UK: A Winter´s Tale - Acting Against A Former Client?

Last Updated: 9 January 2009
Article by Richard Harrison and Julian Killin

Where a solicitor seeks to act against an existing client, the primary consideration is whether the retainer gives rise to an actual or potential conflict of interest. However, when it comes to past clients, the issue is no longer one of conflict but one of preservation of the confidentiality of the former client's information.

Former clients

The current test for when a party may restrain his former solicitor from acting for another client was established in Bolkiah v KPMG (1999). The House of Lords held that a party seeking to enjoin the solicitor (or in that case, accountant providing litigation support services) must show (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the matter in which the interest of the other client is or may be adverse to his own. The burden then shifts to the solicitor, who must satisfy the court that there is no risk of disclosure or misuse of confidential information, failing which the court should intervene. The risk of disclosure or misuse must be a real one, and not merely fanciful or theoretical; but it need not be substantial.

To prevent matters getting to the door of the court, subrule 4.03 of the Solicitors' Code of Conduct provides that a solicitor must not risk breaching the confidentiality of a former client by acting, or continuing to act, for another client on a matter where (i) the relevant information might reasonably be expected to be material; and (ii) the client has an interest adverse to the former client, unless certain safeguards detailed in the code are put in place.

The cases following on from Bolkiah have tended to focus on the second limb of the House of Lords' test; namely, the risk of disclosure of confidential information and the adequacy of safeguards such as the erection of Chinese walls or the giving of undertakings to ameliorate the risk.

Recently, however, the first limb of the test was considered in Winters v Mishcon de Reya (2008).

Winters v Mishcon de Reya

Mr Winters ("W") was the former chief executive of the Jewish National Fund ("JNF"), a UK charity. Mishcons acted for the JNF primarily in connection with litigation involving an associated Israel based charity, KKL. They also acted for the JNF on ancillary matters, including allegations made against it by one of its former trustees to the Charity Commission in respect of alleged accounting irregularities for which W was said to have been responsible. The investigation by the Charity Commission arose against the background of an earlier "dossier" detailing the alleged irregularities. The dossier had been investigated by forensic accountants appointed by Mishcons on behalf of the JNF, who found no evidence of wrongdoing.

However, before the Charity Commission investigation, letters defamatory of W in his role as Chief Executive of the JNF were published. Henderson J, sitting alone, found that in respect of the defamatory publications Mishcons had acted briefly for W in his personal capacity in two respects: (i) in connection with action taken to discover their author; and (ii) in offering to act in a proposed libel action which never progressed substantively.

Subsequently, there was an employment dispute between the JNF and W in which Mishcons were retained to act on behalf of the JNF. W sought to prevent Mishcons from doing so on the basis that Mishcons had advised W in the past about substantially similar matters to those in relation to which they were now acting against him.

W argued that Mishcons were in possession of information confidential to him and to the disclosure of which he had not consented. The relevant information was presented to the court in a confidential witness statement and, though it was not therefore discussed in the publicly available judgment, appeared not to relate specifically to the allegations in the accounting dossier. Rather, the information was provided in response to a request from Mishcons that W advise whether there were any "skeletons in the cupboard" and, in particular, anything over and above the matters to which the dossier related.

Having made a finding of fact that Mishcons had acted for W personally in two limited respects, Henderson J went on to find that:

  • each retainer was closely linked with a contemporary retainer of Mishcons by the JNF in circumstances where there was no perception on either side of any conflict of interest between the JNF and W;
  • in circumstances were there is a joint retainer, or where the same solicitors act for two clients in related matters in which they have a common interest, neither client can claim legal professional privilege against the other in relation to documents which come into existence, or communications which pass between them and the solicitors, within the scope of the joint retainer or matter of common interest concerned;
  • the information sought to be protected was imparted in circumstances where there was no reasonable expectation of confidence arising in respect of that information as between W and the JNF. In particular, there was nothing in the information which alerted, or should have alerted, Mishcons to the existence of any conflict of interest between W and the JNF, or otherwise made it improper for Mishcons to continue acting for them both.

His Lordship therefore concluded that W's attempt to invoke the Bolkiah jurisdiction fell down at the first hurdle and that the application should be dismissed. He emphasised that, absent being able to satisfy that first limb, there was no general principle preventing a solicitor acting for a former client after termination of the retainer and endorsed Lord Millett's dictum in Bolkiah that "the only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality imparted during its subsistence".

Comment

Winters provides some guidance in respect of the approach the court is likely to take in applying the first limb of the Bolkiah test where there has been a joint retainer or closely related retainers between past and current clients. However, the judgment demonstrates that the task of the court in this respect will inevitably be highly fact specific and the fact that the information in question was the subject of a confidential witness statement almost certainly diminishes the case's value as precedent. Further, the court regarded W as an inherently unreliable, and at times untruthful, witness, which would no doubt have benefited Mishcons in delivering them the necessary findings of fact to defeat the application.

Nevertheless, the case does reinforce the need for solicitors carefully to document each and every retainer at the outset and to leave no doubt as to whom the solicitors act for both in the retainer letter and, as appropriate, throughout the performance of the retainer. This is particularly the case where solicitors receive instructions from the senior executives of clients whose interests throughout the course of a retainer may diverge from those of their employer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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