Defunct Law Firm Sues Toy Maker Wham-O

Don’t underestimate the maker of the Slip ‘N Slide.

It may seem like it would be all fun and games to represent Wham-O Inc., the Emeryville, Calif., manufacturer of some of your favorite childhood toys, including the Hula Hoop, the Hacky Sack, the Frisbee Disc, and yes, that strip of plastic that used to provide you with hours of semi-painful backyard entertainment.

But now-defunct law firm Heller Ehrman LLP found that helping Wham-O sort through its domestic intellectual property matters wasn’t exactly a throwback to more carefree times.

Instead, Heller Ehrman—or, what’s left of it, as an administrator looks to put the company’s liquidation plan into action—finds itself embroiled in a legal battle of its own.

Heller Ehrman Thursday launched a lawsuit against Wham-O, targeting a lingering claim in its bankruptcy case and unpaid legal expenses. It said it’s owed $2.27 million in legal fees and is also facing down a “meritless” claim from Wham-O, in which the toy maker invokes malpractice.

Heller Ehrman first signed on to provide Wham-O with legal services in May of 2007. The law firm soon got to work, representing the company in a court battle between Wham-O and SLB Toys USA Inc., which Wham-O said violated its trademark when marketing a yellow water slide that looked suspiciously like Wham-O’s “famous product Slip ‘N Slide,” according to the lawsuit.

Wham-O slid out on top after a jury trial and scored a hefty judgment from the court: $6 million, plus an additional $1.8 million in attorney’s fees and costs. But spring 2008 still found Wham-O deeply in debt to Heller Ehrman.

A settlement the law firm struck on behalf of Wham-O with Wal-Mart Stores Inc. should have freed up funds for the legal fees. But instead of handing over the money to Heller Ehrman, the Wal-Mart settlement funds were funneled into Wham-O’s founder’s other businesses in Asia, the lawsuit alleged. By September 2008, the unpaid legal fees had “ballooned” to the $2.27 million mark, Wham-O said.

An attorney for Wham-O was not available for comment Friday.

Heller Ehrman’s lawsuit also took aim at a claim Wham-O filed in its bankruptcy case in April 2009, in which Wham-O sought an “undetermined amount” and accused the law firm of committing malpractice because it withdrew as counsel in pending litigation.

Heller Ehrman is asking the court to throw out the claim.

Heller Ehrman was once a 700-lawyer-strong San Francisco-based international law firm with more than a century of experience at its back. It sought bankruptcy protection in December 2008, several months after announcing it was dissolving in the face of financial difficulties and several failed attempts to merge with other law firms.