Philips Arena Operators Sue Lawyers

Atlanta Spirit, the seven-man ownership group of the NHL’s Thrashers, NBA’s Hawks and operators of Philips Arena, have sued a prominent law firm in the city, claiming they have lost more than $130 million since 2005 because of a fumbled attempt to sell the hockey team.

The owners claim faulty legal work, as well a contentious split with Boston-based co-owner Steve Belkin, is to blame for the allegedly botched sale attempt after six years of negotiations. Belkin’s shares were bought out in December.

The team’s remaining owners contend that the dispute would have ended in Aug. 2005 if Atlanta law firm King & Spalding hadn’t negotiated a “fatally flawed contract.” The suit claims the firm’s attorneys doled out advice that was “poorly considered, self-interested, and, in many cases, blatantly wrong.”

Co-owner Michael Gearon said in a statement that the $200 million malpractice lawsuit will have no effect on either team.

“My partners and I regret having to file a lawsuit,” Gearon said. “But King & Spalding made egregious errors that caused us to be tied up in litigation for five years and cost us an enormous amount of money, time and anguish.”

The firm promised a vigorous defense.

“King & Spalding and its lawyers acted appropriately, and the lawsuit is without merit,” said Steve Collins, an attorney representing the firm. “We look forward to presenting the firm’s substantial defenses to the court at the appropriate time.”

The malpractice suit recounts a split that occurred in 2005, when Belkin objected to terms of a Hawks’ player trade and contract details.

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 the suit claimed King & Spalding flubbed its responsibilities with, among other things, a loose definition of “fair market value” that gave Belkin an inflated stake. It then tried to conceal the truth and minimize its legal exposure after discovering the malpractice, according to the suit, leaving the other owners bogged down in litigation.

The revelation of heavy losses will undoubtedly stoke the speculation about the Thrashers’ future in Atlanta. Numerous reports from Canada claim the team is on the verge of relocating to a more hockey-friendly city such as Winnipeg, Hamilton or Quebec City.

The owners have repeatedly denied any plans to sell or move the team, instead trying for the past two years to find investors who want to keep the team in Atlanta. So far, no one has skated forward.