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Takeovers create legal nightmares

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Oct 27, 2008 5:38 am

For all of you going through a take over, especially one where the acquiring firm is “purchasing the assets”, be very careful about pending or potential legal issues.  Will the new firm protect you and defend you against current or future client complaintss?  Will they pay your legal fees?  Will they defend you from regulatory inquiries?

  Unfortunately, through personal experience, I have seen the new firm wash their hands of any of the "old company's troubles" and therefore refuse to pay legal fees or help in any way.  They claimed that by helping to defend a current employee from a complaint stemming from actions taken at the "old" firm they were setting a precedent that may have forced them to pay damaiges etc.   It cost me big time and resulted in a 3-4 year nightmare.  The former firms director of compliance was forced into personal bankruptcy and he did nothing wrong.  He was named in almost evey lawsuit and couldn't afford to defend himself.