Bakers faces malpractice suit from UK investor over Russian coalmine fight
A former client claims the global firm bungled an effort to recover a Siberian mine valued at $200m
December 06, 2018 at 05:04 AM
4 minute read
Baker McKenzie faces a hefty malpractice suit over its work on behalf of a Spanish client who used the firm in a failed effort to recover ownership of a Siberian coalmine, which the client says is valued at more than $200m (£157m).
In a suit filed last month in state court in Chicago, Daniel Rodriguez and his British company Lehram Capital Investments allege that lawyers for the firm failed to detail connections in Russia that might have affected their advice on his claims.
They also accuse Baker McKenzie of misleading them into a proposed litigation finance deal with another firm client who had been convicted of a violent crime, a move they say damaged their reputations in the international business community.
The complaint only names one Baker McKenzie lawyer, associate Roman Butenko, who is currently attached to the firm's Washington DC. office. He is not named as a defendant in the case.
"Rodriguez relied on the marketing of Baker McKenzie as a one-stop, global firm suited in particular to Rodriguez's international businesses for the past eight years," Illinois lawyer Daniel Konicek, of Konicek & Dillon, said in the complaint.
According to the complaint, Lehram purchased the Gramoteinskaya coalmine in the Kemerovo region of Siberia in a 2013 deal with London-based Evraz Holdings, in which it also took on $70m in debt.
But shortly afterward, Lehram director Igor Rudyk, the general manager of the mine, was detained by Russian authorities in Kemerovo and ultimately forced to sign documents transferring ownership of the mine to an entity owned by the Shchukin family, which has close ties to the deputy governor and governor of Kemerovo.
That prompted Rodriguez to retain Baker McKenzie in 2016 to help recover the mine. But, according to the complaint, the firm did not reveal to him that it had a number of clients in the Kemerovo region, including the original seller of the mine and others that relied on the "patronage" of the governor of the region.
These connections, Rodriguez said, potentially affected the litigation strategy in the case. For example, while he discovered video of the governor transferring the mine to the Shchukin family days before Rudyk supposedly executed the transfer documents, Baker McKenzie allegedly advised Rodriguez consistently against showing the video in hearings. Rodriguez also accused the firm's lawyers of filing a claim challenging a notary's signature in the wrong court.
Rodriguez said the firm also led him astray when it became clear he needed litigation financing to pursue the matter. It introduced him to another firm client that had faced a similar takeover of its mines from the Shchukin family but had resolved the matter successfully.
But after meeting with a representative of the client and being advised by him and the firm to petition for a criminal investigation against the Shchukins, he was told at a second meeting that he would have to pay the client, Gavril Yushvaev, $300,000 and give him a 50% share in the mine to ensure the success of the investigation.
While these negotiations ultimately proved unsuccessful for Rodriguez, he said that his relationship with Yushvaev, who spent nine years in a labour camp after being convicted of a violent crime, ultimately became public in the banking and mining communities.
Rodriguez did not indicate how much he is seeking in damages, and his lawyer was in a trial on Wednesday and did not immediately respond to a request for comment.
Baker McKenzie said: "The claim has no merit and we will contest it vigorously. A UK-based company filing a claim in Cook County, Illinois for work carried out in Russia is a blatant example of forum shopping."
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