Newspaper chief to sue his lawyers

DAILY Express owner Richard Desmond is suing City law firm Linklaters for more than £2 million in damages, claiming it was negligent and in breach of contract while acting for him during his purchase of Express Newspapers.

Desmond's Northern & Shell group bought the Daily Express, Sunday Express and Daily Star for £125 million in November 2000 from United News & Media, owned by the Labour peer Lord Hollick.

Northern & Shell accuses Linklaters of failing to act properly on its behalf and that as a result the group was unexpectedly presented with a bill for United's tax liabilities.

The law firm is accused of failing to advise Northern & Shell adequately over a deed that left Desmond liable to pay Hollick the amount that Hollick's group owed in corporation tax for the year ended December 1999, £4.2 million.

Hollick had agreed to sell the shares in the titles 'cash free and debt free' by paying all debts and removing all remaining cash from the papers, according to Northern & Shell's writ.

But the effect of the tax deed was not consistent with this since it obliged Desmond's group to pay the tax liabilities.

The writ says that Linklaters knew that due diligence - the careful examination of the company's accounts - was not permitted to any significant degree before the sale, and that the firm also knew that Northern & Shell needed to rely to a large extent on warranties and tax indemnities in its acquisition of the group.

Hollick's group brought legal proceedings against Desmond's group to recover the £4.2 million.

Northern & Shell settled the claim earlier this year by agreeing to pay £2.1 million, but Northern & Shell blames Linklaters for the loss and is suing the firm for damages.

Linklaters says it will defend the case vigorously.