Linklaters has received a setback in its $55m (£37m) court battle with Levicom after the telecoms company today successfully appealed an earlier ruling which saw the magic circle firm escape a multimillion-dollar payout for alleged negligence.

The judgment, which was handed down in the Court of Appeal this morning (11 May) by Lord Justice Jacob, Lord Justice Lloyd and Lord Justice Stanley Burnton, will see the level of damages due to Levicom reassessed, with Linklaters now potentially liable for a multimillion-dollar settlement.

The ruling, which reverses an earlier decision to award Levicom nominal damages of just £5, states: "The judge 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."

The case stems from advice Linklaters gave Levicom in 2000 relating to a dispute with telecoms company Tele2 AB. Levicom claimed that Linklaters' advice led to arbitration in 2004, rather than a settlement on favourable terms.

According to the claim form, which was filed in October 2006 and amended in April 2008, Levicom claimed damages for "the lost opportunity to negotiate a more advantageous settlement".

In the original judgment handed down in April 2009, Mr Justice Andrew Smith ruled that, despite finding that Linklaters' advice was negligent in some respects, it did not cause Levicom any loss.

Stewarts Law litigation partner Andrew Shaw is advising Levicom with 4 New Square's Justin Fenwick QC instructed as counsel. Linklaters was advised by Clyde & Co litigation partner Conrad Walker, with Fountain Court's Stephen Moriarty QC brought in as counsel.

In a statement, Linklaters said: "We do not feel it is appropriate to comment at this time, as there remain substantial issues still to be determined. We can confirm that we are seeking leave to appeal to the Supreme Court."