The Missouri Supreme Court is considering whether to revive a lawsuit against Husch Blackwell on claims that it gave a former executive bad advice on his stock options.
Brian Nail was an official with MTW Corp., a Kansas City-based information technology staffing company, from 1992 to 2001. MTW’s owner, Richard Mueller, gave Nail a series of stock options totaling more than 2.1 million shares.
Shortly after Nail left the company in 2001, MTW merged with The Innovation Group, a British company. The merger called for a one-year “lock up” period during which Mueller couldn’t sell or transfer any stock — including the shares owed to Nail — without board approval.
Nail hired the firm then known as Blackwell Sanders Peper Martin to protect his interests in the stock options. Following a merger with Husch & Eppenberger in 2008, the firm was initially known as Husch Blackwell Sanders and is referred to by that name in the lawsuit. It is now known as Husch Blackwell.
Nail alleges that Husch’s lawyers advised him that he didn’t have much of a case. Based on their advice, Nail settled with Mueller for $50,000 plus a five-year extension of the period to exercise the stock options, which were placed in escrow. Nail later sold the stock for a $600,000 profit.
But in his malpractice suit against Husch, Nail alleges that his lawyers’ advice cost him millions of dollars. A Jackson County circuit judge had earlier granted summary judgment to Husch, but Nail on Wednesday urged the Supreme Court to let the case go forward.
Nail’s current attorney, Tim Monsees, of Monsees, Miller, Mayer, Presley & Amick in Kansas City, said Husch misunderstood aspects of the stock restrictions and, citing expert testimony, said Nail should have been advised to either to file a lawsuit or to try to exercise the stock options to establish his damages. Instead, Monsees said, Nail wound up with a “compromised sum,” as the price of the stock fell considerably during the lock-up period.
But Larry Ward, an attorney with Polsinelli representing Husch Blackwell, argued that the expert testimony didn’t demonstrate that the lawyers’ alleged negligence actually injured the plaintiff or that he was damaged as a result.
Nail “now comes back and says, well, this settlement could have been better — having made the decision himself, of course,” Ward said.
The attorneys who represented Nail, Steven Carman and Jon Ploetz, were initially named in the suit but later dismissed. Ploetz, then an associate, has since left the firm.
The case is Nail v. Husch Blackwell Sanders, SC93543.