My, my. The timing couldn’t have been better. A week after Barry O’Brien’s team at Freshfields Bruckhaus Deringer was thrown off the M&S bid, Law Society president Peter Williamson was giving delegates at The St Paul risk management conference an insight into the way the new conflicts rules were shaping up.
And it looks like being good news for the City. Not only will firms be able to do more by agreement with clients, but there’s finally a provision for information barriers (that’s Chinese walls to you and me).
There’s been a lot to play for on this, because the new rules will take the form of subordinate legislation. The whole process has taken four years, but the results appear to be a delicate codification of existing practice.
Would clearer conflicts rules have changed what happened on Philip Green’s bid for M&S? It’s doubtful. Corporate lawyers are certainly asking themselves whether this sort of bid tactic will become standard procedure. But what made M&S so extraordinary was Freshfields’ apparent naivete, especially since Boardman & co tried exactly the same tack last year on Six Continents. Given Freshfields’ stellar M&A back catalogue, it’s astonishing it didn’t see Slaughter and May coming. Slaughters played a blinder, but Freshfields took it as a bluff. Big mistake.
This sort of conflicts litigation is rife in the US because of the holier-than-thou bar rules, but are they really in the clients’ interest? If you have to have a different firm for the tiniest part of every job, it simply leads to over-lawyering and absurd fees, and there’s quite enough of that in the City already. Nor, by the way, will it help access to justice, something that the Law Society working party has seriously debated.
As Williamson said in his speech at The St Paul conference last week: “In potential conflict situations, risk management is not about managing the commercial risk to the firm. And it is not about managing the risk of being found out by the client or the Law Society. It is about ensuring that a client’s interests are protected and their confidentiality preserved. It is also about maintaining public confidence in lawyers and the legal system.”
Hear, hear. So a big round of applause for classic British pragmatism, unless, that is, the Law Society Council does something unutterably dumb and votes against the proposals next month. Ladies and gentlemen, place your bets.