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Baker & McKenzie can be sued in Chicago for work by Russian entity, Illinois appeals court affirms

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A judge in Cook County, Illinois, did not abuse his discretion when he ruled that Baker & McKenzie LLP can be sued in Chicago for alleged malpractice by a former Moscow outpost on behalf of overseas clients seeking to reclaim a Siberian coal mine. (Photo from Shutterstock)

A judge in Cook County, Illinois, did not abuse his discretion when he ruled that Baker & McKenzie LLP can be sued in Chicago for alleged malpractice by a former Moscow outpost on behalf of overseas clients seeking to reclaim a Siberian coal mine.

The Illinois Appellate Court’s First District ruled 2-1 Feb. 14 that the $200 million lawsuit should not be dismissed based on the doctrine of forum non conveniens. The doctrine says a court with jurisdiction may decline to hear a case when adjudication elsewhere would be more convenient and better serve the ends of justice.

“Here, the parties cannot litigate this matter in Russia, the forum where the tort occurred, but they can litigate in the forum that is the principal place of business” of Baker & McKenzie LLP, the Illinois appeals court said in a decision by Justice Bertina E. Lampkin.

One issue in the case is whether the Chicago-based Baker & McKenzie LLP can be liable for the actions of the Moscow outpost, Baker & McKenzie CIS-Limited.

Baker & McKenzie operates under a Swiss verein structure in which multiple partnerships adopt a common brand and some management functions but remain legal and financially distinct. The malpractice plaintiffs claimed that under this structure, Baker & McKenzie LLP is liable for the alleged malpractice of Baker & McKenzie CIS-Limited.

Baker & McKenzie LLP had argued that the case should be heard in London, where two partners of the law firm’s London office had reviewed the coal mine case and recommended that it be handled by Baker & McKenzie CIS-Limited.

The former clients suing for malpractice are the London-based Lehram Capital Investments, which currently has no assets, and its principal shareholder, Daniel Rodriguez, a Spanish citizen who lives in Europe.

They initially sought legal help after a Lehram Capital Investments official was arrested by Russian immigration authorities shortly after Lehram Capital Investments’ 2013 purchase of the coal mine. The official was allegedly detained in a Russian prison and forced to transfer an interest in the mine to another party.

Their malpractice suit alleges that Baker & McKenzie CIS-Limited filed the coal mine suit in a Russian civil court, which has a 10-day statute of limitations, rather than a Russian arbitration court, which has a three-year statute of limitations. As a result, the coal mine case was dismissed.

The malpractice suit also alleges that Baker & McKenzie CIS-Limited introduced Rodriguez to a representative of a Russian criminal group who would supposedly conduct negotiations for the return of the mine, putting the lives of Rodriguez and his family in danger.

Lehram Capital Investments and Rodriguez had sued Baker & McKenzie LLP, along with three other firm entities—Baker & McKenzie International, Baker McKenzie and Baker & McKenzie.

Baker & McKenzie LLP—shortened to Baker LLP in the opinion—was the only entity that was served and that answered the complaint. The plaintiffs had claimed that the four Baker defendants operate as a single entity that can’t be separated from the Moscow office.

Justice Debra B. Walker dissented. She noted the Swiss verein structure and said the alleged malpractice “occurred in Russia by Russian-based attorneys, none of whom worked for Baker LLP.”

“Baker LLP’s liability for the conduct of member attorneys of the Swiss verein has not been determined,” Walker said. “Our supreme court has taken judicial notice of the congested dockets of Cook County circuit courts. … It would be unfair to burden Cook County residents with the cost and effort of a jury trial on a case involving little local interest. The public interest factors strongly favor transfer of the case to London.”

Baker & McKenzie released this statement to the ABA Journal: “We continue to believe this alleged claim has no merit. Moreover, a foreign U.K. company and a Spanish citizen filing a claim in Cook County, Illinois, to complain about work carried out several years ago in Moscow by Russian attorneys, arising out of a mining project in central Russia, and governed by Russian law, in which none of the alleged events took place in the United States, nor involved U.S. attorneys, constitutes forum shopping and is an affront to the forum non conveniens doctrine. The record demonstrates that resolution of this dispute in the adequate alternative forum of London, where witnesses and evidence reside (unlike Illinois), would better serve the needs of justice. Litigating this matter in Illinois would represent an unwarranted and unnecessary burden on the county’s courts and taxpayers and not serve the public interest. We are assessing the appellate court’s decision—we believe the dissent got it right—and reviewing our further options.”

Reuters, Law360 and have coverage of the decision.

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