In good defence

Linklaters is quids in. At the end of a case that could have seen the firm paying $55m (£37m) damages to Baltic telecoms company Levicom the firm has been ordered to pay just £5 in nominal damages (see blog).

The timing of the case could not have been worse for the firm, which is going through its own New World restructuring, but the judgment could hardly have been better. If the costs hearing goes in the firm’s favour on 6 May, it will be the icing on the cake.

When a law firm takes to the High Court to defend a $55m (£37m) negligence claim you can guarantee it will have a good defence. In the case of Levicom v Linklaters, the firm was  right to be confident of its chances. Yesterday (21 April) Mr Justice Andrew Smith ordered the firm to pay nominal damages of just £5 to Levicom, the international telecoms company that brought the claim.

The battle lines were chalked across the centre of Court 66 at the Royal Courts of Justice on 25 January. At that time the legal teams representing either side – Clyde & Co and Fountain Court’s Stephen Moriarty QC for Linklaters and Manches and 4 New Square’s Justin Fenwick for Levicom – gathered for a 20 day hearing. According  to a mole close to the case, the defence was relying on the inadequacy of claimant witnesses and had been “very aggressive” in its dealing with the claimant.

The telecoms company was seeking damages for advice Linklaters gave in relation to a dispute with telecoms company Tele2 AB. Levicom claimed that Linklaters advised it that it would have a 70 per cent chance of success if the dispute went to arbitration.

Levicom alleged that had it not followed Linklaters’ advice it would have settled on more favourable terms. As it was, the company turned down three settlement offers from Tele2 AB.

It was down to Levicom’s legal team to prove that the company would have settled the original claim with Tele2B if it had been given different advice. It was in this objective that the company failed.

As Smith J observed in his judgment: “Levicom always knew that there was some risk that they would not succeed in establishing substantial damages, although they believed that they would do so.

“I don’t accept that Levicom would have entered into such a settlement even if they had been given advice as pessimistic as that which they contend Linklaters should have given them, still less if they had been given what I conclude would have been proper advice. There is no evidence that I accept that indicates that they would have done so.”

Although the ruling may appear to be a complete washout for Levicom, 4 New Square’s Fenwick, did succeed in showing that Linklaters had been negligent on some of its early advice.

It is unclear yet whether Levicom’s team will appeal the decision but, with instructing partner Andrew Shaw at Manches set to join Stewarts Law in June, there could be issues about whether the client will remain at Manches or follow him to Stewarts.

Regardless, the case is a major victory for Linklaters and the profession.  Much was made of an impending professional negligence tidal wave at the beginning of the year and there are many cases in the pipeline – just this week we published a  story about a £4m claim against Charles Russell (20 April).

Already this year Eversheds and Cobbetts settled a joint claim that alleged they gave negligent advice on a fraudulent property deal brought against them by Nationwide Building Society and Cheshire Building Society. Last month the High Court threw out a £17m claim brought by Land Securities against Fladgate Fielder in a scrap over a judicial review (30 March).

And now Smith J has found that Linklaters had acted negligently in its early advice, but that that had no impact on the loss made by the client. Linklaters, which has its own New World to worry about, will be breathing a massive sigh of relief.