Conflicts top the agenda -again

Another week, another set of conflict allegations. First, there’s Norton Rose being blasted by erstwhile trophy client Stelios on its work for Stelmar. Norton Rose is denying any conflict, but that hardly seems to be carrying much weight with the easyGroup chairman.

And then there’s the GE panel review, heavily trailed in this magazine and the results of which were exclusively revealed on last week. That review is looking uncannily like RBS’s notorious shake-up of its external advisers. First, GE used an online auction process which encouraged law firms to outdo each other on lowballing – all well and good, but there are amusing signs that some firms are already starting to use poker tactics to get themselves the best deal. Second, GE’s roster of advisers is now so gigantic that the vast majority of City firms will be conflicted out of acting against the conglomerate in any capacity.

As we argued last year when we published our groundbreaking study of bank panels, this may be canny from the company’s point of view, but it has huge implications for client choice. The clause, which prevents panel firms from litigating against GE, also includes all its affiliates worldwide, which is very sweeping. It also explains why at least three major City firms (and all three would ordinarily pitch for anything that twitches) did not even attempt to put the arguments for waivers and never even entered the fray.

The third conflict story we report this week is perhaps the most surprising. Here’s Slaughter and May, which is in the unusual position of being tactically wrongfooted on a merger bid through a conflicts allegation. Its role acting for both Euronext and Euroclear is evidence, say Deutsche Börse, Ashurst and Goldman Sachs, that the two bodies are acting in concert on the takeover battle for the London Stock Exchange. Slaughter and May insiders admit that the situation has caused considerable anxiety internally. Even before it emerged that the Takeover Panel was responding to Deutsche Börse’s request for direction on the issue, there was discussion within the partnership on whether it could seriously service both clients satisfactorily.

There must be some smiles over at Freshfields Bruckhaus Deringer, acting for the London Stock Exchange, and indeed at Goldman for Deutsche Börse. The spectre of an injunction against Slaughter and May has faded, because the other parties see it less as a direct conflict and more as leverage in an increasingly bitter battle. But after M&S, Freshfields and Goldman are going to relish Slaughters’ embarrassment.