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)
Rosie Scarlett | 1-Mar-2012 12:42 pm
How funny ... Thatcher had her day, Blair had his day, Fred The Shred had his day and now Sir Nige looks as though he's had his. He will, as sure as whiffs follow certain former Halliwells' partners, have to resign and he will be remebered not as the man who created one of the world's greattest law firms but as someone who lost contact with reality and actually started to beleive his own BS! Sad really.
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Anonymous | 2-Mar-2012 10:14 am
There goes his knighthood. Lawyers know what's right and wrong so obfuscating things does not detract from what is bilindingly obvious. Sad way to end a career.
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Disgruntled Partner | 3-Mar-2012 6:35 pm
In an ideal world Sir Nige would do the honourable thing. However, this is DLA and I doubt very much that he would have the gumption to be a bigger man.
And there are plenty in the wings ready to take the firm forward in a more collegiate and open way.
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Anonymous | 5-Mar-2012 11:52 am
The larger law firms, even those not as large, have fairly specific conflict of interest and disclosure rules.
Either DLA did not have such rules (which is a failure in risk management policy),
or the master of the universe chose to ignore the rules.
In any event, if this was not the master of the universe, he would have been out the door already, and it wouldn't be a mere demotion.
As to the comment that many DLA partners would not have their jobs but for the master of the universe, how severe would the infraction have to be before Nigey would be jettisoned?
Lets see if the board has any b***s.
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Anonymous | 6-Mar-2012 8:24 pm
You can take a Northerner from the North......
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Anonymous | 20-Jul-2012 1:06 pm
As in the manner of a GCSE Law Exam
(1) "they expect that smaller DLA Piper clients will begin to use LawVest." (2 "he expressed shock that his action was being perceived as a conflict of interest." Reconcile these two statements. What do you understand by "conflict of interest? How should this have been managed? What reputational issues are involved here? Do not write on both sides of the paper at once.
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