Eversheds hit with second negligence claim

Eversheds_office.jpg” alt=”Eversheds hit with second negligence claim” />Eversheds is heading for an £850,000 High Court showdown after being sued by two of its former clients in a negligence claim.

The news comes after the firm was hit by a £20m lawsuit by Nationwide Building Society after the financial lender found itself the victim of a mortgage fraud (www.thelawyer.com, 26 September).

In the latest case, business magnates Michael Scarlett and Richard Smith had instructed Eversheds to advise on the chances of Parcel Force’s parent company Consignia suing due to the name of their pallet distribution company Pallet Force being so similar.

Scarlett and Smith claim that Eversheds wrote to them saying that there was a “slight risk” that Consignia would challenge the name, but that a claim was “unlikely” to succeed.

The claim form states that in 2001 Consignia’s lawyers Lovells challenged the validity of Pallet Force’s trademark. Scarlett and Smith claim they were looking at between £150,000 and £200,000 in trial costs with only a 50 per cent chance of winning.

Scarlett and Smith claim this potentially huge cost led the two men, along with two other shareholders, to sell their shares in Pallet Force’s licensing company Mikmar for a loss of £857,400. It is this loss the businessmen are looking to reap back from Eversheds.

The business moguls claim that the firm should have warned them that there was a substantial risk that Consignia would challenge Pallet Force’s name.

Scarlett and Smith have also accused the firm of breaching fiduciary duties and solicitors’ rules by accepting instructions from Pallet Force after the two men were no longer with the company. They claim that there could have been a likely conflict of interest.

An Eversheds spokesman said: “Proceedings have been served on Eversheds by the directors of a former client, for whom we acted some seven years ago. We are currently investigating the allegations, although the intention is to defend this claim. As proceedings are ongoing we are unable to comment further at this time.”