Conflict of interests and RBS's fear

The bank was concerned because a former employee of one of its panel firms (Clifford Chance, though Dentons is acting for RBS in this case) has recently been employed by CYK. The bank said it feared that the employee might have acquired documents or information relevant to the PAG case which, in CYK’s hands, would be extremely damaging to the bank. 

Clearly, if the unfortunate former Clifford Chance lawyer now at CYK had information relevant to the PAG case, then it would have been confidential and privileged, and RBS’s interests could thereby have been severely prejudiced. 

Having previously said it was going to defend the application, and having instructed Trevor Mascarenhas of PCB Litigation to do so, CYK has now conceded that its client’s interests are best served by withdrawing from the case. Members of the disputes team at Bird & Bird, led by partner Steven Baker, are now sharpening their pencils ready to take over from CYK.

If by employing the ex-Clifford Chance lawyer CYK had come into possession of privileged material and had used it to the detriment of RBS, then it would have represented a fundamental conflict of interest and a very serious breach of the solicitors’ Rules of Professional Conduct. Ultimately, it could have led to the solicitor being struck off.

What CYK and its lawyers will have been trying to establish is whether it could demonstrate that it had in place proper safeguards to ensure that any information the solicitor had acquired at Clifford Chance did not penetrate the team dealing with the litigation or, even if it could, there was no risk that an unfortunate perception might otherwise arise.

While the decision to replace its lawyers means that PAG will need to start again with a? new set of lawyers (not an inexpensive undertaking), if the decision had not been taken then the issue might have dogged the rest of what will probably be lengthy litigation.

So far as I am aware, nobody has suggested that either the individual solicitor’s conduct or CYK’s conduct in this case has at any stage been anything other than exemplary: this case is undoubtedly a very good example of the operation of ?the law of unintended consequences followed by prompt investigation and correct decision making as to what is in the best interests of the client. Credit should go to CYK for acting quickly and professionally and putting the interest of its client above its own.

David Golten is a partner and head of commercial litigation at Wedlake Bell @WedlakeBell www.wedlakebell.com