Knowles under pressure after DLA kept in dark over personal LawVest stake
Tony Angel puts matter at top of agenda for firm’s Tuesday board meeting after partners express outrage
Nigel Knowles
DLA Piper co-chief executive Sir Nigel Knowles has become embroiled in a partnership storm after it emerged at the end of last week that he and a small number of other partners at the firm had personally invested in alternative business structure (ABS) LawVest without declaring it to the firm’s board or the wider partnership.
DLA Piper took a collective stake last year (28 October 2011), putting £62,500 into the nascent business. While that is the current extent of the commercial relationship between the two organisations, both DLA Piper and LawVest have stated that they expect that smaller DLA Piper clients will begin to use LawVest.
Following enquiries from individual partners, global co-chairman Tony Angel emailed partners stating that Knowles, who is also non-executive chairman of LawVest, was the only individual on the board to have invested in the ABS. However, sources close to the firm have told The Lawyerthat it then became clear that other individual partners known to be personally close to Knowles had also invested in the business, leading to what one partner described as “uproar”.
Tony Angel
The international board is meeting tomorrow (Tuesday 28 February) and it is understood that the issue is at the top of the agenda.
On Thursday (23 February), Knowles sent an email to the firm in which he expressed shock that his action was being perceived as a conflict of interest and indicating that he would consider divesting his stake.
On Friday (24 February), Angel sent out another email to the partnership that stated that the board had at no time considered any investment made by individuals. It is understood that Knowles’ and the other partners’ individual investments were made subsequent to the firm’s.
A source close to the partnership said: “There’s genuine frustration among the partnership. If it’s such a good investment, how come it isn’t available to everyone?”
Another said: “Corporate governance has gone astray here.”
However, another source said: “The view of the world that there’s some grand plan to funnel vast amounts of work to LawVest and that Nigel and his mates benefit is just nonsense.”
LawVest chief executive Karl Chapman said: “The investors and the share register of LawVest is a confidential matter.”
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Readers' comments (26)
Anonymous | 27-Feb-2012 8:56 am
How very "Halliwells" of him......
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Corporate lawyer | 27-Feb-2012 9:25 am
Why would you invest in a new venture without any right of veto/pre-emption before the addition of new investors? Very strange.
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City cynic | 27-Feb-2012 10:20 am
WTAF? It's usually Stockholm syndrome with DLA partners and it's not like them to make a fuss. Where's this bravery come from?
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Anonymous | 27-Feb-2012 10:27 am
When individuals start investing in other businesses outside their own it raises all sorts of questions about ownership.
The challenge for any partner investing in an ABS, be it their own or an external venture, is to manage potential conflict of interest. The best way is to be transparent and clear about level of external investment, or you risk uproar and may face some very uncomfortable questions.
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George Osborne | 27-Feb-2012 11:53 am
@Anonymous 10.27, you make a good point. How many law firms are applying for ABS? Are they prepared for the amount of transparency they'll have to show?
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Anonymous | 27-Feb-2012 1:24 pm
hat the investment was made by Knowles and his cronies after the firm's investment was made and without openly declaring it smacks of dishonesty. These people are lawyers and cannot claim ignorance of the law or their obligations to their fellow partners under their partnership deed. Knowles should consider resigning as managing partner for so blatantly flouting his obligations.
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Anonymous | 27-Feb-2012 1:33 pm
The investment by Knowles is a blatant disregard of an obvious conflict of interest. Failing to disclose it shows a lack of good faith in his dealings with his fellow partners. Time to step down. Knowles has always treated DLA as if it was his to do with as he chose fit and with disregard of, and little respect to, his fellow partners and/or their opinions. Every leader has had their day at some point and then its time to go. DLa should find itself a leader with integrity.
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Anonymous | 27-Feb-2012 2:01 pm
Am I going to be the only one to make the obvious point that most of the DLA partners wouldn't even have a job if it wasn't for Nigel Knowles?
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Anonymous | 27-Feb-2012 2:20 pm
Every law firm that has fallen behind DLA in the pecking order is desperate to wade in and give their views. Some of the big firms now looking over their shoulder are doing the same.
It's mainly driven by jealousy. Nobody would be chipping in with their 2 cents if this was happening at a firm like Dickinson Dees.
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Anonymous | 27-Feb-2012 2:42 pm
reminds me of Hammonds Direct
Be careful what you wish for Nigel
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