Allen & Overy (A&O) has defended its dual roles on Northern Rock, maintaining that they pose no conflict of interest.
The magic circle firm is advising the Virgin-led consortium on its approach to the beleagured mortgage adviser, despite already having a role advising Northern Rock on its funding from the Bank of England, as first revealed by The Lawyer (October 8).
An A&O spokesperson told The Lawyer: “These are two separate transactions, therefore there is no conflict. Both Virgin and Northern Rock were fully aware of the situation and they were happy to give us their informed consent in order for us to act.”
It is understood that the firm saw no need to inform the Law Society of its dual roles.
Despite the Bank of England agreeing earlier this month that a buyer of Northern Rock would assume the emergency credit line, the group general counsel of Virgin told The Lawyer that he was happy A&O’s instruction presented no conflict of interest.
A&O is not the only firm to claim two roles on the Northern Rock saga. Freshfields Bruckhaus Deringer is offering corporate advice to the company even though it advised the Bank of England on its emergency funding. The Bank later turned to Clifford Chance when it became clear that Freshfields would continue to advise Northern Rock.
A&O has sparked conflict of interest rows in the past, notably over its two positions in the 2003 bid for Safeway, when A&O advised ABN Amro, financier to bidder WM Morrison, at the same time it was advising Dresdner Kleinwort Wasserstein, financial adviser to rival bidder Wal-Mart.
On the Northern Rock deal, the firm spokesperson continued: “As is always the case, we gave proper consideration to our roles in advance of accepting them and we were, and remain, satisfied that we have fully complied with conflict and other professional rules."
Click here to read our earlier article and reader comments on A&O's appointment by Virgin.