CFS bondholders accuse Mayer Brown of negligence

Discovery has just started in a securities fraud and negligence case brought against Mayer Brown Rowe & Maw by bondholders who invested billions of dollars in Commercial Financial Services (CFS), a former US client of the firm.

CFS, which bought and sold delinquent credit card debt, filed for bankruptcy in 1998, defaulting on more than $1.6bn (£1bn) of bonds, after it emerged that it had been selling off loans in order to meet its debt collection targets.

To compound matters for Mayer Brown, CFS founder William Bartmann, who also faces action from the bondholders, has filed a third party claim against Mayer Brown, citing advice given to him by partner Jason Kravitt. Bartmann alleges that he left the language for CFS's final offering document entirely to his lawyer.

The bondholders, advised by Sachnoff & Weaver and Bingham Dana, allege that advice given by Mayer Brown on CFS's statements to investors kept them in the dark.

Mayer Brown's lawyer on the case, John Villa of Washington firm Williams & Connelly, told The Lawyer: “The drafting was a collaborative effort between client and lawyer and the ultimate decision of what to place in the document is the client's.”

Villa said the order for discovery was entered early last week and is expected to last a year.