Legal Business Blogs

Close to the wire: Freshfields and Herbert Smith settle £142m London Underground negligence claim

Freshfields Bruckhaus Deringer and Herbert Smith Freehills have reached an eleventh hour settlement of the £142m professional negligence claim brought against them by London Underground (LUL).

Due to be heard over a four week period in October, the case is arguably the largest ever filed against a City firm.

LUL was represented by Ince & Co partner Charlotte Davies, who instructed 4 New Court Square’s Justin Fenwick QC, while Freshfields drafted in bar heavyweight Tony Grabiner QC of One Essex Court to defend it, and Herbert Smith fielded Fountain Court’s Tim Dutton QC.

The initial High Court claim was issued against 2332-lawyer Freshfields by LUL in January 2011, in relation to the company’s public-private partnership (PPP) with now-defunct transport company Metronet, which was responsible for the maintenance, renewal and upgrade of the infrastructure on nine LUL lines between 2003 and 2008 under the PPP arrangement.

Following a turbulent period during which Metronet was implicated in the May 2004 derailment at White City, the company went into administration in 2007, leaving LUL liable under the PPP agreement to purchase its debt, eventually becoming liable to pay around £1.74bn.

Magic Circle firm Freshfields was served with a £178.5m claim in July 2011 while legacy Herbert Smith was named as second defendant in the dispute in 2012. That sum was subsequently reduced after LUL managed to recoup some of its losses.

The precise terms of the settlement are confidential but a statement from Herbert Smith said: ‘Transport for London, Freshfields Bruckhaus Deringer LLP and Herbert Smith Freehills LLP have agreed to end the litigation concerning legal advice relating to Metronet’s borrowings under the PPP. All parties involved are pleased to have resolved this dispute without the need to go to trial. The terms of settlement are commercially confidential.’