Key Highlights
- Simpson Thacher & Bartlett is set to face a rare legal malpractice trial in Florida next week.
- Former Patriot National CEO Steven Mariano claims the firm’s handling of a 2015 stock sale contributed to the company’s collapse.
- Mariano is seeking more than $200 million in damages, while Simpson Thacher denies any wrongdoing.
Simpson Thacher & Bartlett is preparing to defend itself in a rare legal malpractice trial in Florida, where former Patriot National CEO Steven Mariano alleges the firm’s legal advice during a 2015 stock transaction contributed to the insurance administrator’s eventual bankruptcy.
Opening arguments are scheduled to begin Wednesday in the 17th Judicial Circuit Court in Broward County, Florida, bringing to trial a dispute that has been winding through the courts for years.
At the center of the case is Patriot National’s decision to sell a portion of its publicly traded stock to a group of private hedge funds. Mariano claims Simpson Thacher, which advised the company on the transaction, failed to include restrictions that would have prevented those investors from short-selling the stock after the deal closed.
Dispute Centers on Stock Sale Structure
According to Mariano, the unrestricted trading allowed hedge funds to short Patriot National shares beginning in late 2015, putting significant pressure on the company’s stock price.
His legal team argues the decline created what it describes as a “death spiral” from which Patriot National never recovered. The company ultimately filed for bankruptcy in early 2018.
Mariano, Patriot National’s largest shareholder at the time, is seeking more than $200 million in damages.
Simpson Thacher has rejected the allegations, maintaining that its legal work met professional standards and that Mariano cannot establish either causation or financial damages.
The firm said the claims are “baseless, ignore the realities of the transaction and fail to establish causation or damages,” adding that it intends to vigorously contest the case at trial.
Related Claims Remain On Hold
The lawsuit also originally named Kasowitz LLP, which Mariano hired in 2017 to pursue claims against the hedge funds involved in the stock trading.
Mariano alleges Kasowitz failed to alert him to Simpson Thacher’s alleged malpractice. However, those claims have been paused and will not be considered during next week’s proceedings because the outcome of the Simpson Thacher trial could affect the separate case.
Judge John Bowman denied Simpson Thacher’s request for summary judgment in December, allowing the dispute to proceed before a jury.
Legal experts note that malpractice cases against major law firms rarely reach trial because they are often difficult to prove and frequently settle beforehand. They also tend to involve significant litigation costs for both sides.
The upcoming trial will therefore be closely watched within the legal industry, as jury verdicts in attorney malpractice cases involving high-profile firms remain relatively uncommon.