Legal Business Blogs

RBS Litigation: Bird & Bird loses major instruction on RBS Group Action to Fladgate

A major blow has been dealt to Bird & Bird as it has emerged that the firm has lost its advisory role on the highly complex Royal Bank of Scotland shareholder dispute, a significant instruction which has subsequently been given to Fladgate.  

Bird & Bird was heading one of two large claims against RBS, with a team led by its dispute resolution head Steven Baker and Serle Court’s Philip Marshall QC, who continues to act as lead counsel. The firm picked up the mandate as Baker took the RBS case with him when he joined from Olswang in 2012. The Group Action’s website now states: ‘We are represented by the leading law firm Fladgate, which has an outstanding track record in corporate litigation.’

Bird & Bird had been representing the bank’s former chief executive John Greenwood and the RBoS Shareholders Action Group Limited, with around 12,000 retail and around 100 corporate, institutional and charitable members (the BB Action Group). 

Having lost the instruction last Wednesday (12 November), the firm said in a statement: ‘In what is a very complex and substantial claim our team has worked extremely hard for the group of claimants to ensure their case has been taken forward effectively, and we have continued to work on their behalf despite issues with receiving payment of our fees from the Action Group. We are therefore disappointed that the Action Group has chosen to take the decision to dis-instruct us, but we wish the claimants success in their ongoing legal dispute’

The floodgates opened for RBS following its £20bn government bailout in 2008, with investors seeking to recoup their losses following its nationalisation.

The action is being brought against the bank’s former chief executive Fred Goodwin and three other directors, and relates to a rights issue in April 2008, in which RBS sold its shares at £2 per share. The claimants allege that the prospectus on which the rights issue was based was ‘defective’ and contained material misstatements and omissions.

Earlier this year, Baker was criticised at the High Court over a £500m fluctuation in the value of the claim. In his witness statement to the court in November 2013, Baker told the court: ‘the losses suffered by the members of the BB Action Group who have actually issued proceedings so far would equate to approximately £900m…and the total acquisition value of those claimants’ shares is £1.25bn.’

Such figures were subsequently relied on by Mr Justice Hildyard in the third case management conference, however, in his seventh witness statement in January in the proceedings, Baker corrected these figures to £392m (in place of £900m) and approximately £490m (in place of £1.125bn) respectively.

RBS is also facing a second case involving a group of 313 claimants that comprises a number of UK and international financial institutions and pension funds, led by Stewarts Law partner Clive Zietman and 3 Verulam Buildings’ Andrew Onslow QC.

Herbert Smith Freehills continues to defend RBS in both cases.