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Simmons & Simmons arriving at the mediation.


Simmons & Simmons has successfully defended itself after it unwittingly threatened one client on behalf of another, because a partner missed a conflict check.

Alex Ainley, a Simmons partner specialising in financial regulation, agreed in March 2022 to advise Bank of London Group, a start-up clearing bank, on the legal requirements it would need to fulfil to enter the market.

Ainley hoped that completing an initial task quickly would impress the Bank of London and lead to a long-standing relationship, so he started work before sending an engagement letter or completing the client onboarding process, telling the court that it was "not unusual" to begin non-contentious and non-transactional matters before the onboarding process was finalised.

Unfortunately for Ainley, the firm's trademarks practice had been acting for Bank of London and The Middle East Plc (BLME) on a claim against Bank of London Group since December 2021. Simmons did conduct a conflicts check when Ainley began advising Bank of London, but the partner failed to spot the relevant email in his inbox.

A few weeks later Bank of London received correspondence from Simmons & Simmons, but not the kind it was expecting. Instead of an update from Ainley on the bank's regulatory position, it was a threat to sue Bank of London for passing itself off as BLME, along with a demand that it immediately cease using its name. 

Two weeks later Bank of London Group issued a claim against Simmons, demanding that it stop acting for BLME and seeking to restrain the fiirm from misusing allegedly confidential information about its business. Bank of London feared material held by Simmons would be passed to BLME and then to Lloyds, a rival in the clearing market business with which Lloyds had a relationship.

But in the High Court, Stuart Isaacs KC, sitting as a deputy judge, ruled that the confidential nature of the information wasn't relevant. He factored in the short length of time Ainsley had been working for Bank of London, and the fact Simmons fees "over a limited period amounted to the very modest sum of £5,435 (plus VAT)". 

Isaacs said he was also satisfied that there was no real risk of disclosure of Bank of London's information to BLME. As soon as Ainley became aware of the conflict, he asked the IT department to lock down Bank of London's electronic file, so only he could access it.

Although no Chinese wall had initially been erected, Ainley and his team working for Bank of London testified that they had not discussed the matter with the trademark team acting for BLME, and the trademark team testified that they had not received any contact in respect of the Bank of London matter.

"Any criticism of the defendant's approach to the situation cannot be sustained", said Isaacs. "No challenge is made to the integrity of the solicitors" at Simmons & Simmons, "and considerable weight should be attached to those statements".

In a statement Simmons told RollOnFriday, "We are pleased with the ruling and believe the Court made the right decision". [translation: Thank God for that!]

It continued, "At Simmons we take client confidentiality very seriously and have well-established procedures and policies in place to ensure security and confidentiality at all times." [Our conflict procedures are well-established if only certain people didn't skip over internal emails because they look boring.]

The firm added, "We were always confident that the judge would reject the claim from Bank of London" [You never really know which way a judge is going to go and we have been praying solidly for six months], and that he would "establish that the firm had taken all required steps to protect the bank's confidential information." [We keep client information so confidential some of us don't even know who we're acting for, and you can take that to the bank.]

Tip Off ROF

Comments

Janet 28 October 22 08:16

Having conflict procedures by email to partners may be "well established" but maybe they should update their onboarding system to something a little more modern & stricter. Getting a good team of business acceptance & some conflict training (no work done until conflict has cleared), would not allow this to happen. Any modern system would automatically flag the existing client! 

Conflicting 28 October 22 08:24

I once as a trainee sent a very sharp letter before action to a tenant of a development we were acting on where the tenant was unjustifiably refusing to complete a lease. My supervising partner approved it.  Next day I received an irate call from the head of another office asking why we were threatening to sue his client!! My supervising partner said he was glad he sent it…..The story thankfully had a happy ending as the letter worked and the tenant completed the lease. Playing fast and loose with conflicts was a dangerous game I learned not to play….

Wut 28 October 22 08:26

There but for the grace of God go us all, ROF.

Seems like a total non-story, and certainly not one that warrants a name and shame.  Poor guy, it could happen to any of us.  
 

Anonymous 28 October 22 08:56

‘Any criticism of the defendant's approach to the situation cannot be sustained’ 

Hard to justify not getting a secretary to push the name through the DMS or equivalent which takes all of 30 seconds. 

 

Anon 28 October 22 09:10

Line 1 of Simmons’ website:

“The smartest business solutions come when we work together…working as one integrated team.”

 

Delicious. 

Anonymous 28 October 22 09:14

Non-compliance pure and simple. No correspondence to the other side should ever leave the building until KYC is done and conflicts cleared. That is compliance 101.

Anonymous 28 October 22 09:19

I've always thought that it's completely daft to have a key part of your conflict-checking system be that every fee earner in your firm has to read every line of multiple daily conflict check emails - surely that's just never going to happen?

big smoke 28 October 22 09:23

will make for an interesting CRM meeting next time with BLME (if they get that far). 

Anonymous 28 October 22 09:54

He was named in the judgment, Wut…would be very weird to censor it in a report of the judgment. 

Anon 28 October 22 10:06

Being blunt this should go to the SRA. As everyone in a law knows, relying on partners to read emails in a timely fashion is folly.  This is a question of professional conduct and shouldn't be left to a lucky dip.

At our shop there's an automated search and cross-check against the entire client matter database.  You basically never get a "green" check because I get a flag whenever we have ever worked for a given counterparty.  Most recently I got an "amber" (basically it should be fine but make sure you read about the possible conflict before you proceed) because we had previously acted for a counterparty - had done no work for them for 15 years and the partner in question had left - so clearly absolutely no relationship and no realistic prospect of holding confidential information.  The fact that Simmons' clearly doesn't do this is baffling.  Just imagine if a partner was advising on a contention matter one day, left the next day and then Simmons took the other side of the matter because the partner had left - they'd still be holding confidential information relevant to the matter that they would have a duty to disclose to the new client and a duty to keep confidential for the old client. 

These practices seem baffling and the KC is definitely wrong that Simmons didn't do anything wrong.

That's why you check your emails from Compliance... 31 October 22 01:26

Why be so eager to impress a client on a GBP5K job, rather than waiting the few extra hours it takes to clear conflicts? 

Yes, the client claim seems a bit of a try-on, but I can imagine that the partner was given a stern talking to given the cost involved/increase in insurance premiums for something as basic as completing a conflicts check before sending out the advice.

buzzkill 31 October 22 09:56

My firm has a policy of sending an email to all fee earners globally for all conflict checks.

Most people, including myself, have an automated rule set up to move all conflict check emails to a designated folder. Mine currently has >2000 unread emails. The chance of people reading all of those emails all in a timely manner is pretty much zero. 

Emailing conflict checks is a hilariously outdated system. Perhaps it works for small firms with 10 partners, it doesn't work for major global law firms. More modern systems are required. 

In the know 04 November 22 06:56

Simmons' conflict system does not involve e-mailing the whole firm (at least, it did not when I was there). It was in fact a detailed system with automated and manual review, which looked at not just the party names but the names of the entities/owners behind the parties. The only partners then e-mailed were the client and matter partners whose names were flagged up as part of a potential conflict.

To some extent that makes it more unfortunate that this particular conflict e-mail was missed, but based on my time there, there was no systemic issue. 

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