Former oil executive Michael Reger accuses Dorsey & Whitney of legal malpractice

Former Minnesota oil executive Michael Reger has sued Dorsey & Whitney for legal malpractice, alleging the prominent Minneapolis law firm negligently handled his legal malpractice claims against his earlier attorneys.

Dorsey denies the allegations, saying in a court filing that Reger hasn’t paid his nearly $600,000 legal bill for years of work and is trying to blame Dorsey for the consequences his own conduct.

The lawsuit filed last week in Hennepin County District Court also names Dorsey partners Edward Magarian and James Langdon as defendants. The suit is fallout from the securities fraud saga of now defunct Dakota Plains Holdings, a Minnesota-based oil field services firm.

In 2016, Reger consented to an order from the U.S. Securities and Exchange Commission in connection with Dakota Plains. The SEC found he received illicit payments and skirted public disclosure requirements for his stake in Dakota Plains. Reger agreed to pay more than $7 million without admitting or denying guilt.

In 2022, a federal jury found that Reger was responsible for civil securities fraud, capping a long-running shareholder lawsuit against Dakota Plains. Reger was tagged with a judgement of $234,773. Several other Dakota Plains executives and directors were also sued and settled in 2022 for $14 million.

The Dorsey firm represented Reger in the SEC and civil proceedings, as well as in a wrongful termination lawsuit against Northern Oil. Northern Oil’s board fired Reger as its CEO in 2016 amid the SEC investigation. He was reinstalled in May 2018 before leaving the company 15 months later.

Reger and business partner Ryan Gilbertson created Northern Oil and Dakota Plains, both publicly traded companies.

The SEC accused Gilbertson of violating securities laws in 2016 in connection with Dakota Plains. Gilbertson was indicted and found guilty by a federal jury in 2018 for stock fraud infractions and sentenced to 12 years in prison.

The SEC claimed in 2016 that Reger and Gilbertson installed their fathers as figurehead executives to run Dakota Plains, though they secretly controlled the company.

Reger, in his suit against Dorsey, says he never filed the requisite SEC documents showing his Dakota Plains ownership due to advice from his then “personal counsel,” James Sankovitz, and the law firm now known as Faegre Drinker Biddle & Reath.

Sankovitz also served as Northern Oil’s and Dakota Plains’ legal counsel for a time and, according to Reger’s suit, was a substantial shareholder in Dakota Plains. “It became apparent that Reger had relied on negligent advice from Sankovitz and Faegre to his detriment,” Reger said in his suit against Dorsey.

Sankovitz and Faegre both declined to comment.

Reger claims that while Dorsey represented him, the allegedly negligent advice of Sankovitz and Faegre came up repeatedly. “While [Dorsey] advised Reger he had malpractice claims against Faegre and Sankovitz, they never advised him about the applicable statute of limitations,” Reger’s suit said.

Dorsey calculated the statute of limitations for a malpractice claim ran out in October 2022, but Reger said in his suit that it ran out in March 2018.

Reger claims that Dorsey’s “repeated delay stemmed from an undisclosed reluctance to bring a legal malpractice claim against another large law firm, ... a reluctance that was admitted at a lunch at Murray’s Steakhouse on Sept. 27, 2022.”

In a court filing, Dorsey said it never agreed to pursue a malpractice claim for Reger, nor was it hired to do so.

Reger could not “plausibly assert” malpractice claims against Sankovitz and Faegre because he relied on “some of the same lawyers’” advice while defending himself in the SEC case and the civil securities fraud trial, Dorsey said in the filing.

Further, the filing said, no court has determined that 2018 — and not 2022 — is the statute of limitations on Reger’s claims against his former lawyers, the filing said.

“Reger’s consistent mode of defending his personal and business conduct has been to blame others” – his former business partners, his former legal counsel and now Dorsey, the filing said. Dorsey has asked the court to dismiss Reger’s suit.