Willkie Farr Hit With $735 Million Fraud Lawsuit

It’s been an eventful year for Willkie Farr & Gallagher. The firm bent the knee to Donald Trump, pledging $100 million in pro bono payola to avoid having to stand up to the administration’s attack on Biglaw. That decision didn’t sit well with the firm’s own attorneys, triggering a mass exodus of West Coast partners who fled to Cooley rather than work for a firm they saw as compromising the rule of law.

BRC Group Holdings (the company formerly known as B. Riley Financial) filed a $735 million lawsuit against Willkie this week, alleging the firm aided and abetted a fraud in connection with a 2023 take-private deal involving Franchise Group, the company that runs Pet Supplies Plus. According to the lawsuit, fraud was like catnip for Franchise Group founder Brian Kahn, who the plaintiffs allege ran a “sophisticated fraud” to secure funds that helped him pay off debts incurred defending against a different hedge fund fraud where he ultimately pleaded guilty. Kahn’s wife is also named in the new suit.

BRC and its co-plaintiffs seek disgorgement of Willkie’s fees.

Willkie’s relationship with Kahn has been star-crossed for a while. Last February, a Delaware bankruptcy judge removed Willkie from serving as bankruptcy counsel for Franchise Group after amidst concerns about the firm’s conflicts of interest. As the judge noted at the time, Willkie failed to create any ethical walls until after the conclusion of the take-private deal, meaning all the knowledge gained by the firm from that transaction was properly “imputed to the firm as a whole.”

Now BRC, who led the equity financing for the take-private deal wants its money back and sees Willkie as partly responsible for duping them in the first place.

But, hey, we’re finally not talking about the firm signing away its integrity to the Trump administration so look on the bright side!

Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter or Bluesky if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.