The group that owns the Atlanta Hawks and recently sold the Atlanta Thrashers has settled a $195 million legal malpractice lawsuit against the law firm King & Spalding.
The Atlanta Spirit, which sold the Thrashers to a Canadian group in June and has an agreement to sell a majority stake in the Atlanta Hawks, settled the complaint last week, said attorneys involved in the dispute. The terms of the deal are confidential and attorneys for both sides said they are pleased the dispute was amicably resolved.
The ownership group had claimed that the law firm cost it about $195 million with a ”fatally flawed contract” that prevented it from selling off the city’s NHL franchise team earlier.
The lawsuit filed in Fulton County Superior Court claimed that the owners have been negotiating to sell the Thrashers for six years, but were thwarted by a contentious split with Boston-based co-owner Steve Belkin. That dispute was finally settled in December when his shares were bought out.
Atlanta Spirit, though, contends that the fight with Belkin would have ended in August 2005 if King & Spalding hadn’t negotiated a botched contract and doled out advice that was ”poorly considered, self-interested, and, in many cases, blatantly wrong.”
Belkin split with the group in 2005, after he objected to the Hawks’ trade of Boris Diaw, two first-round draft picks and a $4.9 million trade exception to the Phoenix Suns for guard Joe Johnson, who had agreed to a $70 million contract.
The other owners sought to buy Belkin’s 30 percent stake in the venture and assigned King & Spalding to negotiate an appraisal process that would give the disgruntled shareholder a ”fair and reasonable” value while protecting the other co-owners’ interests, the lawsuit said. But it claimed King & Spalding flubbed its responsibilities and then tried to conceal the truth.
The complaint also claimed the ownership group lost more than $130 million since 2005 and at least another $50 million on the plummeting value of the Thrashers, stoking more speculation about the NHL franchise’s future in Atlanta.
The Atlanta Spirit completed a $250 million deal in 2004 for the Thrashers, the Hawks and arena operating rights. But the group has spent much of the year unloading its sports assets.
It sold the NHL franchise in June to a Canadian ownership group that moved the squad to Winnipeg. And it reached an agreement in August to sell a majority stake in the Hawks and the arena to Los Angeles businessman Alex Meruelo. That deal is still awaiting the league’s approval.