Bird & Bird is facing a €130m (£97.7m) professional negligence claim brought by a group of around 30 German real estate funds, in the latest development in a corruption trial against a former client.
The claims follow the news that a Hamburg-based Bird & Bird lawyer and a former partner had been called as witnesses in a trial involving their client Heinrich Maria Schulte, the ex-chief of German real estate fund Wölbern Invest.
Schulte has been in custody since September 2013, for alleged embezzlement of around €147m (£114m) in funds between 2011 and 2013 (17 December 2014).
The claimants, represented by Heuking Kühn Lüer Wojtek Hamburg partner Christoph Froning, suggest that Schulte and his lawyers contravened their contractual obligations to investors by moving funds to a Dutch limited company, he had set up with about €18,000 of equity but no assets.
As first reported by German legal magazine JuVe, Schulte has denied the charges against him from the start of the trial, insisting that his advisors played an integral role in the movement of funds.
The real estate funds who lost money as a result of Schulte’s actions are now suing Bird & Bird for €130m as well as bringing a €1.5m claim against current Bird & Bird corporate counsel Ole Brühl, and former partners Frank Moerchen and Thomas Demmel.
The lawyers are accused of acting negligently, and potentially criminally, in both enabling the transfer and advising the investors that the transactions were legal and in the best interests of the fund.
The claim suggests that Schulte’s embezzlement was facilitated by the lawyers, either through a lack of due diligence or criminal intent, misleading shareholders into believing that around €147m (£114m) funds had been appropriately invested.
Bird & Bird has been given eight weeks to respond to the allegations.
It is understood that the claimants’ lawyers offered Bird & Bird the opportunity to mediate before issuing the claim. The offer was declined via Ince & Co Hamburg partner Markus Eichhorst, who is understood to be acting for the firm’s insurance company, Travelers.
A Bird & Bird spokesperson said: “We see no basis for this claim. Accordingly we will defend it with all legal measures available to us and will completely refute the assertions it contains. Bird & Bird acted lawfully in the provision of advice to the Wölbern Group and at no time legitimised illegal acts. We regret that we cannot comment further on this.”
Moerchen was among the partners to launch Bird & Bird’s Hamburg office in 2011, joining as part of a six-lawyer team from local boutique Recore Business Lawyers (19 April 2011). He co-led the office, alongside Demmel, who quit Bird & Bird in February 2014 to join German firm Reinberg Meyer von Beust.
The office is currently home to six partners focusing on corporate, media, IP and regulatory work.
Schulte is being represented by Hamburg-based criminal defence lawyer Arne Timmermann, and Brühl has turned to partner Nikolai Venn of Berlin-based criminal law firm Freyschmidt Frings Pananis Venn.
The Hamburg prosecutor is Heyner Heyen, and the presiding judge Peter Rühle.