ABN Amro ditched Allen & Overy (A&O) as its adviser in the ongoing Safeway battle after the investment bank’s bidder Wm Morrison discovered that the magic circle firm was advising two opposing parties, The Lawyer can reveal.
In a move that will send shockwaves through the UK legal market, Morrisons pressured ABN Amro into replacing A&O with Denton Wilde Sapte. A&O was using a separate Chinese-walled team to advise Wal-Mart’s fin-ancial adviser Dresdner Klei-nwort Wasserstein (DKW).
Since the late 1990s, large law firms have invoked Chinese walls to represent opposing bidders in UK M&A. ABN Amro’s move is a sure sign that investment banks, which have taken a tougher stance on their own conflicts in the post-Enron business environment, are far less willing to accept dual roles from their legal advisers.
For huge law firms built to handle several major jobs at once, a stricter conflicts environment represents a serious business issue.
Sources close to ABN Amro claim that, although A&O had cleared the conflict with the bank, the dual role had not been communicated to the relevant people.
“Certain people within ABN Amro were aware of the situation, but perhaps not the right ones,” commented one source.
A&O banking partner Mike Duncan said in a prepared statement: “We agreed with ABN Amro some months ago that it was appropriate that another firm not already involved in Safeway’s bid was instructed on financing matters relating to the bid.”
However, the situation is highly embarrassing for both A&O and ABN Amro, a core client for the magic circle firm’s banking department. It is doubly unfortunate for the magic circle firm, which lost out to Ashursts in the original battle for the Morrisons instruction.
It also follows revelations in The Lawyer of A&O’s controversial multiple role on the TXU insolvency.
A&O was appointed in January by ABN Amro and dropped soon afterwards. Sources close to ABN Amro claim the change was made with mutual consent from A&O and Morrisons. Recently, ABN Amro instigated a crackdown on the conflicts disclosure procedures of its external lawyers.
• A&O, Simmons & Simmons and SJ Berwin have all won places on ABN Amro’s brand new employment panel.
The creation of the panel is a further attempt by the Dutch banking giant to formalise its relationships with external lawyers and reduce the number of firms it outsources work to.
Historically, the bank has farmed out employment work to a number of different firms that were on its original loose panel. John Collins, ABN Amro’s UK head of legal, told The Lawyer that the panel was also set up because the bank had identified a need for specialist employment advice.