Sinclair Roche faces £18m headache

The legal bill faced by Sinclair Roche & Temperley for losing a case against former client Somatra has risen from the estimated figure of £9m to £18m. It has also emerged that the firm will not technically merge with Stephenson Harwood until the £18m is paid off.

Somatra sued Sinclair Roche for negligent work carried out in 1994, when the firm represented the company against a group of underwriters following the sinking of one of its supertankers.

Until the liability issue arising from this case is resolved, the Sinclair Roche partnership will not be dissolved. Therefore, the partnership of the two firms - although on the face of it existing as a single entity - never actually merged.

The 'merger' was thus more akin to a mass lateral hire of Sinclair Roche partners by Stephenson Harwood than a true combination of two partnerships. Stephenson Harwood chief executive John Pike admitted that the firms had merged commercially but not technically.

The ringfenced Sinclair Roche faces a bill of £18m for losing the action. The combined costs of its lawyers, Ince & Co, and Somatra's lawyers Herbert Smith, will come to around £10m, which Sinclair Roche will have to pay. The firm also owes Somatra around £8m in damages, according to the company's lawyer, John Ogilvie at Herbert Smith.

Costs were originally estimated at around £6m, but a costs order last week increased this amount as well as adding extra damages.

Sinclair Roche has been ordered to make an interim payment of £8m to Somatra within 28 days for costs and damages. The firm tried to appeal against the order to obtain a stay of execution, but was refused. Sinclair Roche plans to appeal again within the next 28 days.