Links turns to Slaughters on negligent advice action

Links snubs insurers’ firm Clydes for separate defence on high-stakes claim

Deborah Finkler
Deborah Finkler

Slaughter and May has been instructed to advise Linklaters on its e136m (£115m) professional ­negligence litigation ­battle with Credit Suisse and ­former Italian alliance ­partner Gianni Origoni Grippo & Partners.

The news marks an escalation in a dispute relating to advice Linklaters capital markets partner Simon Firth gave the investment bank on a structured finance ­transaction with bankrupt dairy giant Parmalat in 2001.

Linklaters’ insurers had engaged Clyde & Co to act on the litigation but sources say that the size and ­complexity of the case led the firm to instruct Slaughters alongside its Italian best friend Bonelli Erede Pappalardo. Dispute resolution partner Deborah Finkler is leading for the City firm.

Slaughters is not on the Credit Suisse legal panel. If it was, it would have been ­precluded from acting in ­litigation against the bank, spotlighting the firm’s ­cautious strategy on bank panels. Last week it opted out of the RBS panel citing risk management issues.

As revealed by The Lawyer (11 February), Credit Suisse’s claim relates to a e500m convertible bond issued by Parmalat’s Brazilian ­subsidiary Parmalat Brazil in 2001. The bank subscribed to the bond and a complementary forward sale agreement (FSA) that saw Parmalat pay e248m for future share entitlement.

Linklaters has since brought a contribution claim against Gianni after the Italian firm advised it on local law issues. Firth sought advice from Gianni’s former UK managing ­partner Bruno Bartocci, now a partner at Legance, over whether Credit Suisse would be liable for clawback payments in the event of Parmalat’s liquidation.

Bartocci and then-Gianni associate Andrea Platania advised that the bank would only be liable to revocatory action from Parmalat’s administrators if it had prior knowledge of the threat of insolvency.

When Parmalat went into administration in 2003 the 2001 deal was unwound and Credit Suisse settled on a return payment of e154m. The bank claims that negligent advice over its liability to such an action meant it was denied the chance to negotiate better terms with the administrator.

Linklaters and Gianni dissolved their four-year alliance in 2004 after attempts at merging the firms failed.

At the time conflicts over the Parmalat relationships were cited as one symptom of the breakdown of the talks, with the firms ­advising different sides on the administration process.