Barlow Lyde & Gilbert professional liability and commercial litigation partner Clare Canning has been instructed by Ernst & Young to mastermind the accountancy firm's defence of a claim against it by Equitable Life.
The mutual is suing its former auditors for £2.6bn, claiming that Ernst & Young was negligent in the way it prepared Equitable's accounts.
Canning said: “I'm confident that there is no case to answer. Ernst & Young are convinced that they'll be able to justify the decisions they made. It's important for people to realise that this is not an Enron and Andersen situation.”
Canning has opted for Mark Hapgood QC of Brick Court Chambers to defend the claim.
The claim has been initiated for Equitable by Herbert Smith partners Christa Band and Charles Plant. Herbert Smith was instructed to investigate the roles played by Equitable's advisers in the runup to its difficulties.
Equitable's chairman Vanni Treves said that Ernst & Young had failed to provide satisfactory replies to questions posed by Herbert Smith.
In 2000, Equitable was forced to close to new business following a House of Lords decision that said the mutual had to meet the guarantees in full.
Equitable was then liable for more than £1.5bn. The claim alleges that the auditor should not have signed off Equitable's accounts when there was not sufficient provision to cover its exposure to guaranteed annuity liabilities.
Equitable has now set the litigious ball in motion and hopes to claim damages if it can prove that Ernst & Young acted negligently.
Iain Milligan QC and Guy Morpuss of 20 Essex Street are representing Equitable. Equitable's former legal adviser Denton Wilde Sapte is not a target for future court action. An investigation by Herbert Smith concluded that there was no case against the firm.
Barlows has a strong professional liability practice, representing accountants, solicitors and surveyors. It acted for Pricewaterhouse-Coopers (PwC) in Elton John
PwC and was involved in the Guinness, Barings and BCCI cases.
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