Freeserve condemns Olswang over conflict

Internet service provider Freeserve has fallen out with its long-term adviser Olswang, claiming that the firm failed to tell it about a massive client conflict – first revealed on on 12 March.

Freeserve was using Olswang in its litigation against Customs & Excise over AOL's exemption from paying UK VAT. Freeserve claims that Olswang stopped acting on the litigation two days before proceedings were launched last Friday. According to the company, Olswang pulled the plug on the case because it also acts for Warner Brothers, part of the AOL Time Warner stable. But, said Freeserve, Olswang had never notified it that it acted for Warner Brothers.
“We didn't know that Olswang also acted for Warner Brothers, we were never told and didn't find out until two days before the judicial review was meant to start,” said Freeserve general counsel and company secretery David Melville. “Herbert Smith, our corporate adviser, has the same conflict, as it also acts for AOL Time Warner, but we knew about it. We didn't know about it with Olswang,”.
Olswang chief executive Jonathan Goldstein declined to respond to Freeserve's allegation that the law firm had kept it in the dark over the AOL conflict. “The firm doesn't comment on confidential client matters,” he said.
Melville has now instructed Dechert to handle the litigation. Dechert has not worked for Freeserve before. Melville said he chose the firm “after performing a very rushed conflict check on lots of firms”. He told The Lawyer that he is not likely to instruct Olswang again, but he did not confirm that Dechert will take Olswang's place automatically as Freeserve's main litigation firm. He indicated that he will perform a wholesale review of his legal advisers.
“It's fairly clear to us that we now need to look at where we source our legal advice,” Melville said. “The effect of all this means it's very unlikely that we'll use Olswang again.”
Melville also uses Denton Wilde Sapte for litigation work and instructs Tite & Lewis on some tax matters, although Herbert Smith is Freeserve's main corporate adviser.