A $210m claim against Burness Paull will go to a full Scottish civil trial after Edinburgh’s Court of Session found last month that legacy firm Paull & Williamsons had acted in breach of conflict of interest rules. While the court found that the firm did not act fraudulently, the case is now likely to move to a full hearing in early 2018.
In the meantime, claimant Robert Kidd, former chair and principal shareholder of oil service firm International Tubular Services (ITS), has confirmed he will lodge professional complaints against the lawyers involved – former legacy Paull & Williamsons partners Ken Gordon and Scott Allan, as well as Ledingham Chalmers consultant Malcolm Laing – to the Scottish Legal Complaints Commission and The Law Society of Scotland.
Prior to the February judgment, Burness Paull had admitted a breach of its fiduciary duties after a late disclosure of documents in October, which included correspondence between Gordon, who left the firm around the same time, and Lawrence Ross, then managing director at private equity firm Lime Rock Partners. Allan, who worked alongside Gordon, exited Burness Paull at the end of January.
The claim relates to a private equity investment by Lime Rock into ITS. Kidd, who left ITS in 2013 citing disagreements with the board, claimed Paull & Williamsons (which was acquired by Burness in 2012) acted for both sides in the investment and used another firm – Ledingham Chalmers – as a front for the activity.
The judgment of Lord Tyre refers to an email from Gordon to Ross in which Gordon had agreed to act as ‘unofficial counsel’ to Lime Rock in connection with the ITS transaction, while having a solicitor from another firm ‘front’ the negotiation. The solicitor was Laing, who at the time was a Ledingham Chalmers partner acting for Lime Rock. He is now a consultant at the firm.
The judge concludes: ‘In the present case, it was clear from the emails produced that Gordon had known that what he was doing was improper. The whole arrangement was dishonest… and remained so.’ However, while he concluded that the case should go to a full trial, he considered Kidd’s case ‘is at least of doubtful relevancy’.
In a statement, a spokesperson for Burness Paull said: ‘Lord Tyre has now issued his interim decision. We will continue to defend the action, which relates to a historical case involving Paull & Williamsons, prior to the merger with Burness. It would be inappropriate to comment further on the matter at this stage.’
Ledingham Chalmers chair Jennifer Young said in a statement: ‘This is an ongoing case and, as such, it would be inappropriate to comment further.’
Legal Business first revealed in December last year that Burness was defending the claim relating to its legacy business. Burness has instructed BTO Solicitors’ professional negligence lawyer Alan Eadie, while Levy & McRae’s head of commercial litigation, Graham Craik, is acting for Kidd. Proceedings were originally raised in 2014.
Law firm partners in Scotland have suggested that the practice of acting on both sides of a deal is historically common practice in Aberdeen in order to keep larger Edinburgh and Glasgow firms out of the market.
kathryn.mccann@legalease.co.uk