Winston & Strawn LLP and one of its partners are seeking to toss a $1.7 billion suit brought by a trustee for the bankrupt “anti-woke” financial services startup GloriFi alleging they prioritized the personal interests of the company’s founder over the business.
The law firm isn’t liable for GloriFi’s business failures and performed routine legal work at the company’s direction, it said in a dismissal motion filed Monday in the US Bankruptcy Court for the Northern District of Texas.
“Simply put, the Defendants had no obligation to undermine the wishes of GloriFi’s governing principals by somehow changing their minds about what funding options to pursue or which Board members to seat,” the firm said. “In fact, doing so could itself have been a breach of Defendants’ duties. After all, a lawyer has the responsibility to follow a client’s lawful instructions.”
Trustee Scott M. Seidel in September sued Winston & Strawn and its Houston office managing partner, Michael Blankenship, arguing they engaged in legal malpractice and breached their fiduciary duty. He also argued that the firm’s work led to the loss of nearly $2 billion in enterprise value.
The company, which filed for Chapter 7 in February 2023, aligned itself with conservative values of potential customers and aimed to serve as a bulwark against “cancel culture” and liberal institutions, according to court papers.
With Purpose Inc.—the legal name of GloriFi—hired the firm at the end of 2021 to guide a proposed merger with a special-purpose acquisition company to go public and reach an estimated valuation of $1.7 billion. The trustee’s suit accuses Winston & Strawn and Blankenship of negligence, aiding and abetting breaches of fiduciary duty, and fraudulent transfers related to the failed de-SPAC deal and GloriFi’s collapse.
Winston & Strawn pushed back Monday, saying Seidel’s complaint doesn’t allege it ever provided negligent legal services or bad legal advice. The firm said the blame lies with GloriFi’s CEO, board directors, and majority shareholders “for making decisions on funding proposals and board membership that GloriFi now regrets.”
The motion is part of a complex legal battle between Texas oil and gas investor Toby Neugebauer and investors related to the control and eventual closure of GloriFi, the banking and financial services company he founded.
GloriFi was allegedly run out of Neugebauer’s Dallas home and backed by investors that included Peter Thiel, Ken Griffin, former presidential candidate Vivek Ramaswamy, and former Vice President Mike Pence’s chief of staff Nick Ayers, according to a separate suit filed earlier this year against the former CEO. Neugebauer is also the co-founder of Houston private equity firm Quantum Energy Partners LP.
Winston & Strawn’s “negligence and intentional bad acts” caused GloriFi’s potential investors, including Thiel, Griffin, and Ramaswamy, to lose confidence in GloriFi, which prevented the company from closing the deal and going public, the trustee’s suit said.
The trustee hasn’t plausibly shown that Winston & Strawn and Blankenship’s actions caused any damages related to the “theoretical” merger, the firm said.
The trustee’s legal malpractice claims also fail because Winston & Strawn had no duty to compel Neugebauer to cede control of the company, the firm said. Efforts to claw back about $800,000 in legal fees are also insufficient and should be dismissed, the firm said.
Winston & Strawn and Blankenship are represented by O’Melveny & Myers LLP and Gibbs & Bruns LLP. The trustee is represented by Iacuone McAllister Potter PLLC. Neugebauer is represented by Texas Trial Group.
The case is Seidel v. Winston and Strawn LLP, Bankr. N.D. Tex., No. 25-03105, motion 11/3/25.
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