Barclays conspired with Dewey over dodgy partner loans, High Court told
Barclays bank failed to properly advise a former Dewey & Leboeuf partner on the financial health of the firm when it provided him with a $486,000 (£291,000) capital loan in 2010, the High Court has been told. Charles Landgraf, the former head of the defunct US firm's Washington DC office, has also alleged the lender made misrepresentations at the time of the loan. The counterclaim was made as Barclays sought a summary jud
March 04, 2014 at 06:43 AM
3 minute read
Barclays failed to properly advise a former Dewey & Leboeuf partner on the financial health of the firm when it provided him with a $486,000 (£291,000) capital loan in 2010, the High Court has been told.
Charles Landgraf, the former head of the defunct US firm's Washington DC office, has also alleged the lender made misrepresentations at the time of the loan.
The counterclaim was made as Barclays sought a summary judgement against Landgraf, arguing he is liable to repay the loan and interest in full.
In response, Landgraf said he only had an obligation as a guarantor of the liability of the firm, which served as "primary obligor".
Landgraf, who was represented by 4 Stone Buildings John Brisby QC and Alexander Cook, said that he "played no part in administration of the loan and had no subsequent contact" with Barclays, and that payments were serviced by the firm and deducted from partners' income.
The regulatory partner – now at Arnold & Porter – said he was consistently and repeatedly told by Dewey's management that the loan was just a "mechanism through which the firm could finance the shortfall in its distributable income", with no burden on partners to repay the capital.
Barclays denied any such representations were made with its authority or knowledge.
However, the bank's application for summary judgement was refused by Mr Justice Popplewell at a hearing last Tuesday (25 February), and the matter is headed to trial on 1 December 2014.
In conclusion, Popplewell J said: "In this case it is not fanciful to suppose that with the benefit of disclosure and cross-examination at trial, the impression which arises on first reading of the contractual documents would appear in a very different light."
Shortly after Dewey's collapse in 2012, Legal Week reported Barclays and other banks including Citi were trying to reclaim money they lent through professional practice loans. In July that year, Barclays declined to take part in a proposed settlement by former Dewey partners.
Barclays has since put together outstanding claims against around 50 former partners of the firm, amounting to just over $15m (£9m).
At last week's hearing, Popplewell J remarked: "A decision on construction in this case will not necessarily give definitive guidance, nevertheless a decision of this court at an early stage may help to inform and resolve those other disputes."
Barclays was represented by Fountain Court's Guy Philipps QC and Adam Zellick, instructed by TLT Solicitors partner Richard Clayton.
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