Irish firm McCann Fitzgerald is being sued by the Bank of Scotland (BOS) for negligence over a conflict of interest. The case rests on advice given by McCanns to a group of banks that financed the development of Dublin's Four Seasons Hotel.
BOS has asked that McCanns be joined as defendants to an earlier suit it is pursuing against the recently privatised ACCBank.
ACCBank acted as agent on behalf of all the syndicated banks and instructed longstanding adviser McCanns on the development. However, McCanns also acted as legal adviser for one of the two developers in the Four Seasons project, Harvard Properties.
“No question of conflict of interest was ever raised for the simple reason that no conflict of interest existed”
Ronan Molony, McCann Fitzgerald
The Four Seasons project went overbudget by around I£30m (£23.3m) and the two developers – Harvard Properties and Simmonscourt Holdings – went bankrupt, leaving the banks to cough up the deficit.
The two other banks involved were the Anglo Irish Bank and the Scotiabank. Neither of the two banks has announced any action against ACCBank or McCanns.
It is understood that BOS alleges it only joined the syndicate on the basis that a fixed-price contract was in place and it claims that McCanns at no point made it clear that there was no contract in place. McCanns, however, refutes the BOS claims.
McCanns managing partner Ronan Molony told The Lawyer: “We'll be defending our position in relation to this litigation vigorously. All of the parties were aware of our role in relation to the entirety of the transaction and no question of conflict of interest was ever raised for the simple reason that no conflict of interest existed.”
McCanns also denies the specifics of the BOS claim on the fixed-price contract. “Prior to the closing of the transaction, the participating banks were aware of the issues that arose for decision,” said Molony.
The Dublin legal community has expressed some sympathy for McCanns. A partner at a top Irish firm told The Lawyer: “Everyone feels genuinely sorry for McCanns; it's a really unfortunate position to be in.”
ACCBank is exposed to an estimated I£10m (£7.8m), but the extent of McCanns' liability is unclear.
The firm refused to comment on potential damages or the involvement of the other banks in the syndicate.