Legal Business Blogs

A €20m loan: Fried Frank faces multi-million pound professional negligence claim

US firm Fried Frank Harris Shriver & Jacobson is facing a €10m-plus professional negligence claim at London’s High Court made by a former client alleging multiple breaches of duty over advice provided on the enforcement of a commercial loan in France.

The claim arises out of a €20m loan made to Paris-based company Proximania, under which Luxembourg-based company Trimast Holdings, owned and controlled by investment vehicle Fortelus, became the lender. Trimast claims Fried Frank acted in breach of the terms of its advice over enforcement and security issues arising from Proximania defaulting on the loan.

In 2009 the claimants instructed Fried Frank’s Paris office for specialist French law corporate insolvency and restructuring advice with respect to Trimast’s rights under the loan. Former partner David Chijner, who has since moved to DLA Piper, was then a partner in the Paris office and had overall responsibility for the matter. In the context of events that followed, Fried Frank is accused of multiple particulars of breach including failing to advise on enforcement procedures; failures relating to the post-enforcement restructuring advice; and failing ‘generally to exercise the standard of reasonable skill and care to be expected of an ordinarily competent lawyer.’

As a result of those breaches of duty, Trimast claims to have suffered substantial loss and damage, in particular an additional sum of more than €20.8m invested following the default. Having lodged its claim form at London’s High Court in mid-April, the claim was valued at more than €10m with the claimants seeking damages, interest, and costs.

A pleadings hearing is understood to have taken place on Friday (14 November) with a team from Travers Smith representing the claimants, which includes Trimast and Fortelus Capital Management, while Clyde & Co is representing Fried Frank.

Other firms to face professional negligence disputes this year includes Nabarro, which agreed to pay £10m to settle a £130m claim brought against the firm by a former client unhappy with its handling of a litigation matter. Leading private client firm Withers was in March ordered by the High Court to pay £1.6m in damages after the court upheld a professional negligence claim alleging the misdrafting of a limited liability partnership agreement.

At the time of writing, Fried Frank did not respond to requests for comment.