I understand that the best way to change domain names is to set up a 301 redirect, however I've come across a case where a company has regained access to an old domain following a dispute with their previous design company. The previous company had pulled the site and the account is showing as suspended. This company would now like to redirect the old domain to their new site but surely this would have a negative affect as the old websites SERP would have been affected by any lack of content / relevance on the site? In a situation like this would it be better to wait until Google takes it's course and get's rid of the SERPs for the old domain?
Which 'account' are you talking about that is suspended? The design company's Google Webmaster Tools account? The Google Webmaster Tools account of the company who regained the domain? The old site's hosting account? As long as the old domain is not currently banned or severely penalized by Google, I'm pretty sure 301 redirecting pages on the old site to the logically equivalent pages on the new site where similar keyword phrases in the inbound link text would apply WOULD be beneficial to the new site. However if the old site was banned for some reason, then its 'new' owner should notify Google via a Reconsideration Request that the site has changed hands and explain the situation. Once they verify it, they will lift any type of ban or penalty on the old domain, and again... the new site will begin benefiting from 301 redirecting the old site's inbound links. You can read more about it here http://www.google.com/support/webmasters/bin/answer.py?answer=35843&topic=15253 where they explain:
Yes that could have a negative effect also if you redirect suspended old domains. Instead of that you can put a resubmission request as guided by Mr. Canonical.