Partner Emma Slade has successfully settled a multi-million dollar, multinational, professional negligence injunction claim against a large international law firm ranking in the top hundred law firms in the world by turnover.
Emma’s client was a successful businessman who had a 50% shareholding in a lucrative internet-based company which, whilst registered in England & Wales, was located in Moscow and trading in Eastern Europe, Spain and America. Although the business was profitable, relations between our client and his fellow shareholder and sole director, A, deteriorated quite significantly. A was siphoning trade away from the company and diverting assets to other companies owned by him and his family. Our client was sufficiently concerned that, through agents, he contacted the international law firm with a view to stopping the activities of A by obtaining an injunction.
The law firm wrote to A, inviting him to cease his activities. They gave him 21 days within which to respond, even providing the correspondence in Russian so language difficulties would not arise. However, during that 21 days, A continued to transfer business out of the company to members of his family, making a considerable impact on the trading of the company.
Despite this, the law firm simply chose to issue proceedings in the Companies Court as a shareholder dispute under s994 Companies Act 2006. During the next six months of litigation, A continued to inflict damage on the company. Our client eventually lost faith in the firm and went to alternative solicitors who immediately obtained an injunction against A.
Unfortunately, by then the damage had already been done. What had been a company worth between US$40m-US$45m was now only worth US$2m, with the valuation of our client’s 50% interest devaluing accordingly. He ultimately settled with A at a fraction of what his interest had been worth, which is why he then came to Slee Blackwell to bring an injunction claim against the international law firm he’d originally instructed for professional negligence in failing to prevent A damaging the company further.
The claim was hotly contested by the law firm, who claimed that the valuation placed on the company was incorrect, despite it being a valuation they had commissioned themselves and were relying on. They also claimed that an injunction could not have been obtained, yet the second firm of solicitors had proved otherwise. Additionally they argued that our client would not have funded such an application as he left their firm owing fees; yet he was able to show he had funded the injunction application with second firm.
Ultimately the law firm agreed to a substantial out of court settlement following mediation.