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A High Court judge has thrown out the evidence given by Gouldens' head of company commercial Max Thorneycroft in support of the firm's bid to force a company director to pay up to £200,000 in fees.
In a judgment which effectively scotches Gouldens' attempts to force entrepreneur Robin Herd to pay up the money, Judge John Toulmin openly questioned the truth of Thorneycroft's evidence.
"I cannot accept that an experienced commercial solicitor and partner in a distinguished firm of solicitors was unaware of the law relating to solicitors' liens," he said of Thorneycroft's claim that he believed Herd was still liable to pay the fees.
Gouldens had been attempting to enforce a guarantee Herd had given when he was director of company, the March Group, to pay fees being accumulated by Gouldens as it acted on the proposed acquisition of two companies and a subsequent flotation on the London Stock Exchange.
Herd gave the guarantee - also given by a fellow March director Peter Voller - when the March Group first instructed Gouldens.
But the transactions proceeded very slowly and, in November 1994, Herd said that he could no longer accept responsibility for any further fees. In December he resigned as a director.
Gouldens had run up bills of almost £200,000 and in March 1995 the firm refused to continue to work on the transaction.
In May 1995, Voller and the March Group signed a "fees agreement".
Gouldens agreed to hand over its files to March's new solicitors, Lawrence Graham, to allow the transactions to continue and, in return, Voller and the company unequivocally agreed that Gouldens' fees were reasonable and waived their right to have them taxed.
Last month Judge Toulmin ruled, after a preliminary issues hearing, that the agreement with Voller and the March Group discharged Herd from any liability to pay the fees.
Thorneycroft had argued that the second fees agreement with Voller and the company did not affect the firm's earlier arrangement with Herd as the firm was forced by law to hand over the files to Lawrence Graham.
However, the judge said: "It is much more likely and consistent with the fees agreement... that Mr Thorneycroft knew that in giving up the papers to Lawrence Graham, Gouldens was voluntarily giving up something valuable."
Responding to the judgment, Thorneycroft, whose firm is also attempting to get Voller to pay up, said: "It would be inappropriate for me to comment whilst we are still considering our position."