The third-largest law firm in the state and one of its attorney shareholders are being sued for legal malpractice.
The suit alleges that Bob Deeb, a real estate lawyer at the McNair Law Firm’s office in Hilton Head, conspired with a land developer to dispossess five elderly black sisters of beachfront land that had been in their family since the 1920s.
“They’re going to be left with nothing,” said an attorney for the sisters, Eric Bland of Bland Richter in Columbia. He’s trying the case with law partner Ronnie Richter of Charleston.
The McNair firm has more than 100 attorneys in nine offices, seven of which are in South Carolina. The other two are in Charlotte and Kentucky. The firm’s founder is the late Robert McNair, former governor of South Carolina.
The suit, filed in Richland County on July 14, alleges that Deeb and his friend and business partner, Ed Flynn, a developer in Hilton Head, duped the sisters into signing over land worth more than $6 million in 2009.
Two years earlier, one of the sisters had overheard Flynn discussing a development deal that he was working on along Beach City Road, where the sisters’ land is located, and struck up a conversation with him.
Flynn later told Deeb about the situation and arranged to have him meet at his law office with the sisters. They are Marvelina Clemons, Geraldine White, Maggie Bruen, Rosa Cromwell and Grace Bartley.
During the meeting and throughout the nearly six years that he represented the sisters, Deeb did not tell them that he and Flynn were friends, that he had served as Flynn’s lawyer, or that he and his former law partner, Eugene Laurich, had entered into a real estate business partnership with Flynn, according to Bland.
He also allegedly kept from them the facts that Flynn did not have enough money to buy their land and that he owed significant debts on other real estate ventures, and failed to advise them that the local real estate market was collapsing.
The suit states that Deeb, instead of warning the sisters against going into a risky joint venture with Flynn, “continued to encourage them to accept each and every new proposal pitched by his friend Flynn.”
“It was almost like the perfect storm where you have vulnerable clients loaded with properties that are beachfront and unencumbered,” Bland said. “Then you have a sophisticated lawyer with a sophisticated friend.”
He added, “This was a cascade of events that led to what we see all the time. People who have money or property being targeted and divested of it.”
Deeb and McNair’s CEO and managing shareholder, David Tigges, did not respond to interview requests.
In January 2009, Deeb had the sisters transfer their land to an entity called WSI II, telling two of them that they were the managing members, though he never advised them of what that meant, according to the suit. He then “allowed WSI II to convey the property” into other real estate holdings that Flynn managed and controlled. WSI II became a one-third partner in those entities.
Instead of moving ahead with his development project, Flynn took out mortgages on the sisters’ land to pay off his debts, serve as collateral on new loans, and cover old loans that Laurich and his wife had personally guaranteed. Deeb allegedly never told the sisters that the deal would release Laurich, his friend and former law partner, from being on the hook for millions of dollars in debt.
“In essence, Deeb took the [sisters] from owning unencumbered properties worth approximately $6,000,000 to having a minority interest in three highly leveraged real estate ventures controlled by Flynn in a declining real estate market,” the suit states.
Bland added, “I don’t know of any business lawyer who would have advised them to do this.”
The sisters had been promised a “worst case” profit of $100,000 each on the deal. Some also were told that Flynn would build each of them a house or give them a single-family lot in a subdivision.
The reality, according to the suit, is that none of them received $100,000 or a house and all the Flynn-controlled entities that the properties were deeded to are now defunct and the sisters’ land is in foreclosure.
While Flynn had agreed from the outset to pay Deeb’s fees, Deeb told the sisters in writing that he represented them and not Flynn in the real estate deal. In the end, though, McNair and Deeb “collected substantial attorney’s fees and title premiums from the proceeds generated by the mortgages on the [sisters’] properties,” the complaint states.
According to Bland, Deeb and the McNair firm continued to represent the sisters through April 2013, when the properties started to go into foreclosure and another lawyer who was examining the deed histories discovered Deeb and Flynn’s relationship.
Bland and Richter have retained University of South Carolina School of Law ethics processor Gregory Adams as an expert witness. He said in an affidavit that Deeb and McNair “breached the applicable standard of care, committed acts of professional negligence, and violated their fiduciary duties to” the sisters.
Bland and Richter also have provided the allegations outlined in the sisters’ suit to the state’s Office of Disciplinary Counsel, which investigates reports of attorney misconduct.
“This is just a very sad case,” Bland said. “It’s a blight on our profession.”
Follow Phillip Bantz on Twitter @SCLWBantz