A recent High Court ruling saw Anglo-Scottish law firm, Shepherd & Wedderburn (S&W), cleared of liability in the long-running Sheffield United FC ownership dispute. Mrs Justice Bacon found that the law firm had been negligent in several areas, including failing to advise on an own-client conflict and in drafting an option agreement relating to the club’s Bramall Lane stadium, which resulted in the claimant, Kevin McCabe, losing ownership of the club to Prince Abdullah. However, the judge ruled that S&W’s negligence did not cause McCabe any loss.
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Understanding the History Between the Parties:
The dispute began in 2013 when McCabe, the then-owner of Sheffield United FC, sold half of his share in the club to Prince Abdullah Bin Mosaad Bin Abdulaziz Al Saud. S&W acted for McCabe in the initial investment and shareholders’ agreement with the prince. The agreement included various call options on each other’s shares, with clause 9.1.12 aiming to ensure that ownership of the club and its properties would be reunited in the event the prince bought out McCabe’s stake.
In 2017, S&W advised McCabe’s corporate vehicle, Sheffield United Ltd (SUL), to exercise a call option under the ISA in respect of Prince Abdullah’s shareholding. This ultimately resulted in a ruling by Mr Justice Fancourt in 2019 that SUL had to transfer its 50% stake in the club to Prince Abdullah’s company, UTB.
In 2020, an arbitration determined the price to be paid by UTB for the property assets, including the stadium. McCabe argued that S&W was negligent in several areas, including failing to advise on an own-client conflict and in drafting an option agreement relating to the club’s Bramall Lane stadium.
Breaking Down the High Court’s Decision: What You Need to Know
Mrs Justice Bacon held that S&W had been negligent in several areas, including failing to advise on an own-client conflict and in drafting an option agreement relating to the club’s Bramall Lane stadium. However, she also found that S&W’s negligence did not cause McCabe any loss. The judge ruled that even if the law firm had properly advised SUL on the risk that UTB might seek to use a device to avoid exercising the property options, SUL would have made the same decision.
The judge also found that S&W had been negligent in agreeing to a last-minute change to the stadium option without taking instructions. However, she said that even if S&W had sought SUL’s instructions, it would “most likely” have accepted the amendment.
The judge concluded that the claimants had not shown that the outcome of the litigation would have been any different if SUL had been advised by different solicitors. S&W’s negligence therefore did not cause SUL any loss.
Negligence Claims and Conflicts of Interest: Lessons from the Sheffield United FC Case
The case is significant in terms of highlighting the importance of law firms managing conflicts of interest and providing clear advice to clients. It also demonstrates the potential consequences of legal negligence and the need for clients to carefully consider their options if they believe their lawyers have acted negligently.
However, the fact that the judge ruled that the negligence did not cause the claimants any loss is a reminder that proving causation can be a key challenge in such cases.
Overall, the ruling highlights the need for law firms to ensure they have robust processes in place for identifying and managing conflicts of interest, and for providing clear and comprehensive advice to clients. It also highlights the importance of clients being proactive in seeking independent legal advice if they believe their lawyers may have acted negligently.
Conclusion: Negligence must cause loss
The ruling in the Sheffield United FC ownership dispute case is a reminder that experienced law firms can make mistakes but to be worth taking action the mistake must cause a financial loss. In this case, S&W was found to be negligent in several areas, including failing to advise on an own-client conflict and in drafting an option agreement relating to the club’s Bramall Lane stadium. However, the judge ruled that S&W’s negligence did not cause McCabe any loss. The case serves as a reminder that it is essential for law firms to have robust processes in place to ensure that mistakes are minimised, and that clients are adequately advised of all risks associated with any transaction.
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