Disclosure day

There has been no love lost in the bitter battle between Paddy McKillen and the Barclay brothers over the ownership of the prestigious Maybourne Hotel Group.


The case is one of the most high-profile litigations to come out of the property crash, yet it does not mark an end to such disputes.

Lawyers involved in the case have several other instructions gathering pace and say that there is a substantial amount of prestigious London real estate in the hands of investors who have “hit a brick wall” in terms of financing distressed debt.

“When things go wrong, they litigate”, says one partner, in reference to Irish property tycoon McKillen, who brought the hotel case.

However, the comprehensive judgment handed down by Mr Justice Richards last week found in favour of Sir David and Sir Frederick Barclay – in addition to the brothers’ companies and their directors, investor Derek Quinlan and the Irish National Asset Management Agency (NAMA) – that there had been nothing unlawful about the purchase of a string of hotels including Claridge’s, the Connaught and the Berkeley (10 August 2012).

Quinlan instructed Quinn Emanuel London co-managing partner Richard East and Matthew Bunting, who say the judgment shows there was “no foundation” for the claims against their client.

And in the aftermath of the ruling, East claims that the result highlights a sea-change in the way the biggest cases are litigated.

“The way in which this case unfolded, and the result achieved, demonstrates that litigation in London has moved on from where it was five or 10 years ago,” asserts East. “Specialised and focused firms like Quinn Emanuel have the expertise and firepower to run these cases at the highest level, and to outgun our opponents in the process.”

If that sounds like a dig in the ribs of the opposition – Herbert Smith – then that’s perhaps because of the recent history of this dispute.

Quinn and Weil Gotshal & Manges litigation head Matthew Shankland – who acted for the Barclay brothers – asked for further disclosure on McKillen’s financial background in February. They believed that McKillen didn’t have the means to buy the shares in the hotel group that he was in dispute with the Barclay brothers over.

McKillen’s lawyers, Herbert Smith partners John Whiteoak and Kevin Lloyd, claimed the discussions he had entered over raising equity amounted to a single text message. But after Quinn and Weil chiselled away, Herbies eventually disclosed 21 files of negotiations with seven funding parties.

The firm was slammed by Richards J for a “lackadaisical” approach to disclosure (14 March 2012).

East and others are now claiming that such document-intensive cases need a less traditional structure.

One source claims Herbies’ permanent disclosure centre in Belfast is a “slow, salaried, less-incentivised” model. However, the Belfast office was not involved in the Barclay brothers versus McKillen case.

A recent case in the Technology and Construction Court (paragraph 15) revealed that a team of 35 solicitors and paralegal reviewers could get through only 214 documents each per day. In that case, Mr Justice Akenhead was also critical of Herbert Smith, saying he was “very surprised that competent document reviewers could not get through substantially more”.

Richards J’s judgment was regarded as “resounding” by the defendants and other respondents, but that doesn’t rule out the possibility of all parties locking horns again next month.

Herbert Smith has confirmed that McKillen is “considering an appeal” and that he “firmly believes in his claim”, as well as hitting back at criticism of its handling of the case.

“The decision turns on various points of contractual construction and law which were and are important to test,” says a firm spokesman. “We’re proud with how we have run the case. We were able to get it off the ground and to trial within six months notwithstanding a complex set of facts, law and supporting documents.”