City law firm accused of “untenable” Post Office conflict of interest

Herbert Smith Freehills: Debate over whether it advised on key court application

Herbert Smith Freehills (HSF) was yesterday accused of being in an “untenable” conflict of interest with its continued role in the Post Office scandal compensation schemes.

Edward Henry KC argued at the Post Office inquiry that efforts to compensate subpostmasters would “fail” if the City law firm giant was involved in running much of the process while also acting for the Post Office.

However, the Post Office’s counsel, Kate Gallafent KC, countered that the argument was based on a misunderstanding of a key document.

Inquiry chair Sir Wyn Williams held a hearing yesterday for updates on how compensation is progressing, an issue about which he has expressed continuing concern.

Mr Henry acts for a group of subpostmasters represented by London law firm Hodge Jones & Allen, and a key focus of his submissions was HSF’s role in an unsuccessful and now infamous effort to have Mr Justice Fraser recuse himself from presiding over the landmark group litigation in 2019.

In refusing permission to appeal Mr Justice Fraser’s refusal, Lord Justice Coulson said “the recusal application never had any substance”. The circumstances of the application will be investigated later in the inquiry.

Mr Henry described the application as “a seminal episode in the whole saga of injustice”.

He told Sir Wyn: “The Post Office knew that the [Criminal Cases Review Commission] was riding on the back of the Horizon litigation. That was apparent to the Post Office. If the Horizon litigation had foundered, if it had resulted in a defeat for the claimants or a miserly settlement… you and I, together with all of these other people, would not be here.

“But, worse, who can say what would have happened to the CCRC referral [which led to dozens of subpostmaster convictions being overturned]? So, therefore, the Post Office was playing for very, very high stakes indeed by attempting to recuse Mr Justice Fraser.”

He said a submission made last October by UK Government Investments (UKGI) – which oversees the government’s 100% shareholding in the Post Office – said HSF was only instructed after the recusal application was made; however, other evidence indicated that this was wrong and actually it advised on the application.

He stressed that the UKGI submission had not been corrected and described the recusal issue as “central to the question of misfeasance” at the Post Office.

HSF was not “a new broom”, Mr Henry said – it was “part of the problem” and “deeply implicated”. He added: “It was, as it were, an oily rag that tried to tarnish the reputation of the judge.”

The written brief authored by Mr Henry, his junior Flora Page and Hodge Jones & Allen explained: “We do not see how HSF can be seen to be impartial in acting for POL in the inquiry while the conduct of its own lawyers will be under examination by the inquiry, in relation to an issue of arguable bad faith, or catastrophic misjudgement.

“Meanwhile, HSF (Cerberus like) will continue to wear a third hat investigating and settling compensation claims from those brave litigants who brought the action, which led to the recusal application which the inquiry will be investigating, which HSF advised upon.”

He told Sir Wyn yesterday that this placed HSF in “a hopeless conflict” and an “untenable” position.

“If that isn’t a conflict and if they cannot see that it is a conflict, then one respectfully submits they are so purblind that it’s even more dangerous.”

Mr Henry recommended interim payments to subpostmasters, rather than final settlements, while the truth of what happened was established.

Ms Gallafent said the reason the UKGI submissions were not corrected was “for the simple reason that they are based on a contemporaneous document… [which] does not say that HSF was involved in the recusal application”.

She went on: “The inference that Mr Henry seeks to draw from it is completely different from what the document itself says.”

She laid out a “factual” timeline that said HSF did not advise on making the application.

Sir Wyn did not permit the barristers to debate the issue further, except to allow Mr Henry to ask: “If they were not formally instructed, were they, as it were, acting below the parapet?”

The written brief also highlighted a “worrying development” that emerged last December “when it was revealed that derisory sums had been agreed with unrepresented victims by HSF, sums that were plainly inadequate, and subject to errors and omissions”.

It continued: “That this had been sanctioned on the Post Office’s behalf gives rise to legitimate concerns that very little has been learnt from this tragedy: the dynamics of power and inequality persist, whether consciously exploited or not by the Post Office and its advisers.”

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