The number of conflicts searches has skyrocketed across City firms following yesterday’s turmoil on Wall Street, even at firms that do not currently have roles advising any of the major players.
While Linklaters is one of the few firms with a major UK mandate, advising the Lehman administrators PricewaterhouseCoopers (PwC) in the UK, most other firms in the City have been inundated with client queries.
Particularly, clients have been calling City firms for advice on how they will be affected by the demise of Lehman Brothers (TheLawyer.com, 15 September), as well as some worried about the takeover of Merrill Lynch by Bank of America (15 September) and the troubles of US insurance giant AIG (16 September).
Ashurst general counsel Chris Vigrass said that conflict issues had “vastly increased” since Monday and that he was issuing a briefing note to assist lawyers deal with Lehman-related conflicts.
A US firm’s London partner confirmed: “We are getting lots of enquiries … over a whole range of issues for counterparties/creditors, etc. in respect of Lehman, each of which has its own particular characteristics, depending on particular fact patterns.”
Allen & Overy (A&O) senior partner David Morley too acknowledged that conflicts searches had increased dramatically. “We’ve had a lot of calls,” he said but added that the conflicts systems were coping with the strain: “We’ve got very well established systems and processes for dealing with this.”
A&O has so far not yet scored any major roles for any the major parties, although it is understood to be acting for the International Swaps and Derivatives Association (ISDA), which is central to the fears of many clients. It is understood that A&O is also advising a large number of other clients on the impact of Lehman’s role as a counterparty in derivative contracts.
Clifford Chance is understood to be acting for Barclays, which pulled out of the bidding for Lehman over the weekend but is reported to still be interested in purchasing certain parts of Lehman’s remaining business, such as the relatively healthy asset management arm.