$103M verdict against Chicago’s Baker & McKenzie

By Julie Wernau
Posted Oct. 25, 2010 at 6:37 p.m.

A $103 million verdict was handed down Friday in Jones County, Miss., against Chicago-based Baker & McKenzie and one of its attorneys.

Joel Held, a Baker & McKenzie attorney based in Dallas, represented both sides of business relationship that turned sour for one client while the other benefited, according to court documents.

A spokesman for Baker & McKenzie said the law firm strongly disagrees with the verdict.

Around 1999, S. Lavon Evans, Jr., a businessman in the oil drilling business since 1995, began drilling wells for another businessman named Reed Cagle, whose various business entities are represented by Held and Baker & McKenzie, according to the suit.

Cagle introduced Evans to his attorney, who Evans retained, and for the next several years, the two engaged in various business ventures, including the construction of two drilling rigs, while Held represented both sides.

But what Evans didn’t know, according to the suit, was that Cagle was insolvent and, despite a legal agreement in place that disallowed it, was using Evans’ significant assets, with Held’s help, to obtain loans worth millions of dollars.

In one instance, unbeknownst to Evans, Cagle allegedly used one drilling rig as collateral to obtain a $7 million loan, according to court documents, while at the same time, he refused to pay invoices for the rig’s construction or money he owed Evans. Meanwhile, after the rigs were built without any contribution from Cagle, he and his attorneys attempted through various means to give Cagle ownership of the rigs.

According to the complaint, the defendants drafted legal documents, establishing LLC’s as subsidiaries of the joint company, in Evans’ name, that would be controlled by Cagle, without advising Evans that the LLC’s had been created. The LLCs, and Evans’ assets were then used to procure further loans, which would show up in the bank account of their company, then immediately be withdrawn for Cagle’s other uses.

It wasn’t until early 2007 that Evans realized, after an accountant reviewed the company’s books, that Cagle was insolvent. When Evans tried to dissolve the business relationship, the suit alleges that Cagle and his attorneys “instituted a litigation strategy to bring Evans to his knees.” Cagle and his various companies accused Evans of stealing the rigs out from under him and even obtained a restrained order to intimidate Evans into handing his assets over to Cagle.

Attorneys representing Evans and his various companies had no further comment.

“We are confident we acted in a manner that was entirely consistent with our professional obligations and that no harm was done to the plaintiffs,” Baker & McKenzie said in a statement. “We will continue to argue our position vigorously and expect we will be vindicated. As this is a pending legal matter, we will have no further comment at this time.”

Tribune reporter Ameet Sachdev contributed to this report.

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One comment:

  1. jack (me) Oct. 26, 2010 at 1:18 pm

    Although Mississippi is backward, I’m sure it has the same law as everywhere else that an attorney cannot serve both sides if there is a potential conflict of interest, without full disclosure.

    In that it was not disclosed that Cagle was milking Evans, that rule was per se violated.

    So, even though Baker & McKenzie “strongly disagrees with the verdict,” it should recognize that its attorney violated the simple rule I noted in the preceding paragraph, and they will eventually have to pay. If they don’t, they are guilty of malpractice, again almost prima facie.