JPMorgan Axes Linklaters Over Bear Stearns Suit
As major corporate law firms in New York and London have begun to relax a traditional taboo against suing investment banks, it can be a challenge to take on these lucrative cases without offending longtime clients.
This has been demonstrated by the punishment dealt out to Linklaters by JPMorgan Chase, which has axed the magic circle London firm from its list of preferred legal advisers, according to the Lawyer.
The Linklaters office in New York agreed last year to represent Barclays Bank in litigation against Bear Stearns over alleged misleading information provided about a hedge fund that collapsed earlier in 2007. Seemingly, at the time, this had nothing to do with its valued representation of JPMorgan.
But then, when JPMorgan bought Bear Stearns this year, it was outraged to discover that its legal adviser was now an opponent, the Lawyer recounts in another article. “An epic row ensued.”
Forbidden by legal ethics rules in New York to simply drop the Bear Stearns case, Linklaters was forced to stand its ground.
“With the benefit of hindsight, we wouldn’t have sued Bear Stearns,” an unnamed source tells the Lawyer. “But at the time, people were comfortable with it.”
Ten financial institutions, including JPMorgan, reportedly account for 20 percent of the firm’s global revenue.
