4 New Square Chambers 4 New Square Chambers

This topic brings into focus two competing tensions; the first is the tension between the professional and ethical obligations of a solicitor on the one hand as opposed to the commercial factors that can be brought to bear, particularly under the partnership model. The second tension is between solicitors’ regulatory obligations and what can be seen as practical good sense because the law of conflicts is an area where doing the right thing can in fact lead you to the wrong place.



As law firms become larger and are forced to be more cost effective per retainer, the need for work grows. Combine this need with (i) increasingly sophisticated and challenging clients and (ii) ever more intense regulation, and the scene is set for problems relating to conflicts of interest.



In this podcast, we aim to summarise the principles applicable to conflicts of interest and to identify what can and cannot be done to manage the risks of and arising from conflicts of interest.



The law in this area is far from settled and the existence of conflicts and how they are best dealt with is very fact sensitive. Accordingly, what follows is not intended to be definitive or a panacea. But we hope it will serve as a helpful guide through what can seem rather a maze of law and regulation.

The talk is borne primarily of thoughts and considerations which arose in the course of Palmer Birch v Lloyd [2018] 4 WLR 164. In that case, Matthew acted for the successful claimant, which faced and overcame a defence founded on the separate legal personality of companies. The Court also rejected the contention that a defence of justification exists in the tort of unlawful means conspiracy.



Having considered how the “corporate veil” defence in Palmer Birch was overcome, Matthew discusses other recent decisions in this area and the very real and vital uncertainties they exemplify, including:

- The potential impact on cases such as Palmer Birch of the Court of Appeal’s decision in Garcia v Marex Financial [2018] EWCA Civ 1468, in relation to which a decision of the Supreme Court is awaited.

- Precisely what the Supreme Court meant by the concept of a “just cause or excuse” for an unlawful means conspiracy in JSC BTA Bank v Khrapunov [2018] UKSC 19.

- Recent decisions underscoring the ongoing gulf in the authorities as to whether a claimant must prove knowledge of unlawfulness on a defendant’s part in order to affix that defendant with liability for unlawful means conspiracy, and the potentially large impact of this uncertainty on claims under that tort (Stobart Group v Tinkler [2019] EWHC 258 (Comm); Racing Partnership Ltd v Done Brothers [2019] EWHC 1156 (Ch)).

- Whether acts which are unlawful under foreign law may serve as the relevant unlawful means in a conspiracy claim.

In order to do that, we are going to address the following:

- What is sexual harassment?

- By reference to a hypothetical example: who are the relevant stakeholders, what are their rights and obligations?

- Investigation by the firm and reporting to the regulator – does one follow the other or should they be done at the same time?

- What are the problems and pitfalls of non-disclosure agreements?

In this episode, Jamie Smith KC, Helen Evans, and Anthony Jones survey the current state of play for claims against accountants and auditors following the Supreme Court’s decision in BPE v Hughes-Holland [2018] AC 599 and the two important cases handed down on consecutive days in January 2019: Manchester Building Society v Grant Thornton [2019] EWCA Civ 40 and AssetCo v Grant Thornton [2019] EWHC 150 (Comm).Jamie Smith KC starts by considering duty and scope, identifying the particular challenges which the audit context presents for the SAAMCo and BPE ‘information and advice’ dichotomy. In doing so, Jamie sets out a handy checklist to assist classification for SAAMCo/BPE purposes, drawing from the first instance and Court of Appeal decisions in the Manchester Building Society case. Jamie goes on to address the implications of the SAAMCo approach to scope of duty for the type of ‘common sense’ legal causation favoured by the Court of Appeal in Galoo  v Bright Graeme Murray [1994] 1 WLR 1360, asking whether Galoo retains any relevance in the current era, but offering a way to rationalise the outcome in that case.Helen Evans then reviews how contributory negligence operates for accountant and auditor claims, bearing in mind the impact fraud on the part of the subject company/its officers may have on the accountant’s culpability (including the recent approach of the Commercial Court in the AssetCo case). Addressing another means by which accountants may effectively reduce their liability, Helen explains how the law of contribution from third parties tends to operate in accountants’ cases. First, Helen examines so-called ‘net contribution’ clauses frequently found in accountants’ retainers, which seek to impose a ‘just and equitable’ proportionate limit on liability with the need for formal contribution proceedings. Then Helen looks at common grounds and targets for accountants’ contribution claims and the best strategy on deploying them.Finally, Anthony Jones reviews the means by which accountants can formally limit liability, looking first at the statutory audit context under the Companies Act 2006 and the technical requirements for liability limitation agreements (which anecdote suggests have failed to catch on). Considering general methods of limiting liability, Anthony looks at the role of important (but sometimes hard to define) ‘basis clauses’ and then more conventional explicit restrictions on liability as they tend to operate in the accountancy market, and how the Unfair Contract Terms Act 1977 ‘reasonableness’ test has come to be applied in the field.

This talk looks at professional liability claims brought in England but which have a cross-border element.  Listeners will follow how to found or resist jurisdiction in England where the defendant is situated in another jurisdiction, either within the current UK, within the current EU, or anywhere in the rest of the world; and how the rules are affected by Brexit. Paul also looks at the exposure of professionals to future claims arising from the way they handle cross-border litigation during the current period of uncertainty regarding Brexit.

Generally speaking, the law’s protection of legal professional privilege (both legal advice privilege and litigation privilege) is absolute, but the courts do not always welcome the resulting inhibition on their ability to get to the truth, and the boundaries of privilege are often quite vigorously policed.



In this talk Amanda and Charles examine two recent lines of authority, which might both be said to contribute to an overall picture of courts and regulators presently being willing to take the pruning shears to privilege in quite a dramatic fashion.



The first relates to the exclusion of privilege from the professional disciplinary and/or regulatory sphere. Amanda discusses the potential significance of the decision of Arnold J in Financial Reporting Council Ltd v Sports Direct International plc [2018] EWHC 2284 (appeal outstanding) and the Bar Standards Board’s new approach to issues of client privilege.



The second relates to the strict confinement of litigation privilege to third party communications for the purpose of gathering information or advice. Litigation privilege had previously been seen by many as providing a general zone of privacy for the conduct of litigation, but Charles considers the impact of the Court of Appeal’s recent decisions in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2018] EWCA Civ 2006 and WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652.