Would-be property mogul Paul Chiodo is being sued by his former lawyers for unpaid bills

Robert Filippini outside court. Picture: Nadir Kinani

Would-be property mogul Paul Chiodo, who has a mounting list of legal woes, has added a messy falling out with his former lawyers as top-shelf firm Holding Redlich heads to Victoria’s County Court to sue for $263,000 in allegedly unpaid bills.

The lawsuit has also exposed a potential rift between Chiodo and Melbourne businessman Robert Filippini – both defendants in the Federal Court amid the accusations of the siphoning off $160m of investor money in an allegedly fraudulent invoicing scam.

Chiodo is facing a litany of legal trouble after ASIC stepped in on the alleged mismanagement of some $480m pumped into his Shield Master Fund.

To be clear, Chiodo vehemently denies any wrongdoing, as does Filippini.

But court cases involving Shield and Chiodo’s Keystone Asset Management group are heading towards double digits, and Chiodo himself is named as a defendant in at least two of them as court-appointed receiver Deloitte tries to work out where all the money went.

Those issues have been hampered by ASIC raids on Chiodo’s house and office, after the corporate plod seized documents “relevant to the preparation of their defence”, according to court filings by Chiodo’s current brief, Velocity Legal.

But that’s not the only thing that’s hampered Chiodo’s legal preparations, it turns out. They were also slowed by the fact that Chiodo sacked his first set of lawyers in the main matter, Holding Redlich.

That’s left the law firm to do what it does best, and lodge a lawsuit on its own behalf in the County Court seeking about $263,000 in unpaid bills.

The amount in dispute is chicken feed in the context of the $480m of investor money at stake in the collapse of Keystone.

Paul Chiodo is fighting legal battles on a number of fronts.

But the affair is shaping up to be a messy one, as Chiodo accused Holding Redlich of serious ethical breaches ahead of his decision to sack it and refuse payment.

How so? Remember that Keystone (now in the hands of Deloitte) is suing both Chiodo and Filippini over the collapse, alleging around $160m was paid to Filippini’s City Built in dubious circumstances – namely that City Built didn’t tender for any work or sign any contracts, and that Filippini didn’t even have a building license until 10 months ago.

Holding Redlich initially represented both men, helping Filippini with legal advice as ASIC investigated the affair, as well as advising both men on their legal position.

Despite the fact that Holding Redlich says Chiodo agreed to its billing terms and never queried their work, that’s a conflict of interest worthy of sacking and non-payment, according to the would-be property magnate.

The law firm should have spotted the conflict and quit after realising that Chiodo might, at some point, “need to bring a claim against Filippini”.

But it didn’t, and Chiodo was then forced to brief new lawyers (Velocity) at additional cost.

Only the court will be able to settle whether Chiodo’s claims are the result of an ethical breach by Holding Redlich, or just a convenient excuse to skip the bills.

But the suggestion of a breach between the two men will likely have ASIC and Deloitte salivating at the possibilities.