The High Court has today (9 June) handed down its judgment in favour of Barclays Bank in a long running battle to secure repayment of a $540,000 loan together with interest from former Dewey & LeBoeuf partner Londell McMillan.
In a case that was closely watched by the industry as it tackled issues relating to liability in partner loan programmes, the dispute arose when Barclays negotiated and agreed a scheme around the end of 2005 with legacy Dewey Ballantine. After Dewey & LeBoeuf filed for Chapter 11 bankruptcy in 2012, the bank sought to recover some $56m in outstanding loans to over 200 partners, including McMillan. In 2013 Barclays filed a claim against McMillan and other former Dewey lawyers Lester Charles Landgraf, Lewis Rosenbloom, and Ellias Farrah.
Landgraf, Rosenbloom and Farrah settled out of court with the bank for an undisclosed sum before the first day of the hearing on 5 May and proceedings went ahead with just McMillan.
McMillan’s case was based on the assertion that he did not intend the agreement to be for the provision of partner capital because he did not want or need a loan for such purposes. He also maintained that he was confused by the communication and did not understand what he was signing was a loan necessary to fund his capital contribution. Presiding over the hearing, Justice Popplewell rejected the argument, stating it was ‘untenable in the light of the clear terms of the correspondence’.
He added: ‘McMillan was an experienced and senior partner in a major international law firm whom the bank could reasonably expect to understand the clear terms of the agreement which he signed, and to be able to assess the financial implications of doing so. Mr McMillan was not a naïve or vulnerable consumer.’
Popplewell further pointed to the structure being standard at the time for loan programmes, while there was nothing in the recovery terms that was unusual or unfair. He further held McMillan was under no obligation to finance his capital contribution by a loan from the bank and could have used an alternative scheme or any other personal source of funding.
A Barclays spokesperson said: ‘We are pleased with the court’s decision and reasoning, including the indemnity costs award. The vast majority of partners have repaid the sums owed already. Barclays will continue to robustly pursue those partners whose loans remain outstanding.’
Fountain Court Chambers’ duo Guy Philipps QC and Adam Zellick were instructed by Addleshaw Goddard partner Richard Clayton for Barclays Bank.
McMillan appeared in person with written submissions from 4 Stone Buildings’ pair John Brisby QC and Alexander Cook alongside Wilberforce Chambers’ John Wardell QC who were instructed by Candey partner Andrew Dunn.