Lawyers to pay $9m for conspiring to lure away clients
Sydney Morning Herald
Saturday December 12, 2009
A FORMER Freehills partner and a former in-house lawyer for Westpac must pay nearly $9 million in damages after they were found to have conspired to lure lucrative oil and gas clients away from their former employer.Robert Nicholls and David Slater were found to have improperly earned millions in fees and share-based payments by luring clients from a law firm in Kazakhstan to their breakaway firm.In the NSW Supreme Court yesterday, Justice Clifford Einstein ordered the pair, as well as companies associated with their law firm, Temujin, should repay profits earned by Temujin between 2006 and February 6, 2007, to their former employer, Michael Wilson & Partners, which is run by another expatriate Australian lawyer.Justice Einstein ruled the profits made up of $US3.5 million ($3.8 million), plus ‚555,258 ($894,000) and $US4 million were "tainted".The trio had conspired to defraud MWP and deprive it of clients, the judge found.The two lawyers were working in Kazakhstan taking advantage of the huge demand for advice on the purchase of formerly state-owned oil, gas, gold and mineral companies and their listing on the London Alternative Investment Market.Clients in Kazakhstan often paid the lawyers in equity rather than in fees and law firms often operated more like investment banks in structuring deals and bringing parties together to form deals.A third Australian expatriate lawyer, John Emmott, was also found to have conspired to lure clients away from the firm, but he has not been ordered to pay damages because he is facing separate proceedings in Britain. While still working at MWP, Mr Emmott tried to "kick-start" the new firm by referring work to his friends and former colleagues. Mr Emmott later joined the new firm.Mr Emmott was found to have breached his duty of fidelity and his fiduciary obligations to MWP by passing on work to the new firm he had set up.He was found to have been "the backbone of the plot" to profit from stealing the clients and "likely played the dominant role in every step" of the breakaway firm's work. Mr Nicholls and Mr Slater participated as "accessories" in Mr Emmott's breaches of his duties to his employer because they knew Mr Emmott was breaking the law by sending work to their new firm, the court ruled.Mr Emmott secretly continued to supervise Mr Nicholls and Mr Slater's work at Temujin, even while he worked at MWP.Justice Einstein also found Mr Nicholls and Mr Slater took advantage of their positions when they worked at MWP, using the firm's resources to create a foundation for Temujin.He also found Mr Slater stole confidential documents belonging to MWP by sending them to his personal email account before he left the firm in January 2006.The damages award marks the end of a bitter three-year legal fight between Michael Wilson and the trio. The case has exposed an intriguing web of companies from Liechtenstein, Panama, the British Virgin Islands, the Bahamas, the Channel Islands, Switzerland and the US.
© 2009 Sydney Morning Herald
