Professional Negligence Special Report: The ex factor
16 February 2009
3 June 2013
24 July 2013
7 February 2013
7 October 2013
9 September 2013
The issues that a law firm needs to consider if it wants to act against a former client were clarified in the recent case of Winters v Mischon de
Mishcon de Reya acted for the Jewish National Fund (JNF) in litigation involving an associated charity, KKL. The firm also acted for the JNF on ancillary matters, including allegations made against it by one of its former trustees to the Charity Commission in respect of alleged accounting irregularities for which then chief executive Simon Winters was said to have been responsible.
Before the Charity Commission investigation, defamatory letters regarding Winters in his role as chief executive of the JNF were published. The court found that Mishcon had acted briefly for Winters in his personal capacity: first, in action taken to discover their author; and second, in offering to act in a proposed libel action that never progressed.
In a subsequent employment dispute between the JNF and Winters, Mishcon was instructed by JNF, but Winters brought proceedings to prevent the firm from doing so on the basis it had acted for him before.
In the previous case of Bolkiah v KPMG (1999), the House of Lords held that a party seeking to restrain their former solicitor from acting for another client must show that: the solicitor is in possession of information that is confidential to the client and to the disclosure of which the client has not consented; and that the information is or may be relevant to the matter in which the interest of the other client is or may be adverse to his own. The solicitor must then satisfy the court that there is no risk of disclosure or misuse of confidential information, failing which the court should intervene.
Code of conduct
Subrule 4.03 of the Solicitors Code of Conduct provides that a solicitor must not risk breaching the confidentiality of a former client by acting, or continuing to act, for another client on a matter where: the relevant information might reasonably be expected to be material; and the client has an interest adverse to the former client, unless certain safeguards detailed in the rules are put in place. The rules on confidentiality and disclosure contained in Rule 4 are currently the subject of a consultation by the Solicitors Regulation Authority (SRA) which proposes to extend the circumstances in which information barriers can be used without the consent of the client whose confidential information is being protected.
Having made a finding of fact that Mishcon had acted for Winters personally in two limited respects, the court concluded that:
• Each retainer with Winters was closely linked with a contemporary retainer by the JNF in circumstances where there was no perception on either side of any conflict of interest between the JNF and Winters.
• In circumstances where there is a joint retainer, or where the same firm acts for two clients in related matters in which they have a common interest, neither client can claim legal professional privilege against the other in relation to documents that come into existence within the scope of the joint retainer.
• The information sought to be protected by Winters was imparted in circumstances where there was no reasonable expectation of confidence between Winters and the JNF. There was nothing in the information that alerted the firm to the existence of any conflict of interest between Winters and the JNF, or otherwise made it improper for the firm to continue acting for them both.
The Bolkiah test
Winters’ attempt to invoke the Bolkiah jurisdiction therefore fell at the first hurdle. The judge emphasised that, without being able to satisfy the first limb of the Bolkiah test, there was no general principle preventing a solicitor acting for a former client after termination of the retainer, endorsing the dictum in Bolkiah that “the only duty to the former client that survives the termination of the client relationship is a continuing duty to preserve the confidentiality imparted during its subsistence”.
Although Winters illustrates the approach the court is likely to take where there has been a joint retainer or closely related retainers between past and current clients, it also demonstrates that this task is highly fact-specific.
So how do solicitors protect themselves from disputes of this type? They must be careful to document each and every retainer at the outset and to leave no doubt as to whom they act for, both in the initial retainer letter and then throughout the performance of the retainer.
We await with interest the outcome of the SRA’s consultation exercise.
Richard Harrison is head of the lawyers’ liability group at Barlow Lyde & Gilbert