CHICAGO -- A Michigan judge has rejected a Detroit law firm's request for a new trial and a reduction in a $25.6 million award the firm was ordered to pay in a legal malpractice case involving a bond issue.

Oakland County Circuit Court Judge John J. McDonald last week rejected Miller, Canfield, Paddock & Stone's contention that the award "was grossly excessive and totally unrelated to economic reality."

"The court finds that, given the record before it, that the jury's verdict is supported by the testimony." the judge wrote in the opinion. "The award was not grossly excessive."

McDonald also rejected a plea for new trial in the case. Miller Canfield had argued for the trial based on alleged misconduct on the part of the attorney representing the Pontiac School District, which filed the lawsuit.

Thomas Linn, a partner at Miller Canfield, said an appeal will be filed soon in the Michigan Court of Appeals.

He said the firm was "clearly disappointed, but not surprised" by the failure of its post-judgment motions.

"We're optimistic we'll get some relief on appeal," Linn said.

In July, Judge McDonald entered an award of $25.6 million plus interest against Miller Canfield after a jury in May found the law firm liable on three counts of legal malpractice, including a conflict of interest charge.

The Pontiac School District had filed the lawsuit in connection with a $54.6 million bond issue in 1991 that included about $35 million of capital appreciation bonds. The district charged that Miller Canfield, its bond counsel, also represented Kemper Securities Inc., the senior manager on the deal, without the district's consent.

The district also charged that Miller Canfield had omitted language in the ballot proposal for the issue that would have allowed the district, as it had intended, to use bond proceeds to buy land for a bus service and storage facility. In addition, the district claimed the law firm misinterpreted to the district's detriment the Michigan State School Act of 1979 when the firm helped structure the bond issue.

Dennis Pollard, an attorney representing the school district, said he is optimistic the jury verdict will be upheld on appeal.

Both Pollard and Linn acknowledged that settlement discussions are continuing. Linn said, however, that to the best of his knowledge "the sides are not close to settlement."

The verdict and judgment sent shock waves through the bond counsel community nationwide. In the wake of the verdict, Michigan passed a law requiring school districts to obtain better disclosure from prospective bond counsels. The state also outlawed the issuance of capital appreciation bonds by school districts starting next May.

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