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1) COBBETTS LLP (2) LEE CROWDER (A Firm) v MARK REGINALD STUART HODGE

A solicitor instructed by a company to assist it to raise capital through subscriptions for new shares had acted in breach of the fiduciary duty he owed to the firm that employed him when he negotiated for himself a share in the client company without obtaining the firm's informed consent.

5 May 2009

The claimant solicitors (C) claimed against the defendant (H), a former employed partner, for shares in a client company (E) which they claimed he had obtained in breach of his duty not to profit personally. H had been a salaried partner with no interest in the firm's equity. E was owned and run by a husband and wife. They were seeking to raise capital to expand the business, with which a corporate finance adviser (W) was assisting them. W recommended H to the husband and wife and he was instructed in relation to a subscription for new shares, a shareholders' agreement and some restructuring. While H was acting for E, he was told that he would not become an equity partner in the firm, so gave six months' notice of his resignation. By that time E's financial situation was becoming precarious and C's work for it was being done on a contingency basis. E put forward a private placing memorandum, by which it invited investors to subscribe for new shares. W was planning to invest. H was i...

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