City poised to sue lawyers over flimsy trams contract

Published on Thursday 26 May 2011 17:27

LAWYERS who helped draw up the contract for Edinburgh's embattled tram project could themselves be facing legal action, it has emerged.

The city's transport convener today said there were "concerns" about how the contract had been drafted and said the city council was considering "all options" for possible redress.

Councillor Gordon Mackenzie said the tram contract had "not stood up" to a lengthy adjudication process which saw tram firm TIE lose a series of disputes with its German contractor, Bilfinger Berger.

TIE chief executive Richard Jeffrey last week announced his decision to step down in the summer after being accused by some critics of wasting two years on a series of costly adjudications about how the contract should be interpreted.

Councillor Mackenzie said there were now worries about both the contract and the advice given to TIE and the council. He said: "Clearly, the contract has not stood up well to the dispute process and, as such, I have concerns about how it was put together."

Asked about the possibility of legal action to claw back some of the money spent during the adjudication process, he added: "We have to look at all aspects of the contract process before we determine the appropriate course of action."

The council's in-house legal team is set to pore over the contract amid fears the document has undermined the project from the start.

The legal firm responsible for signing off the contract was DLA Piper, although it is understood that senior TIE officials who have since left the project may have instructed that changes be made.

DLA Piper is understood still to carry out work on the project as well as another firm, McGrigors.

One source close to the project said: "For a long time there have been concerns about the legal advice we were getting. DLA were marginalised because we were so concerned about the adjudications - we were not winning anywhere near as many as we thought we should be. One case DLA told us was a 'slam dunk' was lost and at that point confidence in them was completely shot.

"Once the contract was signed there was a limited amount that could be done to mitigate the consequences.

"As a result of the legal advice we got on the contract our strategy in going into adjudication was probably wrong.

"The people who drew up that contract got it wrong, they still believed their interpretation of the contract was right. Only when evidence was coming in from the adjudications did it become clear."

A spokesman for TIE said: "We have reviewed all external advice which we received at different stages of the project."The closer governance arrangements which are currently under way between the council and TIE may lead to future arrangements being considered. However, beyond this we will not be discussing individual contracts."

DLA Piper declined to comment.