Law Case Study Assignment Questions with Solutions


Assignment Details:-

Number of Words: 2000


Law Assignment Case Study



Compulsory Assignment Question


Jones, Solicitor, was a partner in AA, one of Sydney’s largest commercial legal firms. Jones was AA’s ‘go to’ M&A Solicitor. Jones had handled some of the largest company mergers and acquisitions that Australia had seen in the last 10 years. His clientele had included a who’s who of the ASX top 25, including XYZ Pty Ltd, the largest manufacturer of widgets in the southern hemisphere.


AA had a very strict policy – many of the big city firms had a similar policy – once you turned 60 you had to retire from partnership and it was expected that you would also retire from AA.


On 1 May 2022 Jones turned 60! His partnership, as per the partnership agreement, ceased and he had arranged to finish working at AA on the following day – much celebration followed and both AA and Jones amicably went their respective ways.


After a vacation in Europe Jones returned to Sydney but with nothing to do. Jones was financially set for life, but that wasn’t the point – after all, he was only 60 and rightly thought that he had many years of practice left. He toyed with the idea of doing consultancy work, maybe even sounding out the government (he had contacts!) for some enquiry work – there was always an enquiry going on! However, just as he was thinking things through, YY, a new start-up legal firm called. YY was comprised of a small group of former employees/partners of interstate law firms who were keen to settle into Sydney and take (as they put it) a ‘big bite out of the Sydney pavlova’. YY specifically wanted to get into the commercial field. Jones, they said, would be welcomed with open arms – he had the connections and the expertise they wanted; he could name his remuneration package and work structure. Just what Jones was looking for – not too much pressure and yet making sure his mind was active – the remuneration would be a bonus.


Having talked things through with his wife, Jones agreed to join YY. They would still have plenty of time to do the things they had planned, especially travel and yet Jones wouldn’t be bored. A marriage made in heaven – Jones and YY were a perfect fit.


Jones’ expertise was invaluable to YY and it began to make substantial inroads into the Sydney commercial market. Indeed, some of Jones’ old clients followed him to YY and with no ‘restraint’ clause in his old partnership agreement, Jones was free to take on any of his old clients that wished to follow.


Six months after joining YY, Jones was asked to look after a particularly sensitive matter. One of his old clients CC had approached YY. CC wanted to undertake a take-over of Q. Q represented a relatively recent merger between T and V. Indeed, Jones had acted for V on that merger. Q (originally T) produced high end widgets for the international car manufacturing industry.


The CEO of CC came into the office and many pleasantries were exchanged. Jones had his instructions, bring in the accountants/actuaries and work out a price for Q –“squeeze the last drop out of the deal”. CC wanted Q, but not for a cent more than it had to pay for it.


Jones organised the actuaries and accountants who came up with a per share value of $3 – he informed CC’s CEO whose instructions were to offer $2.30, all cash – “that should set the market and shareholders talking”. Indeed, by the afternoon of the day the offer was made, the market had valued the shares at $2.57 and the Board said they would make a positive recommendation at $2.60.


By early evening the same day, Jones had the go-ahead at $2.60 and it looked like it was a done deal, except that Jones had just looked at the background papers in the accountants and actuaries’ reports. There was no mention of a contingent liability (by Q) in the range of $1B which Jones knew about – there was talk of a product liability claim by some US consumers which, if successful would heavily impact Q’s share price. It was alleged that Q’s widgets (then produced by T) were defective and had caused a number of fatal car crashes. If the contingent liability was factored in, the fair price for the shares would be $2.03 – a substantial discount on the market price as well as on his instructions.


The possible liability claim was not public knowledge – Jones had come across the information during the initial merger between T and V and it had been factored into the merger which produced Q.


Jones was in a dilemma. If he followed instructions, his client may well be paying above Q’s true value. If the contingent liability came to fruition, his client would likely face heavy losses and might then look to Jones and/or YY for those losses. If Jones disclosed what he knew, it was likely that Q’s share price would fall dramatically and there was the very real possibility that it would take action against Jones and/or YY for any loss.


Having regard to the above:

(a) What would you advise Jones to do? Why?


(b) (i) Assume that Jones does disclose to CC what he knows about the liability claim and CC withdraws the offer – leaving aside any action Q may take, does Jones face any disciplinary action for the disclosure. Why? and


(ii) If you are of the view that disciplinary action should be taken against Jones, what findings and orders do you believe should be made. Why?


Refer to appropriate authorities and any relevant legislative provisions.

Rely solely on the above facts and make no assumptions.


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