In the niche practice of law-firm bankruptcies, Texas law firm Diamond McCarthy LLP has earned a reputation for its willingness to sue other lawyers.
Now, the firm is suing a lawyer it knows well—its former partner Sheila Gowan, who Diamond McCarthy says unjustly pocketed a $1.4 million fee for her work as Dreier LLP’s bankruptcy trustee.
Ms. Gowan, a former federal prosecutor in New York, began unwinding Ponzi-scheme operator Marc Dreier’s law firm in December 2008 while working as a partner at Diamond McCarthy. She moved to Sadowski Fischer PLLC in February 2013 and took the assignment with her, concluding work on the case in May when Dreier’s creditor-repayment plan went into effect.
In a suit filed earlier this month in Texas state court, Diamond McCarthy says it is entitled to much of the $1.4 million because its partnership agreement requires all fees earned by its lawyers, including as a bankruptcy trustee, to flow back to the firm. The firm says it brought the suit “with considerable regret and only after potential avenues of compromise reached an impasse.”
Diamond McCarthy managing partner Allan Diamond declined to comment Tuesday, as did Ms. Gowan.