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Nobel Prize-winning economist Joseph Stiglitz is seeking $5 million in damages against his former lawyer for failing to file divorce papers in time to prevent his second wife from claiming part of his $300,000 in prize money.

At a hearing today, U.S. District Judge Richard Leon in Washington pushed the start date of the trial to Sept. 29 from July 22 at the request of counsel, who did not give an explanation for the delay. The suit accuses attorney Rita Bank of professional negligence. The trial is expected to last six days, according to court papers.

Stiglitz, 66, who shared the Nobel in 2001 for showing that markets are inefficient when all parties in a transaction don’t have equal access to critical information, accused Bank of keeping him in the dark about her loyalties, according to court papers. Jane Hannaway, Stiglitz’s second wife, filed for divorce in 2002.

Bank never told Stiglitz she had consulted with Hannaway about a potential divorce before he hired her to represent him in August 2000, according to the complaint, first filed in 2005 in District of Columbia Superior Court in Washington. Stiglitz said in court papers that he repeatedly asked Bank to file divorce papers in Washington in 2000 and 2001 to limit his financial exposure, though this was never done.

Future Income

At the time, Stiglitz anticipated “that certain future publications he was working on, along with the potential award of the Nobel Prize in Economics in October 2001, would generate income which he wished to protect from being awarded in a divorce to Hannaway,” according to the complaint.

Neither Stiglitz nor his attorney, David Whitworth, returned telephone calls seeking comment.

“We believe that the allegations made in the lawsuit are completely meritless and we fully expect to prevail at trial,” Richard Simpson, the attorney for Bank, said in an e-mailed message health insurance quote.

After winning the Nobel, which earned Stiglitz more than $300,000, Bank advised him to reject settlement offers made by Sanford Ain, Hannaway’s attorney, for half the assets accrued during the 24-year marriage, according to court records.

In October 2002, Stiglitz was informed that Bank could no longer represent him because she was joining a law firm with Ain. Hannaway found out “weeks, and perhaps months” earlier and responded by seeking new counsel and filing for divorce in New York, where “celebrity status” rules allowed her to claim against Stiglitz’s future income that would be enhanced by his Nobel, the complaint said. Ain, who isn’t a party in the litigation, didn’t return a call seeking comment.

Bestseller

Stiglitz’s book “Globalization and Its Discontents,” was published in 2002 and became a bestseller, ultimately translated in 28 languages, according to court documents. His follow-up book, “The Roaring Nineties,” came out in 2003.

Had Bank filed the divorce case in a timely manner in Washington, or had she informed Stiglitz of the huge legal cost of not accepting the settlement offers, Stiglitz would have saved “millions of dollars in legal fees, expert fees and future incomes and royalties,” according to the complaint.

Stiglitz last worked in Washington as chief economist at the World Bank, a position he held until he resigned in early 2000. He is now a professor of economics at Columbia University. He remarried in 2004.

The case is Stiglitz v. Bank, 05-1826, U.S. District Court, District of Columbia (Washington).

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Filed under: management, money by Finance Boss