NEW YORK, Nov 17 (Reuters) - A $42 million legal malpractice action against Pryor Cashman involving pilfered union benefits can move ahead following an appeals court decision Thursday.

Affirming a lower court ruling, the Appellate Division, First Department, refused to dismiss a lawsuit filed against the law firm in 2010 by trustees for the benefits fund of a construction workers' union.

The Local 147 Construction Workers Retirement Fund alleged that Pryor Cashman failed to give legal advice that would have prevented the funds' third-party administrator, Melissa King, from embezzling $42 million. King pleaded guilty last month to the embezzlement.

The trustees' lawsuit alleged that as fund counsel, Pryor Cashman lawyers failed to recommend an independent auditor to examine the funds' books and failed to advise the trustees on how to ensure that books were maintained properly.

Thursday's decision affirmed a ruling that found the complaint sufficiently pled the trustees' claims.

Pryor Cashman did not immediately respond to requests for comment.

The case is Fitzsimmons v. Pryor Cashman, No. 651360/2010, Appellate Division, New York County Supreme Court. For the plaintiffs: Ronald Richman, Schulte Roth & Zabel, New York.

For the defendants: Gideon Cashman, Pryor Cashman, New York.

(Reporting by Leigh Jones)

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