Answer Happy

During a routine audit, LeNature Corporations chief financialofficers expressed concerns about the accuracy of the corporation’ssales figures. The next day all three submitted resignationletters, explaining that they suspected Greg Podlucky, thecorporations founder, of engaging in improper conduct withLeNature’s suppliers LeNature’s board of directors appointed aspecial committee of three independent directors to conduct aninvestigation. The special committee retained the services of a lawfirm, K&L gates, to lead the inquiry. The law firms stressedthat it was “engaged to act as counsel for the special committeeand for no other individual or entity including the Company.” Uponcompletion of its inquiry, and before issuing any report to thespecial committee, the law firm send a message to Podlucky,announcing that had found no evidence of fraud or malfeasance. Inreality, K&L Gates had failed to uncover a massive fraud beingperpetrated by Podlucky and as a result he continued to “loot” thecompany. After the fraud was finally uncovered, the corporation,which was forced into bankruptcy, sued the law firm formalpractice. Did the law firm owe a duty to the corporation?Explain.