Herbert Smith has decided not to act for clients suing the big four accountancy firms after losing the Equitable Life case last year.
Herbert Smith acted for Equitable Life in the £2.6bn negligence claim against Ernst & Young (E&Y) and a number of the building society’s former directors. The case settled in September 2005, with E&Y emerging victorious.
Herbert Smith senior partner David Gold said the decision was made after careful consideration. “We have for many years been close to the major accounting firms,” he said. “That’s something which we wish to take even further.”
The difficult issue of balancing the interests of Herbert Smith’s litigation and corporate groups has historically been limited to the banking sector. Like many other major City firms, Herbert Smith will typically not accept instructions to sue major investment and clearing banks.
Although Herbert Smith’s litigation group sued E&Y in the high-profile Equitable Life case, it has established ties with the accountant. Most notably the firm advised joint administrator E&Y on the collapse of energy giant TXU Europe in 2003.
Herbert Smith also has strong relationships with PricewaterhouseCoopers (PwC) and KPMG. It advised on the worldwide merger of Price Waterhouse and Coopers & Lybrand and the subse-quent separation of PwC’s management consulting businesses, as well as on the sale of KPMG’s consultancy business to Atos Origin.