Linklaters Losses In Levicom Appeal
By: Ainsley Brown
Solicitors be aware of the advice you give a client or even potential clients about their chances of success, it may come back to haunt you
: Levicom vs. Linklaters is as much a lesson in professional responsibility as it is in professional liability.
In pervious post, ‘World’s Second Largest law Firm, Linklaters, Sees Off €50 Million Negligence Claim,’ I wrote about the slap on the wrist – a £5 nominal damages judgment – that Linklaters received in the High Court for giving negligent advice; however the story did not end there. The High Court decision was appealed to the Court of Appeal and this time the ‘Magic Circle’ firm did not escape with a slap on the wrist, becoming potentially liable for a claim of £37 million.
So what is the story here?
In a nutshell, Linklaters was sued by its former client Levicom International Holdings BV (Levicom), a Baltic telecommunications company, after what Levicom claimed was negligent advise. Linklaters was retained to represent Levicom after a joint venture with the Swedish company Tele2 went awry. Based on the advice it received, one that overstated its chances of success – ‘a 70% chance of success’ – Levicom took a hostile position, even refusing several settlement offers from Tele 2 to its later detriment. It was this over estimation – negligent over estimation – of its chances of success according to Levicom that caused it to take such a harsh line which eventually resulting in the case being settled on less favorable terms than the pervious settlement offers.
Mr. Justice Andrew Smith, sitting in the High Court however was only partly convinced. Justice Smith agreed that Linklaters was in fact negligent in its advice, however it could not be said that such negligence caused Levicom to settle on less favorable terms. Linklaters was however in breach of contact for its negligence however with the lack of causation it only got a slap on the wrist – a £5 nominal damages judgment.
The Court of Appeal agreed with Mr. Justice Smith also finding Linklaters to be negligent, however it disagreed with his causation analysis. In the court’s judgment as was explained by Lord Justice Jacob: “when a solicitor gives advice that his client has a strong case to start litigation rather than settle and the client does just that, the normal inference is that the advice is causative.” He later went on to say: of course the inference is rebuttable – it may be possible to show that the client would have gone ahead willy-nilly. But that was certainly not shown on the evidence here.”
In effect what the court was saying is that once a solicitor gives advice as to the strength of a client case and acting on that advice the client follows the recommended course of action it can be said that the solicitor caused the client to take said action. However, this is only an inference and simply shifts the burden of proof from the client to the solicitor to prove otherwise. This is the approach endorsed by the Lord Justice Jacob: “the judge [Justice Smith] should have approached the case on the basis that the evidential burden had shifted to Linklaters to prove that its advice was not causative. Such an approach would surely have led him to a different result.”
There is no word on if Linklaters is going to appeal the decision to the Supreme Court.
Contrast this case with Rollerteam v Edwin Coe whose ‘advice’ merely consisted of repeating what a freezing injunction said.