Baker Botts Hit With Legal Malpractice Suit Over Gas Contract

Baker Botts LLP mishandled a gas gathering contract, losing two energy company clients at least $100 million, according to a Texas lawsuit.

Pennsylvania-based EQT Production Co. and EQT Energy LLC filed suit Tuesday against the law firm and one of its attorneys in the 61st Civil Court in Harris County.

The companies allege Baker Botts committed legal malpractice in connection with the negotiation of an agreement between EQT and EQM Gathering Opco LLC. The contract governed the construction of a natural gas pipeline intended to connect EQT’s wells in Pennsylvania to the Mountain Valley Pipeline in West Virginia.

At the time of the negotiations, EQM Gathering was a subsidiary of EQT Midstream Partners LP, which in turn was a subsidiary of EQT Corp. The plaintiffs were wholly owned indirect subsidiaries of EQT Corp, but they had separate negotiating principals and governance structures from EQT Midstream, according to the petition.

Baker Botts represented both EQT and EQM Gathering despite the fact that their interests were “adverse” to each other, the petition said.

Further, Baker Botts and attorney Scott Looper allegedly failed to obtain separate engagement agreements for the transaction, didn’t advise EQT of the risk of the firm’s dual representation, and didn’t obtain a waiver from EQT, the petition said.

When EQT gave notice that its was exploring termination of the contract because the pipeline wasn‘t complete in 2020, Equitrans Midstream Corp., the successor to EQM Gathering, rejected it, the plaintiffs say.

Equitrans argued that the in-service date of the Pennsylvania part of the pipeline wasn’t tied to the in-service date of Mountain Valley, the latter of which had experienced delays.

EQT initiated arbitration proceedings, where a panel found that the termination rights were unenforceable because a force majeure provision in the contract excused the delay.

The plaintiffs allege that Baker Botts neglected to warn them that there was a chance the force majeure clause could invalidate the parties’ intention, which was that EQT would have a right to terminate the agreement if the pipeline project was delayed.

The law firm’s alleged negligence caused a $100 million loss “by conservative estimates” by depriving EQT of its right to terminate the agreement and acquire the gas gathering system, the plaintiffs said.

Causes of Action: Malpractice, breach of fiduciary duty, gross negligence.

Reliefs: Monetary relief.

Response: “This is an unfortunate reaction to an adverse arbitration ruling against EQT. The record will show we adhered to the highest professional and ethical standards, and we will vigorously defend this meritless lawsuit,” a spokesman for Baker Botts said in a statement.

Attorneys: Michelman & Robinson LLP represents the plaintiffs.

The case is EQT Prod. Co. v. Baker Botts LLP, Tex. Dist. Ct., No. 2022-71602, complaint filed 11/1/22.

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