Freshfields partner gets whacked $140,000 over conflict of duties to concurrent clients

Freshfields used to be Marks & Spencer’s go-to lawyers. Then they fell out of favour a bit. But they were still acting for Marks ‘n’ Sparks on one relatively small contract. A key partner then decided to accept instructions to act for a consortium trying to take over the supermarket chain. If the takeover went hostile, that one contract was likely to be contentious. There was a potential conflict of duties, the Court found in Marks and Spencer Group Plc v Freshfields Bruckhaus Deringer [2004] EWCA Civ 741, and restrained the firm from acting. Three years later, the wheels of justice have ground on, and the disciplinary sequelae of the injunction application have come to a head. Barry O’Brien copped a £5,000 fine from the Solicitors Disciplinary Tribunal, and a £4,000 fine for bringing the profession into disrepute. He pleaded, and ‘volunteered’ to pay prosecution costs of £50,000 which suggests that he had a good long think before pleading.I think lawyers should be disciplined if they are found, in civil injunction proceedings, to have acted in the face of a conflict of duties. To say that they should be disciplined does not mean that there should be some huge prosecution, trial, and severe punishment. It just means that, the rules having been authoritatively determined to have been broken, there should be a formal ruling to that in a case to which to the lawyer is personally party, and an appropriate punishment. Rules which are not enforced are not rules but platitudes, and the personal interest in avoiding disciplinary prosecution is the one which is most likely to stop lawyers acting in the face of a conflict of duties.

Freshfields said first there was no conflict, and there was not necessarily any prospect of a conflict. Here was a nice group of rich people who were willing to pay the shareholders a lot for their shares. There was nothing to suggest the shareholders might not want to sell at the offer price. What conflict? Actually, I have a degree of sympathy for the argument. In my view whether or not there is a conflict ought to be looked at subjectively. It does not follow, for example, that two recently divorced people have conflicting interests in relation to the distribution of their matrimonial property. The fact that most such couples lawyers see have such a conflict is not determinative. It is a skewed sample space. So too, it does not follow that someone offering to buy a majority of the company’s shares is in conflict with the company.

The English are very keen on proscribing lawyer from acting both in the face of actual conflict of duties and potential conflict of duties. Here, the Court of Appeal found that there was a potential conflict, and that was enough to disentitle the lawyers from acting.

Interestingly, the Court of Appeal accepted that one firm could act for and against the same person at the same time. I have noted this proposition before. But one firm cannot act for and against the same person at the same time in relation to the same or a sufficiently related matter. And these two matters were sufficiently related, potentially, to mean that the lawyers should be prohibited from acting.

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