Dismissal of Fortress’ Complaint Against Dechert Illustrates the Limits of a Hedge Fund Manager’s Ability to Rely on a Legal Opinion Issued by a Law Firm of Which It Is Not a Client

On November 29, 2011, the New York State Appellate Division, First Department – the state’s intermediate appellate court (Court) – dismissed a complaint brought in December 2009 by Fortress Credit Corp. and FCOF UL Investments LLC (together, Fortress) against the law firm Dechert LLP (Dechert).  See “Business Issues with Legal Consequences: A Wide-Ranging Interview with Dechert Partner George Mazin about the Most Important Challenges Facing Hedge Fund Managers,” Hedge Fund Law Report, Vol. 4, No. 40 (Nov. 10, 2011).  The Court’s decision helps define the scope of a law firm’s obligations to a non-client in connection with the issuance of a legal opinion.  Accordingly, the decision is relevant to law firms that issue such opinions and hedge fund managers that rely on them.  This article summarizes the allegations in the complaint, the decision below and the Court’s legal analysis.

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