Lawyers’ fees on Barclay brothers case could reach £20m

A number of firms instructed for various defendants in the failed claim brought by Irish property developer Patrick McKillen could be in line for a bumper pay day with total costs estimated at £20m.

McKillen, represented by Herbert Smith partners John Whiteoak and Kevin Lloyd, sued Sir David and Sir Frederick Barclay, their companies and some nominee directors, alleging dishonesty in preventing him from buying more shares to gain control of the Maybourne Hotel Group, owner of London’s Claridge’s.

The Barclay brothers were represented by Weil Gotshal & Manges litigation practice head Matthew Shankland.

Derek Quinlan, leader of an investment group which bought the hotel group in 2004, was also accused of being involved in the conspiracy. He was represented by Quinn Emanuel Urquhart & Sullivan partners Richard East and Matthew Bunting.

Costs for Weil Gotshal and counsel on behalf of the brothers and their companies were put at £8.5m at a hearing before Mr Justice Richards last week (10 September).

Quinn Emanuel’s costs were estimated at £4.6m. Costs for Ashurst, which represented directors of the Barclay brothers, and counsel, could hit £2.1m.

The National Asset Management Agency (Nama) – sued for selling the debt to the Barclays and represented by Hogan Lovells – put its costs at £750,000. Herbert Smith’s costs are estimated as £4.5m.

However, Richards J ruled that costs will be assessed on a standard basis. This means the firms are likely to receive significantly less than if they had been assessed on an indemnity basis.

A source said the general rule is that standard costs are usually around two thirds of the amount claimed, whereas indemnity costs, imposed if the judge rules there has been unreasonable conduct on one side of the case, can amount to 90 per cent of the estimated figure.

A costs judge will now decide if the costs are proportionate and therefore how much McKillen will have to pay. The process could take up to 12 months as thousands of documents are examined.

McKillen has been ordered to pay around £6m of the legal bill within 42 days, including £1.5m payable to Quinn Emanuel, £2.5m for the Barclays’ and their companies’ costs, and £500,000 of Nama’s bill.

Judgment in the case was handed down on 10 August in favour of the Barclay brothers (10 August 2012). McKillen was seeking to block the £600m transaction by alleging it was unlawful, but Richards J found against him.

McKillen was refused leave to appeal by Richards J, but Herbert Smith will apply directly to the Court of Appeal in the next few weeks.

The parties

For the claimant/petitioner Patrick McKillen: Serle Court’s Philip Marshall QC, 4 Stone Buildings’ Richard Hill QC and Gregory Denton-Cox, also of 4 Stone Buildings, with Serle Court’s Ruth den Besten, instructed by Herbert Smith partners John Whiteoak and Kevin Lloyd.

For the respondent Derek Quinlan: One Essex Court’s Stephen Auld QC, Michael Fealy and Michael d’Arcy instructed by Quinn Emanuel Urquhart & Sullivan partners Richard East and Matthew Bunting.

For the respondents Misland (Cyprus) Investments; Ellerman Corporation; B Overseas; and Maybourne Finance: One Essex Court’s Kenneth MacLean QC, Edmund Norse, Sa’ad Hossain and Emma Jones instructed by Weil Gotshal & Manges partner Matthew Shankland.

For the respondents, directors Richard Faber, Michael Seal and Rigel Mowatt: Essex Court’s Joe Smouha QC and Erskine Chambers’ Edward Davies instructed by Ashurst partner Ed Sparrow.

For the defendants Sir David and Sir Frederick Barclay: One Essex Court’s Lord Grabiner QC, Edmund Nourse of the same set instructed by Weil Gotshal & Manges partner Matthew Shankland.

For National Asset Loan Management (Nama): South Square’s Robin Dicker QC and William Willson instructed by Hogan Lovells’ litigation partner Hugh Lyons.

For Coroin: Erskine Chambers’ Nigel Dougherty instructed by DLA Piper partner Charles Gordon.