Litigant’s conflict of interest claim rejected after former lawyer ‘changed sides’



Lord Malcolm
Lord Malcolm

A party litigant who argued that a solicitors’ firm instructed by the other party should be barred from acting because one of its consultants had previously represented her while working as a partner in a firm which merged with the opponent’s firm has her claim dismissed.

By a majority of two-to-one, judges in the Inner House of the Court of Session ruled that there was no “conflict of interest” in BLM Solicitors acting for Ecclesiastical Insurance Office plc where the defender, Lady Iam Hazel Virginia Whitehouse-Grant-Christ, had previously consulted George Moore, then a partner in HBM Sayers, which had since amalgamated with BLM, with Mr Moore becoming a consultant.

No legal bar

Lord Bracadale, Lord Malcolm (pictured) and Lord McGhie heard that following a fire at her home in February 2000 the defender made a claim for indemnity under a policy of insurance with the pursuers.

Later that year the pursuers raised an action for reduction of the policy on the ground of non-disclosure.

The defender consulted solicitor George Moore, now QC, who was then a partner in HBM Sayers.

The pursuers were originally represented by Simpson and Marwick, but following the hearing of a reclaiming motion in 2016 they changed solicitors to BLM.

The defender realised that the firm of HBM Sayers had been amalgamated with BLM, for whom Mr Moore was still acting as a consultant, and argued that this meant that BLM could not act for the pursuers.

The court was told that BLM took advice from senior counsel as to the propriety of accepting instructions, and were told that there was “no legal bar” in doing so.

Submissions

On behalf of the pursuers it was submitted that the court should follow the decision of the House of Lords in Bolkiah v KPMG 2 AC 222; that the real question was one of confidentiality, and it was only if there was a realistic risk of confidential information in the hands of Mr Moore being used to benefit the pursuers in the litigation that any difficulty might arise.

It was argued that it was for the defender to show what type of information Mr Moore might hold which might be used to her prejudice, but if she could show a possibility of such risk it was for the pursuers to demonstrate that the risk was remote and unrealistic.

The defender stressed that her concern about disclosure of confidential information, and, under reference to Bolkiah, asserted that there was a “real risk of unlawful disclosure and unlawful use” by BLM of “private sensitive privileged and relevant confidential information”.

She also referred also to cases which supported not only the protection of such information but also a “duty of loyalty” and an “over-riding jurisdiction” of the court to intervene “to protect the due administration of justice”.

Decision

Lord McGhie – with whom Lord Bracadale agreed – said that having considered cases from various countries on the potential issues arising in cases of a solicitor changing sides, he was “satisfied that the protection of confidentiality is accepted as the dominant issue in most, if not all, jurisdictions and the main additional factors which have been examined can be characterised as those said to arise either from a continuing duty of loyalty or from the need for the court to intervene when necessary to protect public faith in the proper administration of justice”.

In a written opinion, Lord McGhie said: “I have come to accept that there is no continuing obligation of loyalty in the present case and indeed that, unless there are special circumstances, there is no such duty on termination of a normal agency. Although I have come to the conclusion that dicta in Bolkiah need not be read as excluding consideration of the need to preserve public faith in the proper administration of justice, I do not think the circumstances of the present case call for intervention on that basis.”

He continued: “Mr Moore’s involvement was extremely limited and it is not suggested that the defender has had any dealings with him for about 15 years. Apart from the question of confidential material there is no practical reason to prevent his new firm acting against the defender.

“Put shortly it can be said that the court was not directed to any clear authority for the proposition that there is any continuing legally enforceable obligation of loyalty in Scots law arising in the normal course after termination of the formal relationship.

“The unanimous decision of the House of Lords in Bolkiah, as expressed by Lord Millett, is that there is no such obligation in English law…I see no justification for any distinction between Scots and English law on this issue.”

Lord McGhie added: “I have no difficulty in accepting that Lady Christ will have experienced some surprise and possibly irritation when she found out what had happened. She is certainly entitled to expect the court to protect confidential material. However, that issue apart, I am not persuaded that the particular circumstances of this case disclose a situation where right thinking members of the public would have any real concern about the continuing role of Mr Moore.

“On any view, a firm asked to act in a litigation where one of its partners, employees or associates has previously acted in that litigation for the other side requires to exercise great care and I was surprised to find that the solicitors in this case had been aware of the difficulty and agreed to act in the circumstances of this case. On the other hand, I understood the explanation that the pursuers had a long established connection with the solicitors in question and this might have been a factor to take into account had we been involved in a detailed balancing of interests.

“On any view, I would have expected them to take steps to ensure that information barriers were in place to prevent any dissemination of confidential material rather than rely on their own bald assertion that the information held was not confidential. However, having considered the detail of Mr Moore’s role I am not persuaded that the present case is one where the interests of justice require the court to bar the employment of BLM.”

In a dissenting opinion, Lord Malcolm noted that all the judges who had any involvement in the case had entertained “immediate concerns” about the issue.

“Intuitively, it seems wrong,” he said. “While not excluding the exceptional case, for my part I am of the view that it would be a sound general rule if a firm of solicitors, having acted on one side of a litigation, was disabled from thereafter changing sides. I would apply such a rule to the present case.”

Lord Malcolm added: “Whatever else this case may prompt the professional bodies to reflect on their codes of conduct. For a model which is consistent with a relatively strict approach, they need look no further than the rules of the American Bar Association.”

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