US law firm Sidley Austin Brown & Wood has found itself embroiled in more controversy over its involvement in the COBRA (Currency Options Bring Reward Alternatives) tax sheltering arrangement, which was developed by Jenkens & Gilchrist in conjunction with Brown & Wood, prior to the latter's merger with Sidley & Austin in 2001.
The firm is already facing fraud and recission claims brought against it in New York by an angry ex-client. However, in a new case filed on November 5, three additional former customers have revealed that they plan to seek $155 million in damages, alleging fraud, conspiracy and legal malpractice.
One key issue in the new trial, according to a Legal Week report on the matter, is the more than 300 'cookie cutter' or mass-produced opinion letters that the firm sent out to clients announcing that the shelter was a legal tax minimization vehicle.
In testimony before the Senate last year, former Sidley vice-chairman Thomas Smith admitted that the firm had earned $15 million from the opinion letters alone.
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