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4 March 2002
In the usually calm environs of the legal profession that is the in-house lawyer community, you do not often hear accusations of ‘betrayal of trust’ being bandied about. But that is how Anthony Armitage, the former vice-chair of the Law Society’s Commerce and Industry (C&I) Group, is describing the reason for his dramatic resignation last month. He left following an emergency meeting called solely to discuss whether his being a director of legal tendering law firm FirstLaw was compatible with chairing the C&I Group. But Armitage is not leaving without a fight: he still claims to be chair of the London region despite the C&I executive insisting that he is out; and he has also set up a rival group, the In-house Lawyers Association (IHLA).
Armitage is a man who chooses his words carefully, and ‘betrayal’, he insists, is absolutely the right word. “I’ve given my time voluntarily and it feels like a real kick in the face to be dropped at the eleventh hour,” says the solicitor, a former Davies Arnold Cooper property partner. “I wouldn’t have done all the things that I have done if I knew I was going to be stopped in this way,” he continues. “It’s never happened like this in the past and so there was no reason to think that it might.”
Contested elections for the post of national chair took place at the end of last month, although succession from vice-chair to chair was previously automatic. Stanley Williams, head of legal at BSi, was elected chair and the current chair Carol Williams will hand over the reins officially at the beginning of next year.
Is there room enough in the legal profession for two groups representing in-house lawyers? “Well, there’s a big gap in the market,” reckons Armitage. “Frankly, I don’t think the C&I Group has remotely filled its potential. Yes, I see this as a rival organisation, but there’s a terrifically wide gap to be filled by providing a commercial, member-focused service.”
The C&I Group will be disappointed to see that its would-be chair appears to have struck a chord with a section of the in-house community. In less than two months, 150 individual lawyers have signed to register as a member on the new association’s website (www.ihla.org.uk), including counsel at the BBC, the Crown Estate, the Financial Services Authority, HSBC, the Bank of England and Reed. “And I haven’t really been trying yet,” adds Armitage.
Caroline Wilkinson, general counsel at venture capitalists Abingworth Management, is glad to see a new group. “I had concerns about the C&I Group and it seemed Anthony was my champion in looking after those concerns,” she says.
Armitage acknowledges that the split has been “personally unpleasant”, but he insists that he is not setting up a breakaway group as an act of thwarted ambition. Instead, he says that he felt obliged to leave because of serious failures in corporate governance which he repeatedly called upon fellow board members to deal with – but to no avail.
First, Armitage took issue with the fact that there was “no definition of the relationship between the national group and the region or the roles and responsibilities of each”. Second, he complained that there were “no written rules and procedures to govern the conduct of executive meetings”.
But the biggest problem was “the confusion” over the group’s fundamental corporate structure. As he explains it, the company operates as “two entities: one as a company limited by guarantee and one as an unincorporated association”.
So why is that important? “In most of its publicity and literature the group likes to promote the fact they’re a recognised group with the Law Society, but I had an increasing concern that was misleading, not only for our members, but also the Law Society,” he says.
In fact, it was only the unincorporated association that was recognised by the Law Society. “That entity has no assets, no database of members and was almost completely inactive, but the group uses that body as a device to gain Law Society recognition,” he continues. “However, it trades and operates through a limited company that has no tie with the society whatsoever.”
This is not just navel-gazing, because being a Law Society-recognised body would prevent the C&I Group doing many of the things it does, such as engaging in commercial activities. “I felt distinctly uncomfortable that they were operating in that way because not only was it misleading, but generally there was no understanding among the general membership of the structure,” Armitage says. “Of course, members are paying their £40 annual subs and corporate members are paying their £250, and all that money went straight into the company. None of it went to the unincorporated association.”
The issue was brought up time and again, and Armitage, who was on the company’s board for three and a half years, was even mandated by fellow board members to draw up papers and proposals on the three issues. He did just that, setting out his stall in a paper which he felt had sufficient detail to be voted upon. Those individual issues were raised at three consecutive board meetings and each time he was blocked. “The last straw for me came on 9 September when, yet again, they deferred making a decision; and in fact the chair [Carol Williams] actually produced an alternative set of papers which she hadn’t even been mandated to do,” he says.
Is it not somewhat ironic that a group representing the interests of in-house lawyers has such an apparently slapdash approach to corporate governance? “Yes,” he replies. “It’s just extraordinary that a group of lawyers couldn’t really get their heads around this rather disturbing problem and actually try to address it,” he says.
Williams says that Armitage’s proposals on formalising the definition of the relationship between the national and regional groups and their roles were “too restrictive” for an organisation run primarily by volunteers and people with full-time jobs. “The view was also that there could not be a one-size-fits-all approach to management,” she adds. On his second point, that there were no written rules or procedures governing executive meetings, she points out that the company was governed by its memorandum and articles and was “perplexed that Anthony does not believe this to be the case”. On Armitage’s main point, the group’s corporate structure, she acknowledges that the C&I Group is aware that a small minority of members are “confused” but that the creation of a commercial company “was vital and necessary to enable more benefits and services to be made available”.
As far as the C&I Group is concerned, Williams insists it is “business as usual”, adding that the formation of a breakaway group “has been met with astonishment” by members.
So did C&I have a problem with Armitage’s chairmanship? C&I chief executive Sarah Sheehan was quoted in the Law Society’s Gazette saying that “some board members” expressed concerns over a possible conflict of interest between being a director of FirstLaw and being C&I chair. It is not a suggestion that has been repeated since. Armitage says no conflict existed and takes exception to the inference that he was incapable of dealing with the two roles objectively. For there to be conflict there needs to be two separate interests that conflict with one another, he reasons. “I’ve challenged the group to identify those interests because I don’t think the interests converge,” he says. “The business I run advises in-house lawyers in relation to the outsourcing of their work to private practice lawyers. How does that create a conflict?”