Firm accuses lawyer of negligent drafting of subcontracts that led to Court of Appeal defeat

Shepherd Construction has taken the highly unusual step of suing its own lawyer, Pinsent Masons, for more than £10m, over allegations of “negligence” in the drafting of its contracts.

In a lawsuit filed with the High Court, Shepherd claims the alleged negligence left it liable to pay subcontractors when its client went into administration, despite the fact Pinsent Masons had drafted a “pay-when-paid” clause designed to protect it from this.

The law firm is to fight the case on the grounds that the contract was accurate when drafted.

The writ follows the collapse of a joint venture, Trinity Walk Wakefield, between Modus and Ciref Wakefield. The JV was building the £210m Trinity Walk shopping centre in Wakefield, West Yorkshire, on which Shepherd was the contractor. Shepherd attempted to withhold payment from subcontractors when the JV entered administration in March 2009.

However, a highly-publicised Court of Appeal case in 2009 against Shepherd’s steel contractor, William Hare, confirmed Shepherd could not withhold payment because the contract did not allow it.

Pinsent Masons’ “pay-when-paid” clause, originally drafted in 1998 and repeatedly used afterwards, had not taken account of changes brought in by the 2002 Enterprise Act, forcing Shepherd to pay out on its subcontracts. Shepherd claims Pinsent Masons owed it a “duty of care” to advise of the impact of the new laws.

Andrew Paton, PI partner at Pinsent Masons, said: “We shall be vigorously defending these allegations.”

Antony Smith of Beale and Company, acting for Pinsent Masons, said “Pinsent Masons denies all liability as the contract was accurate when drafted.”

The case will be heard on 2 August.