank McCourt’s sole property. Frank McCourt’s divorce attorneys say that lawyer was just correcting a mistake.
That “discrepancy” could very well lead to the court voiding the post-nuptial agreement and forcing the sale of the Dodgers.

This is not only bad news for Frank McCourt, but for Larry Silverstein as well. The potential damages that could be claimed against the attorney for legal malpractice should the Dodgers be sold are considerable to say the least-the team is valued at $727 million. To make matters worse, this divorce could become the most expensive in U.S history in terms of attorney’s fees. As of March 2010, the McCourts had spent a combined $19 million in attorney’s fees, half of which were incurred by Frank. If Frank loses, you can expect he will want to recoup damages from the firm that neglected to attach an important exhibit to all six copies of the post-nuptial agreement.

Silverstein’s screwup underscores the importance of attorneys giving due attention to detail. It’s unlikely that Larry Silverstein printed off copies of the McCourts’ post-nuptial agreement himself. He probably drafted the document, reviewed a rough draft with the McCourts and had his staff print off six copies of the final draft for signature. Apparently no one checked to ensure that they were all identical. Rule 1.1 of the Rules of Professional Conduct requires an attorney to be thorough in representation of a client. Since the buck stops with Silverstein, he should have taken the time to make sure that all exhibits to the agreement were attached. His failure to do so might cost him dearly.