A U.Okay. funding group has sued Baker McKenzie LLP, one of many largest legislation corporations on the earth, for allegedly botching the group’s effort to recuperate a Siberian coal mine it says is price greater than $170 million.

London-based Lehram Capital Investments Ltd., which focuses on distressed belongings, filed the lawsuit in November in a state court docket in Cook dinner County, In poor health., the place the legislation agency was based.

Lehram employed Baker in 2015 to assist it retrieve a coal mine the corporate surrendered to a Russian oligarch in what Lehram describes as a state-sponsored theft, in keeping with the grievance.

Baker all however ensured the authorized effort’s failure by lacking a Russian court docket submitting deadline, and the agency tarnished Lehram’s fame by advising it to hunt assist from one other Baker consumer, a convicted, violent legal with alleged ties to the Russian mafia, the lawsuit says.

Slightly than aiding Lehram, that consumer demanded 50% of the mine after which failed to barter its return, the lawsuit alleges. Baker later requested Lehram to signal a doc waiving its proper to sue the agency, in keeping with the lawsuit. Lehram refused.

Lehram’s grievance, which seeks unspecified damages for skilled negligence, reads like a parable of the dangers Western corporations face once they enter Russia, the place weak establishments and corruption can result in misplaced investments. The claims additionally forged a harsh mild on Baker, a global agency that markets its capacity to assist corporations handle these dangers. With about 13,000 legal professionals, Baker is the second-largest worldwide legislation agency by head depend.

“The declare has no advantage and we are going to contest it vigorously,” Baker stated in an emailed assertion. “A U.Okay.-based firm submitting a declare in Cook dinner County, Illinois for work carried out in Russia is a blatant instance of discussion board purchasing,” the agency stated, referring to the case’s alleged lack of ties to the U.S.

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A legislation agency spokesman declined to reply to particular allegations within the grievance.

Aman Tuleev, then the governor of the Kemerovo Region, transferred the coal mine in dispute to coal baron Alexander Shchukin, according to Lehram’s lawsuit.

Aman Tuleev, then the governor of the Kemerovo Area, transferred the coal mine in dispute to coal baron Alexander Shchukin, in keeping with Lehram’s lawsuit.


Photograph:

Danil Aikin/TASS/Getty Photographs

Lehram bought the Siberian coal mine from a subsidiary of London-based Evraz Holdings in October 2013, taking up $70 million of debt within the deal. Later that yr, the deputy governor of the Kemerovo area demanded {that a} Lehram director in Russia signal over possession of the mine to an organization managed by coal baron Alexander Shchukin, an ally of the regional authorities, the grievance alleges. When the director refused, he was imprisoned for an immigration violation and launched solely after he agreed to finish the paperwork, the lawsuit says.

The governor of the area, Aman Tuleev, transferred the mine to Mr. Shchukin, accusing Lehram in an interview broadcast on Russian tv of failing to pay its miners.

Elena Yulova, a lawyer for Mr. Shchukin, denied that Lehram was compelled to surrender the mine.

With roughly 301 million tons of coal in reserve and annual manufacturing of greater than 2.5 million tons, the mine has an estimated worth of between $171 million and $394 million, in keeping with an audit produced for Lehram and reviewed by The Wall Avenue Journal. The mine was the one asset held by Lehram; its shareholders personal different belongings in South America and Africa beneath totally different company entities.

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An audit carried out for Mr. Shchukin’s firm and reviewed by the Journal valued the mine at between $5 million and $12 million.


Lehram’s grievance, which seeks unspecified damages for skilled negligence, reads like a parable of the dangers Western corporations face once they enter Russia.

Lehram filed a declare in Russian court docket to repossess the mine in 2015 and employed Baker the next yr. An affiliate lawyer at Baker withdrew the declare for procedural causes, however the agency missed the deadline to refile, ending the case, in keeping with the Illinois lawsuit. Baker filed a separate declare difficult the notary signature on the mine switch however lodged it within the fallacious court docket, the lawsuit alleges.

One among Baker’s different shoppers, billionaire Gavril Yushvaev, as soon as the biggest shareholder of dairy merchandise firm Wimm-Invoice-Dann Meals, had a mine seized by Mr. Shchukin and was in a position to efficiently negotiate its return, Baker attorneys instructed Lehram, in keeping with the lawsuit.

By September 2016, Lehram was operating out of cash to pay its authorized payments. Baker instructed the funding group that Mr. Yushvaev would finance the authorized effort to recuperate the mine, the lawsuit says. In keeping with Lehram, it was unaware of Mr. Yushvaev’s alleged ties to Russian organized crime and his previous run-in with the legislation when it agreed to hunt his assist.

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On the urging of Mr. Yushvaev’s consultant, Lehram filed a petition to provoke a legal case in opposition to Shchukin household, the lawsuit alleges. Afterward, the consultant demanded $300,000 and 50% of the mine in return for Mr. Yushvaev’s assist recovering the mine.

Baker accomplice Alexander Gomonov, now at Latham & Watkins LLP, urged Daniel Rodriguez, Lehram’s largest shareholder, to take the deal, telling him to belief Mr. Yushvaev, regardless of Mr. Rodriguez’s misgivings, in keeping with the lawsuit.

However Mr. Yushvaev proved of little assist, in keeping with the lawsuit. Settlement talks with the Shchukin household broke down in December 2016 when Mr. Yushvaev’s consultant tried to barter the acquisition of “different belongings owned by the Shchukin Household” apart from the Lehram mine, Baker later knowledgeable the corporate, in keeping with the go well with.

Mr. Yushvaev couldn’t be reached for remark. A Russian lawyer who Baker launched to Lehram as Mr. Yushvaev’s consultant, in keeping with the lawsuit, denied any connection to Mr. Yushvaev and stated he represented Lehram on his personal.

Mr. Gomonov couldn’t be reached to remark.

In the end, Baker requested Lehram to signal a waiver giving up its proper to file any authorized claims in opposition to the legislation agency, in keeping with the lawsuit. Lehram says it has since been the sufferer “of threatening cellphone calls, intimidation” from a Russian linked to Messrs. Yushvaev and Shchukin.

Write to Joe Palazzolo at [email protected]

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