KIRSTEN HICKS SPIRA

Kirsten Hicks Spira is a certified specialist in the field of professional responsibility and represents large national and international law firms in state and federal court in large actions. While she also handles complex commercial disputes, including employment matters and class action suits, professional responsibility matters currently comprise the bulk of Spira’s practice.

She currently is representing Paul Hastings LLP in defense of claims asserted in a cross-complaint arising from two separate merger agreements. Paul Hastings represented Concortis Biosystems Corp., principally owned by Zhenwei Miao and Gang Chen, in its merger with Sorrento Therapeutics in 2013. Two years later, the firm represented CBC and its new parent, Sorrento, in a separate merger involving another company primarily owned by Miao and Chen. In 2018, Sorrento sued Miao and Chen, asserting various claims for unfair competition and breaches of the merger agreements. Miao and Chen filed a cross-complaint against Sorrento and also sued Paul Hastings for securities fraud and indemnification-related claims. The securities fraud claims were dismissed as a result of Paul Hasting’s demurrers.

Miao and Chen claim the lawyers were representing them individually in both transactions. They claim that if they are liable to Sorrento, it’s because Paul Hastings committed malpractice, concealed facts, or made negligent or fraudulent misrepresentations in connection with the two mergers.

“They admitted Paul Hastings was representing the business, they just thought [the firm was] also representing everybody,” she said. “The standard for lawyers is if the alleged client has an objectively reasonable belief based on your actions that they are being represented, then they may be being represented, even if you’re not being paid and there’s no attorney-client agreement.”

In this case, she said, there is no basis for a reasonable belief that Miao and Chen were being represented by a firm that was known to them to be representing the other side of their transaction.

In a major win for the client, Spira and her team were granted a motion to sever the case against Paul Hastings so that the firm would only face a trial if there were first a verdict against Sorrento. The trial date was set for this year, but Sorrento filed for bankruptcy on Feb. 13, and a new trial date has not been scheduled yet.

The case is an example of a growing trend by parties to allege “implied” attorney-client agreements as a way to ensnare law firms that are seen as having deep pockets.

“Lawyers are always going to be people in the room in complex transactions, and they become targets because of that,” Spira said. “When a major financial transaction goes awry, like accountants, lawyers now have targets on their backs. Being the person that stands up for them is something that I’m very proud to do.

“To have somebody in your own profession turn to you for help is humbling.”

– Jennifer Chung Klam