Company Recoups Losses From Theft By Controlling Shareholders Through Legal Malpractice Claims
By Amy Wuliger | December 7, 2025
THE CLIENT: Local Manufacturing Company
Wuliger & Wuliger helps company recoup the losses it sustained when former controlling shareholders looted the business with the help of corporate counsel.
THE PROBLEM: Controlling shareholders used corporate counsel to help them loot the business to fund their drug habits
Brothers who controlled a Cleveland corporation through a voting trust enriched themselves at the expense of the company – all with the aid of legal counsel hired to represent the business. The lawyers had even drafted one-sided employment contracts that provided for the payment of millions of dollars in the event of the brothers’ termination regardless of fault. By the time the other shareholders regained control, the company was on the brink of bankruptcy. The client was desperate to avoid the employment contracts and recover the money that had been stolen.
WHAT HAPPENED: Multiple lawsuits are filed
We filed a lawsuit against the brothers as well as legal malpractice actions against several attorneys from two different law firms who had engaged in improper dual representation of the brothers and the company in violation of their ethical duty to avoid conflicts of interest.
THE OUTCOME: Substantial settlements and recovery of stock shares
Although the brothers both died during the litigation leaving little behind in their estates, we successfully prevented the estates from enforcing the employment contracts and helped the company recapture their shares of stock. We then negotiated lucrative settlements with both law firms, saving the company from financial ruin.
THE TAKEAWAY: Wuliger & Wuliger saved the client from financial ruin
Sometimes lawyers representing a closely-held corporation lose sight of who their client really is: the company or the controlling shareholders. Dual representation of a company and its principals – especially in a transaction that affects both – can lead to disastrous results. Although the corrupt controlling shareholders had wasted their ill-gotten gains and their estates were essentially uncollectible, we helped the client recoup its losses from the lawyers who allowed the theft to happen in the first place.