There was an interesting article by Geoff Ho in the Sunday Express yesterday (31/5/2015) on the law suit being pursued by shareholders against RBS. He reports that the RBoS Shareholders Action Group was presented with a bill for £1.2 million by its former solicitors Bird & Bird and a demand for “prompt payment” after they changed lawyers to Fladgate following concerns over costs and communication. Indeed the original demand was even higher but was subsequently reduced. Fladgate are working on a conditional fee arrangement which will help to control costs going forward. The RBoS Shareholders Action Group is just one of several groups pursuing a legal case over the rights issue prospectus in 2008. Royal Bank of Scotland have said they will vigorously defend the case.
Martin Flanagan in the Scotsman also reported that the High Court had earmarked from December 2016 to summer 2017 to hear the case because of the enormous amount of evidence and complexity of the case.
US legal firm US law firm Quinn Emanuel Urquhart & Sullivan are also pursuing a case based on complaints from business customers of RBS that the “turnaround” division acted unethically.
Comment: as expected the prospectus claim is becoming one of the largest and most expensive legal actions ever launched in the UK. One can see exactly why so many lawyers are keen to get involved in the case when they can rack up such large fees. Just imagine what the bills will be from QCs for weeks in court and for the supporting legal teams. Even if the case is won, it is not clear that private investors will get much back after taking into account their own contributions and third party costs. It is a good example of how the legal system in England makes it very difficult to pursue legal actions at reasonable cost which of course plays into the hands of large corporations who can absorb the fees (in this case even backed up by the Government who own a majority of RBS). Yes the legal system under which such cases operate, and the associated costs, do need reform. And before you ask, no I have no idea who might win this marathon battle between leading legal counsel. Moral justification may have little to do with the outcome, despite many private investors being impoverished by events back in 2008.