Collins Stewart sues Middleweek's lawyer

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Collins Stewart is suing the solicitor who represented its former analyst, James Middleweek, over allegations that he forwarded his client's sensational claims against the broker to two newspapers.

The broker, which last week launched a record £240m "special damages" against the Financial Times, has filed a damages claim in the High Court in London against Dale Langley, the solicitor hired by Mr Middleweek last summer to represent him in the acrimonious row which erupted between himself and the company.

Mr Langley sent copies of a report compiled by Mr Middleweek, which made allegations about his former employer's business practices, to the Financial Times and The Sunday Telegraph.

The articles that the two newspapers subsequently published about the report "seriously damaged" the reputation of the company and caused "considerable hurt, distress and embarrassment" to Terry Smith, Collins Stewart's high-profile chief executive, according to the claim.

The dispute between Mr Middleweek and Collins Stewart rapidly escalated into one of the most high-profile sagas to grip the City last year, after the broker sacked its employee for allegedly trying to blackmail the company.

According to Collins Stewart, Mr Middleweek compiled the dossier of serious allegations against the broker which he said he would send to the Financial Services Authority unless it agreed to pay him more than £2m compensation.

Mr Middleweek does not deny that he offered to shelve the document if his claim was settled, but argues that he was doing nothing wrong because he was not under a legal obligation to send the report to the FSA.

Collins Stewart's claim against Mr Langley marks a ratcheting up of its campaign to discredit Mr Middleweek's allegations. The company is scheduled to have a showdown with Mr Middleweek himself in court, in a case scheduled to begin next spring. There is still, however, plenty of time for the two sides to settle ahead of the trial if they decide that they do not want the details of their fall-out to be aired in meticulous detail in court.