International firm Charles Russell Speechlys is battling a £5m High Court claim for giving allegedly negligent advice to the founders of a communications company.

Paul Richards, 48, and Keith Purves, 57, sold their stakes in IP Solutions in 2014 in an investment deal with a private equity house, under which they each retained a 30% stake in a newly-incorporated company, IP Solutions Group, which acquired their company’s shares.

However, the High Court heard this week that ‘things went quickly wrong’ and, just months after the deal was completed, the pair were summarily dismissed for alleged breaches of duty and required to transfer their shareholdings for £1 as ‘bad leavers’.

They sued IP Solutions Group and, in 2016, were found to have been ‘wrongfully dismissed’ – but the pair were entitled only to a nominal sum for their shares due to a redemption premium provision agreed as part of the deal.

Richards and Purves allege Charles Russell Speechlys ‘negligently failed to advise’ that the provision could apply and claim they lost between £1.7m and £1.9m each, as well as just under £900,000 between them in costs racked up in the subsequent litigation.

Their barrister Richard Leiper QC said in written submissions: ‘It is obvious that someone in their position would expect to be advised of the risk that they could be ejected from the business that they had established and be left with nothing more.’

However, the firm – which was instructed as Speechly Bircham, shortly before it merged with Charles Russell in 2014 – argues that the High Court was wrong and that an appeal against the 2016 decision by Richards and Keith Purves, which was settled after permission was granted, ‘would have succeeded’.

Charles Russell Speechlys also argues that the risk it allegedly should have warned against was ‘not a substantial one [and] eventuated only because of a most unlikely combination of factors’, which could not have been foreseen during the negotiation of the takeover.

‘The defendants were not party to those discussions and were neither asked nor required to advise on the commercial desirability of the deal,’ the firm’s counsel Nigel Tozzi QC said in his skeleton argument.

The trial before Judge Jonathan Russen QC continues and is expected to conclude next week.