Solicitor with Lynn firm seeks indemnity

A SOLICITOR in fugitive lawyer Michael Lynn’s firm was the “whistleblower” on his activities but now finds herself facing accusations by Mr Lynn’s insurers in its efforts to avoid any liability for claims arising from her employment, the Commercial Court was told yesterday.

Fiona McAleenan, who began working with Michael Lynn Company in late November 2004, was herself “a victim” of Mr Lynn and is entitled to be indemnified by his insurers against any claims arising from undertakings she signed while with the firm, her counsel Frank Callanan SC said.

There was “no dishonesty or intention to mislead” in anything Ms McAleenan did while working in the firm, he added. It was she who had raised issues in September 2007 about apparently conflicting material relating to borrowings of some €7 million by Mr Lynn and the registration of charges on properties.

Ms McAleenan had asked for a printout of all accounts of Mr Lynn from September 2006, counsel said. When she saw there was no lodgement for that €7 million sum in the accounts, she became very concerned and steps were later put in train for the Law Society to be contacted.

At about this time, Mr Lynn tried to contact Ms McAleenan by phone but she would not respond and she had resigned from the firm on September 11th, 2007.

Counsel also argued Ms McAleenan was not a partner in the firm. While she had expected in time to become a partner, no agreement was reached in that regard because Mr Lynn was offering her a 10 per cent share and she sought 30 per cent. She also denied she had held herself out as a partner. Mr Callanan said his client had signed various undertakings related to certain properties in good faith but there were also other undertakings to which her name was appended without her authorisation.

He was opening proceedings by Ms McAleenan, a mother of seven of Betaghstown, Co Meath, against AIG Insurance Company Ltd claiming entitlement to an indemnity against any claims against her arising from her employment with Mr Lynn. The case is before Ms Justice Mary Finlay Geoghegan and is listed for four days.

AIG, which provided insurance cover for Michael Lynn Company and a related company, Overseas Property Law, want to have the policies declared fully void on grounds of alleged fraudulent misrepresentation and non-disclosure. More than 250 claims have been made against the policies by banks and others owed large sums by Mr Lynn, who has estimated liabilities of some €80 million.

It is claimed AIG provided the first layer of cover of up to €2.5 million for each claim, subject to €7,500 excess and excess indemnity insurance was provided by Chubb Insurance Company Europe SA and WR Berkley Insurance (Europe) Ltd.

In December 2007, AIG refused cover on the grounds of alleged material non-disclosure by the Lynn firms at the time the policies were taken out. Chubb and WR Berkley also brought proceedings alleging the policies are void.

Mr Justice Peter Kelly has previously said AIG was entitled, in default of appearance by Mr Lynn in the case, to void policies but any order was stayed pending the outcome of Ms McAleenan’s claim for indemnity.

AIG rejects Ms McAleenan’s claim for an indemnity on various grounds, including its claim Ms McAleenan was a partner of the firm. It claims Ms McAleenan had held herself out as a partner to it and to the Law Society and had signed a proposal form as a partner. AIG also alleges Ms McAleenan allegedly failed to disclose she was engaged in a practice of giving multiple undertakings on multiple properties to multiple institutions.

Brian Cregan SC, for AIG, said Ms McAleenan should have known Mr Lynn was engaged in a practice of giving multiple undertakings on multiple properties to multiple institutions and should have disclosed that to the insurers.

Earlier, proceedings by Chubb and Berkley were settled against Ms McAleenan on terms including the making of declarations that the companies are entitled to avoid payment out of any claims made under two specific policies taken out by Mr Lynn and his property company.