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Alderstein v. Duane Morris
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Alderstein v. Duane Morris
Posted by: Jason Reese
August 27, 2008
Topic: Legal Malpractice
A 1.6 million dollar legal malpractice trial went underway in late 2001 in Philadelphia's Commerce Court Program before Common Pleas Judge Howland Abramson. This case concerns whether a settlement agreement that attorney Duane Morris helped his client reach should have provided security in the event the other side did not pay up.
In Alderstein v. Duane Morris, plaintiff's lawyer Clifford Haines said the firm was responsible for Joseph Adlerstein receiving only $200,000 of a $1.8 million settlement with a company he founded and eventually forced out of. The company, SpectruMedix terminated Adlerstein from the board and replaced him in July of 2001. This even lead Alderstein to hire Duane Morris.
Duane Morris said the evidence would show that the settlement agreement would never have included security because SpectruMedix declined to guarantee payment. The company would not agree to guarantee the settlement and Adlerstein still signed off on the deal.
In 1991, Adlerstein founded the company SpectruMedix; a company that makes DNA synthesizers. Partner Haines said that Adlerstein was seeking investors. On July 9, 2001 board members with SpectruMedix issued new stock that would all go to Reich and Adlerstein was fired.
In 2002 a handwritten agreement from SpectruMedix would give Adlerstein $800,000 and a limited stake in the company. This agreement only needed to be formalized to go into effect. Centrella said that the deal provided 15% interest in the company along with $800,000, but that Adlerstein decided after he signed the agreement that he wanted to be able to independently sue the other board members.
On July 24, 2002 Adlerstein signed a second agreement that allowed him to be paid $1.2 Million plus salary of about $600,000 over five years. Adlerstein received the first payment and gave it to Duane Morris-however he never received another payment.
Adlerstein couldn't sue SpectruMedix over the contract because the company filed for bankruptcy. Reich declared liquidation in the fall of 2006 and sold the intellectual property behind the DNA synthesizers for $2.5 million. This resulted in Reich receiving money as well as $200,000 for Duane Morris, and nothing for Adlerstein.
Source: Passarella, Gina. New Jersey Law Journal. 11, February 2008.
