Anglo-Scottish firm Shepherd & Wedderburn (S&W) has rejected criticism made by a High Court judge of its managing partner and a litigation partner.
We reported yesterday that Mrs Justice Bacon found the firm negligent in its advice to the former owner of Sheffield United FC but dismissed the claim because it did not cause any loss.
Andrew Blain, currently S&W’s managing partner, was head of its corporate group at the relevant time and the relationship partner for the claimants – collectively Sheffield United Ltd (SUL) – in the action.
Though he had only limited involvement in the negotiation of the agreements at the heart of the case in 2013, because he was on holiday at the time, Bacon J said he played “a central role” in advising SUL on the exercise of call options under the agreements in 2017 and was also involved in advising SUL at the outset of the litigation that followed in 2018.
Thereafter the litigation was mainly overseen by partner Philip Sewell.
S&W put forward four witnesses and the judge was critical of the evidence provided by Mr Blain and Mr Sewell, saying that she placed little weight on their testimonies, save where corroborated by “other more reliable evidence”.
Mr Blain was cross-examined for two days and the judge said “he claimed to have a detailed recollection of his thought processes in relation to the advice that he gave in 2017, which I do not consider was credible”.
She continued: “More generally, his evidence as to the events of late 2017 and 2018 was defensive to the point of implausibility.”
Mr Sewell, the judge went on, was cross-examined for a day and a half. “He repeatedly avoided giving straight answers to questions, instead giving obfuscatory and highly defensive answers or (on several occasions) simply refusing to respond to the questions asked.
“He was argumentative and combative, making implausible claims as to the matters which he supposedly considered during the relevant period of time.”
Bacon J’s criticisms focused in particular on the issue of whether, when it emerged that S&W may have given negligent advice back in 2013 and again on the same issue in 2017, the firm should have told SUL they had an own-client conflict and advised it to take independent legal advice.
Mr Sewell claimed that he had asked a KC instructed on the case about whether they were conflicted and the barrister had said he did not think they were. Mr Blain said Mr Sewell reported this conversation to him.
However, Mr Sewell’s evidence on this was inconsistent and his answers in cross-examination “evasive”. Bacon J held that “on the material before me I am unable to accept that this conversation occurred”.
There was also no documents to back up Mr Blain’s evidence that he had discussed the issue with the firm’s compliance officer for legal practice.
While finding negligence on the failure to declare the conflict, the judge said she was not persuaded that there was a breach of fiduciary duty, in that the two lawyers knew there was a conflict and took a deliberate decision not to inform SUL.
“Although it may seem extraordinary that their consideration of their duties was as superficial as it appears to have been, the way they sought to answer the questions put to them in cross-examination makes it entirely plausible, in my judgment, that despite knowing the risk that their drafting would turn out to have been defective, they simply convinced themselves that there was not a conflict.
“In so far as they had any regard to the guidance set out in the SRA Code of Conduct and S&W’s conflicts policy (which is not clear on the evidence before me), I consider it unlikely that they gave any proper or objective thought to the definition of an own interest conflict, or their duties if such a conflict arose.”
An S&W spokeswoman said: “While we are pleased with the overall outcome, there are aspects of the judgment with which we respectfully disagree. Mr Blain and Mr Sewell at all times sought to assist the court in giving their evidence in a genuine, honest and straightforward manner.
“We welcome the court’s decision that all of the claims against us failed. From the outset, our position was that these claims would not, and should not, succeed. We are pleased that the claims have been defeated.”
Bacon J was also critical of evidence given on behalf the claimants. She said much of the evidence of Kevin McCabe, the main figure behind SUL, was “disingenuous and inconsistent with the documentary material”, while SUL finance director Jeremy Tutton was “not an impressive witness”; he “avoided answering questions, and gave answers that were frequently rambling and incoherent”.