MPs criticise Olswang for 'sheltering' behind client confidentiality
LPP should be waived in matters of 'clear public interest', says committees' report
Legal professional privilege (LPP) should not prevent parliament from gathering information where there is a clear public interest, MPs have said in a damning report into the BHS scandal.
Members of the work and pensions and the business, innovation and skills committees accepted the duty of lawyer-client confidentiality but expressed regret that Olswang had been unable to discuss the detailed nature of their role during Retail Acquisitions Limited (RAL)'s acquisition of BHS for £1 in March 2015.
'We recognise the duty of confidentiality advisers have to their clients and, in particular, the principle of [LPP],' read the report. 'In exceptional matters of clear public interest, however, there is a strong case for those concerns to be overridden by duties to provide information to parliament.'
The report added that MPs and the public would have had a better understanding of the motives of RAL owner, Dominic Chappell, in proceeding with the 'rushed transaction', if he had released his advisers from their formal obligations.
'Equally, we regret that Olswang … sheltered behind these duties when their interests - and that of the public - would have been better served by full and frank disclosure to legitimate parliamentary scrutiny,' the report stated.
The Solicitors Regulation Authority (SRA) said: 'Solicitors have a duty to uphold the rule of law. If the law changes around disclosure of confidential client information, then we would expect solicitors to comply with those changes.'
Olswang had adopted a 'very wide interpretation of confidentiality' towards their client, according to MPs, which included not disclosing whether they were involved in providing advice around attempts by RAL to sell BHS before it entered administration.
Former BHS owner, Sir Philip Green, who having overseen the retailer's sale to RAL was held largely accountable for its demise, had told MPs that Olswang had earned total fees from the deal of at least £3.7m. However, the firm refused to clarify the total fees they received due to client confidentiality and LPP.
The firm was also criticised for taking 'generous fees' and lending its name and reputation to the deal, despite being 'increasingly aware of RAL's manifold weaknesses as purchasers of BHS' following a 'detailed and rigorous' due diligence exercise.
Olswang and Linklaters -which was paid £1.2m for advising Arcadia Group on the sale of BHS - were labelled as being part of the large number of advisers in which 'many of those closely involved claim to have drawn comfort from the presence of others'.
The report pointed to an example of the 'the cursory nature of checks' where Olswang had told Linklaters that Chappell, previously bankrupt, was credible the day before RAL acquired BHS during a 'know your client' discussion.
'Expert advisers are an important part of business transactions,' the report stated. 'They should, however, be there to advise, not to provide an expensive badge of legitimacy to people who would otherwise be bereft of credibility.'
However, MPs said Green's argument that the retention of 'respected' Olswang gave Chappell's BHS bid 'vital credibility' was 'disingenuous'.
MPs concluded that Green had a 'moral duty to act' and urged him to make a 'large financial contribution'.
'The presence of reputable advisers does not absolve the client from exercising judgement. Equally, their engagement cannot be taken as a guarantee of the business acumen of their clients.'
As a result of the scandal, the futures of 11,000 employees have remained at risk while 20,000 current and future pensioners face substantial cuts to their entitlements. The pension costs are set to be paid by the Pension Protection Fund (PPF).
Olswang has been contacted for comment.