Clifford Chance and Linklaters are set to divvy up £800,000 between
them for the first stage in a £300m negligence claim brought against
embattled accountant Ernst &Young (E&Y) by a DaimlerChrysler
The claim, E&Y’s second since being hit with a £2.6bn lawsuit by
the directors of troubled insurer Equitable Life, revolves around the sale
of ERF, a UK truck-building group once owned by DaimlerChrysler’s
truck-making unit Freightliner.
Linklaters’ client E&Y, which is also using Brick Court’s Jonathan
Sumption QC and Stephen Salzado, saw its attempt to throw out the case
dismissed by Mr Justice Cooke. It is now expected to go to trial in 2005.
So far it is understood that total legal fees have reached around
£800,000. Following the decision to quash E&Y’s strike-out attempt
– it tried a similar tactic without success on the Equitable claim –
Clifford Chance, as Freightliner’s adviser, has already been paid
£250,000 by the accountant.
Clifford Chance’s London managing partner for litigation and dispute
resolution Jeremy Sandelson and litigation partner Roger Leese are leading
The payment followed an interim order from the judge, although it is
understood that Clifford Chance’s costs for this stage of the action could
reach £400,000, a percentage of which will go to Freightliner’s lead
counsel 3 Stone Building’s Geoffrey Vos QC and his junior on the case, Guy
Morpuss of 20 Essex Street.
Sources estimate that Linklaters, led by litigation partner Greg Reid, and
its counsel can also expect to see similar legal fees.
The trial itself is expected to be long and complex – like the history of
the deal that started the claim. In January 2000, Canada’s Western Star
sold ERF to Germany’s truck and engineering group MAN.
However, last year MAN filed a lawsuit against Freightliner after
discovering that ERF was insolvent. Freightliner then launched its own
action against E&Y for negligence, after it audited EDF and indeed
Western Star, which is now owned by Freightliner, in 1998 and 1999.