Lloyds TSB ignites corporate and litigation clash at Herbies

Herbert Smith's corporate and litigation practices have clashed over the firm's decision to accept an instruction to sue Lloyds TSB Bank.

It is understood that there is mounting frustration in the corporate department that the firm accepted instructions in ongoing litigation against Lloyds.

The Lawyer can reveal that Herbert Smith's litigation department has been advising the Mahme Trust Reg in ongoing High Court proceedings against Lloyds since September 2003.

However, when The Lawyer contacted corporate partners about the case last week, they said they were unaware of the mandate and were surprised the firm had accepted it.

The spat is potentially embarrassing for Herbert Smith as the firm has recently been touting itself to Lloyds.

The firm does not have a formal protocol to deal with conflicts between corporate and litigation, but the current consensus is that it will not accept instructions against banking or corporate clients.

One source at the firm argued that, when the instruction was taken, Herbert Smith did not have a relationship with Lloyds. The source added that if the instruction were offered now the firm would turn it down.

The threat of a power struggle between Herbert Smith's corporate and litigation practices came to the fore following the two-way senior partner election between litigation chief David Gold and corporate partner Richard Fleck. Gold won the race last October and became the first litigator to become Herbert Smith's senior partner for almost 20 years.

After Gold's victory, he said he was planning to appoint a managing partner from corporate to work with him in order to bridge the gap between the practices. However, as first revealed by The Lawyer last week (14 February), Gold has abandoned this idea in favour of creating an executive committee.

Herbert Smith declined to comment.