Baker McKenzie Hit With Malpractice Suit Over Russian Coal Mine Fight
A former client claims the global firm bungled an effort to recover a Siberian mine valued at $200 million.
December 05, 2018 at 05:38 PM
4 minute read
The original version of this story was published on The American Lawyer
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 coal mine that client says is valued at over $200 million.
In a suit filed last month in state court in Chicago, where the global law firm was founded, Daniel Rodriguez and his British company Lehram Capital Investments Ltd. allege that attorneys 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 attorney, associate Roman Butenko, who is currently attached to the firm's Washington, D.C. 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 attorney Daniel Konicek of Konicek & Dillon said in the complaint.
According to the complaint, Lehram purchased the Gramoteinskaya coal mine in the Kemerovo region of Siberia in a 2013 deal with London-based Evraz Holdings in which he also took on $70 million 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 says, 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 percent share in the mine to ensure the success of the investigation.
While these negotiations ultimately proved unsuccessful for Rodriguez, he says that his relationship with Yushvaev, who spent nine years in a labor 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 attorney was in a trial Wednesday and did not immediately respond to a request for comment.
“The claim has no merit and we will contest it vigorously. A U.K.-based company filing a claim in Cook County, Illinois for work carried out in Russia is a blatant example of forum shopping,” Baker McKenzie said in a statement.
The firm is currently litigating an unrelated malpractice action in the Superior Court of the District of Columbia over claims that its affiliate in Brazil jeopardized a client's $3.18 billion settlement from that country's “Operation Car Wash” corruption scandal.
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