30 April 2001
10 October 2005
3 October 2005
26 September 2005
20 November 2006
2 January 1999
It is not surprising that in the face of Sir Elton John & ors v Price Waterhouse & ors, the media have made much of Sir Elton's distaste for "men in suits", his propensity to buy flowers, his alleged "betrayal" by his manager and former lover, and now the auction of his cars. But are there any lessons in this case which the legal profession should take note of?
What this case highlights is a shift in culture and approach to litigation by defendant professionals. This is not a recent shift, but it appears that a high-profile action such as this, involving a celebrity, was needed to illustrate the point.
It is understandable that in any form of business when things have gone wrong, it is attractive for the remaining (and sometimes new) management to look for people to blame and, ideally, to underwrite any commercial or other losses. And what better target is there than the professional advisers associated with the personnel and period involved, who are often perceived to have the attraction of "deep-pocket" insurance cover?
During the 1990s in particular, defendant professionals (and most notably the big-five accountants) have, as a result of our growing culture of litigation, addressed and survived numerous heavyweight and threatening actions - the Maxwell litigation, BCCI, NRG, DeLorean, Wallace Smith Trust Company, and the Lloyd's litigation are to name but a few. They are, therefore, no strangers to the threat and process of litigation and are not afraid to litigate in their own defence. They have learned that meritless claims need to be defended. As PricewaterhouseCoopers has been making clear over the last few days, in our emerging blame culture, it will not be taken to be "a banker of last resort".
But it still seems to be the assumption of many claimants and their legal advisers, that it is sensible practice to embark upon litigation against their professional advisers. They assume that the defendant professional will wish to dispose of the litigation prior to trial at some cost, irrespective of the merit of the allegations made. This thinking appears to support wide-ranging and vague allegations being thrown at defendant professionals on the basis that if "enough mud is thrown, something will stick". In many settlement meetings and mediations it is said by claimants and their lawyers that "everyone knows that insurers will always pay up when professionals are sued". Well, what this case has illustrated is that this is simply not true.
In some instances, the structure of insurance arrangements involved will mean that decisions on defence and settlement are principally those of the organisation involved. Insurance arrangements vary from professional to professional, but claimants should not assume that insurers will always have the conduct and control of proceedings. Self-insurance or partial self-insurance is far more prevalent and, in any event, the days of the slow defendant insurer dragging his feet until an inevitable settlement are long gone. This is true as a matter of culture and as a result of the new Woolf procedures which aim to flush out an inactive defendant. Culture aside, preaction disclosure and the increased pressure to mediate together provide enough reason to assume that a defendant professional has addressed the merits of his position well before reaching trial.
If nothing else, one lesson to be learned from this case is that speculative actions aimed at "deep-pocket" defendants do not guarantee success and are an expensive risk. While Sir Elton may be able to take such an expense in his stride, most claimants are likely to have a different attitude.
Clare Canning is a partner at Barlow Lyde & Gilbert specialising in commercial litigation; she acted for Price Waterhouse on the claim brought by Sir Elton John