A court has found Norton Rose Fulbright Hong Kong liable for HK$4.4 million (c.£445,000) for an IP partner's blunder.
Justin Davidson failed to take into account crucial legislation when advising a transferee of a business, which resulted in the client being saddled with huge debts when it took over a failing shop. Davidson's gaffe appears to have been the result of an unintended hospital pass from a colleague, who asked him to advise on an area of law outside his expertise.
In 2012 Norton Rose Australia was advising Dymocks Franchise Systems China (DFS), a company that grants franchises for businesses to run bookstores under the Dymocks brand. One of DFS' franchisees in Hong Kong failed to make its necessary payments, so DFS decided to explore the option of stepping in to take over the struggling shop. DFS asked Norton Rose Australia if there would be any "unexpected problems" in doing so.
The case was very much signposted for a franchise specialist. However Fiona Wallwork, a franchise lawyer at Norton Rose Australia at the time, passed the matter to Davidson, a Hong Kong partner specialising in, erm, intellectual property.
Presumably at a loss to conjure up a patent law angle, Davidson had a crack at franchising advice. Unfortunately, it was a steep learning curve and he failed to alert the client to vital legislation that imposed liability for past debts on DFS when it took over the bookshop.
A Norton Rose Fulbright partner having a stab at it, yesterday.
After DFS had the keys to the store, it was surprised to receive demands for outstanding debts owed by the previous owner, and found itself having to stump up significant sums to pay creditors and other lawyers to deal with the unexpected issues.
A disgruntled DFS sued NRF HK and, in a recently published judgment, a Hong Kong court held that the firm ought to have known and made its client aware of the critical legislation. It ordered the firm to pay damages of HK$4.4 million, but didn't mention that IP lawyers should stay in their lane.
A spokeswoman for NRF did not comment.
I really don't see how this deserves to be a news item. Many of us have committed the odd cock up during our professional lives. If we hadn't, how come insurance premiums are so high? You could find a hundred stories a week like this one. Why single out NRF? And by the way, I have no connection whatsoever with NRF. However, I have taken the occasional hit during my time.
I note your absence in the comments on stories about non-partners making errors, Dayglo Dave. Are you, by any chance, a partner? A story like this highlights it doesn't just happen to juniors/non-lawyers.
Dabble dabble whoops
The newsworthy-ness is why on earth did this not settle and the fact that partners made suck a c*ck up. Complaints and claims happen all the time but on such an obvious error the firm should just pay up, unless they were really looking for an excuse to stop acting for DFS so a bit of conflict of interest would do the trick.
Dearie, it may be that the insurers made them fight it
09:22 - suck a cock up.
Clearly predictive text on your phone going from historical search results.
There but for the grace of God go most us...
Dayglo Dave, I don't think it's your average cock up. Seems partner tried to blag it as it wasn't his area of law. He may have been unlucky to get it wrong. But seems pretty newsy that a p*ssed off client ended up paying huge sums for the mistake and the firm then had to appear before court and pay a big fine.
Since when have Insurers ever been the ones pushing for undefendable actions to be given judicial treatment...?
Most of us must have advised on areas of law that we knew nothing about. Sometimes you get lucky, sometimes not. If it is a failing shop, surely the first concern for any transferee is "if we take over the shop, what are our liabilities?"
I can only imagine there are more stories behind this.
Nearly half a million quid is newsworthy. This isn't a minor lane-straying.
This is a proper cock up though - and it's from a Partner, not an NQ. He's supposed to have the experience and the good sense not advise on something that is not his area of expertise.
Ppl on here saying similar things have happened to them - that's the whole point. By the time you reach the partnership you should know the dangers of advising outside of your area. You should be able to see this sort of crapola coming from a long, long way off.
Clients pay a lot of money to multi-disciplinary law firms like NRF because they expect to get expert advice in whatever matter they bring to the firm. Palming off the work to whomever is available regardless of their ability to do it is cheating the client.
What next? Shall we just have a paralegal dig out the relevant precedent and fill in the gaps as they think best?
Oh. Hang on a minute.....
If he declares himself a Freeman on the Land then according to admiralty law he will not be liable.
How is it that so few people understand how this works.
Dentons HK acted for the insurers
Client pays for risk management.
Lawyer utterly fails to manage risk.
Firm given a well deserved shoeing.
I would love to know what the franchise specialist put in the email when she gave it to him? "Piece of piss. Fill in the forms and take the money"?