Editors' Blog

M&S comes back to haunt Freshfields

Posted 30/10/2006 by legalweekblogs.com SU

‘Freshfields bags Green on M&S bid.’ So read the headline to a story that appeared in Legal Week on 28 May, 2004, which revealed the firm’s role advising Green’s consortium on his putative bid for Marks & Spencer.

How the firm must now regret accepting that particular instruction. The immediate fall-out came just a few days later when Freshfields Bruckhaus Deringer was embarrassingly thrown off the deal by the courts for acting in a conflict of interest situation (see comment).

The Law Society’s subsequent investigation has proved much more of a slow burner. Indeed, at first Chancery Lane claimed there was no need to investigate Freshfields over the affair. Then in July 2004, Legal Week revealed that the society had had a change of heart (see story).

Today - finally - after well over two years of deliberations, the Law Society has announced that Barry O’Brien, the partner who led on the deal, and UK head of corporate Tim Jones have been referred to the Solicitors Disciplinary Tribunal (SDT) “over the claim that Freshfields were conflicted”.

O’Brien and Jones are two of City law’s biggest names. O’Brien was a contender for the Freshfields senior partner job before he decided to step out of the race because of the ongoing threat of a tribunal referral. Jones is regarded by many Freshfields partners as a potential senior partner. The embroilment of two such high-profile and respected City figures in a SDT hearing is unprecedented.

“The tribunal is very used to dealing with conflicts of interest cases generally involving smaller firms, often in such areas as conveyancing,” says Peter Cadman, the head of Russell-Cooke’s professional regulation department. “However, I am not aware of any similar conflict cases involving partners from the large City firms. Having said that, the same conduct principles will apply.”

The nearest equivalent – assuming, of course, that the case against the pair is proven or admitted – is that of the Labour party’s favourite lawyer, Geoffrey Bindman, who was fined £12,000 in 2001 for two counts of conflicts of interest and a third of improperly sharing confidential information.

Senior City lawyers will, no doubt, feel a good deal of sympathy towards the pair, arguing that the drubbing Freshfields received at the time was punishment enough for what they regard as an honest mistake. But the Court of Appeal’s ruling, coupled with the pressure the Law Society is under to prove that it can be an effective regulator, made a referral to the SDT almost inevitable.

Whether ensuing events solve the riddle of exactly why Freshfields felt able to take on the case in the first place remains to be seen. All sorts of theories have been bandied about the City. Whether they will see the light of day depends on the approach O’Brien and Jones take to the accusations that have been levelled against them. No doubt they have been asking themselves whether a contested hearing, involving a blow-by-blow account of the events running up to the injunction, is in anyone’s interests - especially given the absurd amount of time it has taken for the case to reach even this stage, a circumstance that in itself should be regarded as a mitigating factor.

john.malpas@legalweek.com