In the Media

London chiefs face fraud claim as Coudert unravels

PUBLISHED September 20, 2006

Coudert Brothers' former chairman and London managing partner have become embroiled in the quagmire of litigation that has engulfed the firm since its spectacular collapse last year.

Former partners have confirmed that Coudert will shortly file for Chapter 11 bankruptcy protection in the US in a desperate bid to mitigate its mounting obligations and liabilities, The Lawyer can reveal.

Steven Beharrell, Coudert's chairman from 2001 to 2003, and Dean Poster, the firm's London managing partner at the time the UK office jumped ship for Orrick Herrington & Sutcliffe in May 2005, have been named in a lawsuit filed against the firm by US company Statek Corporation.

The case - for fraud, malpractice and negligence - is just one of a litany of litigation that Coudert's 'special situations committee' is dealing with as it attempts to wind up the firm.

Litigation costs are escalating as the firm faces at least 20 lawsuits globally, and the committee believes that Chapter 11 protection is the only way to help reduce costs and collect other funds owed to Coudert.

Coudert's liabilities are estimated to total almost $25m (?13.25m), not including its secured debt and potential future litigation results. However, the filing is being delayed until Coudert completes the transfer of its mainland China offices to Orrick and receives a payment of around $1.4m (?740,000).

Orrick has struggled to transfer Coudert's local operating licences. But the process is likely to complete within the next couple of months following the Beijing and Shanghai Judicial Bureaus' approval of the transition (, 13 September).

Coudert announced its closure in August 2005 after two years of plummeting profit and the collapse of merger talks with Baker & McKenzie.

The closure prompted a rush to pick off the cream of the firm's international offices. Orrick and DLA Piper took teams and offices in the Far East, with the latter also hiring lawyers in Belgium and Russia.

Dechert merged with the bulk of Coudert's Paris office, while Chadbourne & Park took St Petersburg and Denton Wilde Sapte secured Almaty.

Beharrell confirmed the Statek lawsuit, saying: "It will be vigorously defended as it has no merit."