Risk Update

Investigation Conflicts — Another Allegation in the News

Posted Dan Bressler

Another allegation of this ilk in the news caught my eye: “Leading Silk Rips Lining From Leading Law Firm FieldFisher” —

  • “Leading QC Alison Levitt has excoriated law firm FieldFisher and partner Matthew Lohn in a report over advice the law firm provided to the Royal Institution of Chartered Surveyors, (RICS) saying the firm had either ignored or misjudged potential conflict of interest issues, among other matters.”
  • “The report was commissioned to conduct a review over allegations that RICS had attempted to suppress an internal report that had criticised the way the organisation ran its finances and unfairly dealt with non-executive members of the RICS board who wanted to investigate the matter.”
  • “The issue arose in 2018 when one of the RICS non-executive directors had queried the extension of the organisation’s overdraft from £4 million to £7 million as a result of ‘inaccurate cashflow forecasting,’ which had been partly explained by a £400,000 discretionary bonus paid to the CEO.”
  • “A continued investigation lead to the director continuing to express concerns and the non disclosure of an audit report, which he said should be addressed by RICS, leading to a review which ultimately lead to the conclusion that there was no governance problem, exonerated the Executives and lead to the firing of the whistle-blowing non-executive directors.”
  • “However, one of the major issues that concerned Alison Levitt was a ‘clandestine’ and ‘partisan’ approach taken by the law firm that had sided with the Executives against the four non-Executive directors. The firm had taken the view that their priority was not to threaten or ciritise the CEO or the COO, she said.”
  • “Levitt’s report said the lawyers here were ‘seriously overused.’ ‘What was needed was not legal advice but judgement, common sense and the courage to stand up to the executive as appropriate.'”
  • “FieldFisher said that it was ‘disappointed’ by Levitt’s findings. ‘We are disappointed to note that some of the actions of the firm and the partners who were involved in seeking to help RICS, in what was an exceptionally difficult time for the organisation, have been criticised.'”

For more context, see also : “Fieldfisher’s Matthew Lohn criticised by QC for disastrous advice” —

  • “When Hardwick flagged that the audit’s findings were a serious problem and that its suppression by the Executives represented a failure in governance which needed to be addressed, the Executive team commissioned RICS’s General Counsel to produce a review.”
  • “Her investigation concluded that there had been no failure of governance and exonerated the Executives, and in November 2019 Hardwick and three other non-Executives who shared his concerns were fired. When they threatened to take legal action, the Executive team came under pressure from the Governing Council and commissioned Levitt, of 2 Hare Court, to investigate.”
  • “Levitt had almost finished her 467 page report in June this year when Fieldfisher belatedly disclosed its file on the matter, which Levitt had been requesting for months. ‘Reading it completely changed this report from the one I had been going to write,’ said Levitt. She had been led to believe that Fieldfisher’s involvement in the debacle was minimal, but its file was huge.”
  • “RICS’s General Counsel trained under Lohn at Fieldfisher and worked in his team for almost 16 years before taking the RICS role in 2018. It turned out she was still very dependent on her old supervisor. Lohn had, unbenownst to the non-Executives or Levitt, worked extensively with the GC to ghostwrite her review and steer the termination of the non-Executives.”
  • “But the GC had not divulged any of that in her interview with Levitt. ‘Knowing what I now know, I am very surprised that she was not candid with me about their involvement,’ said Levitt.”
  • “The Governing Council had no idea either, even though it was RICS (not the Executive) which was Fieldfisher’s client, and even though Fieldfisher charged RICS £118,677 in a single three month period for advising solely on the issues surrounding the four non-Executives.”
  • “Lohn approved of keeping Fieldfisher’s involvement secret from the majority of RICS, telling the GC, ‘No need to explain external resource.’ Levitt said his attitude was ‘inexplicable.'”
  • “She found that Fieldfisher’s approach was not just clandestine, but partisan, and that from the beginning it had sided with the Executives against the four non-Executives ‘without any objective analysis of the true merits of the situation.'”
  • “Proof of its bias included a Fieldfisher document setting out the review’s conclusions, which had been drafted before the review’s terms of reference had even been finalised.”
  • “Levitt said it was not for her to say whether Lohn’s conduct merited the attention of the regulator. If it does, it will be the second time that perceived conflicts of interest have brought him to the SRA’s attention. Lohn was investigated in 2017 for his dual role as both an adjudicator at British Horseracing Authority tribunals and a paid legal advisor of the BHA, which ended with similarly calamitous results.”