HSF and Post Office: a half-hearted clearout?

HSF being stood down on Inquiry work raises a really important question for the Post Office and the Inquiry

It is interesting to see the Post Office’s statement suggesting it was the fact that Herbert Smith Freehills (HSF) were too expensive that led to them and the PO parting ways. This seems to be prompted by a realisation (doh!) that the Inquiry was going to go on for, ahem, a while longer. Or at least that’s one interpretation of their justification for giving them the flick:

The Post Office is committed to providing full assistance to the Inquiry and the Post Office Board decision was taken in consideration of costs, given the Inquiry is now due to run significantly longer than anticipated. It also addresses any future potential risk of Herbert Smith Freehills being unable to assist on aspects of Phase 5 relating to matters in which it has been involved.

“In consideration of costs” is one of those slightly unnaturally strained pieces of language that seems to haunt the corporate world. Too expensive, not value for money, just looking for an excuse? Who knows.

There is more of that sort of thing here in the eye-brow raising report into executive bonuses from PO non-exec and former city lawyer Amanda Burton. Tl;dr - no one important in PO who read the bonus material realised that a metric that could not be met had not been met but it didn’t matter because they would have said a completely new made-up metric would have been met anyway).

So that’s alright then.

PO legal folks and HSF might be being slightly dipped in the blood given Burton tells us they reported on progress in the Inquiry (well, of course, but what did they say?). But for me, concerned mainly with the lawyers, the issue which I think is more interesting is what role did senior legal folks in the PO, and the GC in particular, have in reporting on progress in relation to the Inquiry to justify the bonus which he almost certainly benefited from himself?

52 people in the PO benefited from the bonus scheme; and so it seems very unlikely to me that a bonus scheme that seeks to incentivise meeting the Inquiry’s requirements, did not include the GC and perhaps others in his team. Proper governance would require that they report and someone give those reports proper scrutiny. Oopsie. So far a couple of experienced, but I am told, badly paid by normal standards, non-execs seem to be carrying the can.

The more interesting thing about HSF and PO parting ways is the second comment about being unable to assist on parts of Phase 5 of the Inquiry. Phase 5 covers this:

Redress: access to justice, Second Sight, Complaint Review and Mediation Scheme, conduct of the group litigation, responding to the scandal and compensation schemes

This acknowledges an actual or potential conflict of interest between HSF and PO in Phase 5. Paul Gilbert, a former GC himself, put it pithily on twitter:

Three reasons to change lawyers 1. You are in the shit and they have told you 2. They are in the shit and they have told you (you didn't notice) 3. A dawning realisation that we are all in the shit and and it is just best to say as little as possible and part company.

I hasten to add, for the benefit of HSF and the PO, there are other possible reasons; it may be a deepening sense of mutual discomfort and embarrassment being caused each to the other by their handling of Scandal-related matters rather than something more sinister. But I have argued for some time that HSF was in a difficult position representing PO given their prior involvement in the Bates litigation (at whatever point they came involved) and the compensation scheme (prior blogs here, here, and here). Involving them always looked like a serious misjudgement, which deepened when the Inquiry signaled its interest in the lawyers involved in the Scandal and its aftermath. That misjudgement is one to which the added costs of changing horses mid-Inquiry will be added. One would not bet against a significant part of HSF’s compensation work also needing to be redone.

Of course, the more important issue from my own perspective is whether there was an actual (debatable) or significant risk of (much less debatable) conflict of interest and when that was apparent to the firm and the lawyers in PO instructing them. At that point significant professional misconduct may have occurred. Solicitors are prohibited from acting: “if there is an own interest conflict or a significant risk of such a conflict.” (SRA Code of Conduct Rule 6.1) Lawyers are well aware of the perils of giving evidence in your client’s case; and given Williams’ interest in the Compensation scheme, this evidence-giving could be substantial. That is before one even considers the nature and extent of HSF’s role in the Bates litigation.

Thoughts of a conflict of interest turn back too to the Post Office itself. Such a risk of a conflict of interest should have been part of the thinking of those in the Post Office instructing HSF. Quite aside from the professional conduct question there was the obvious question: was it wise to have the same firm advising them (towards the end of) the Bates litigation? I personally regard the idea that they should have administered the compensation scheme as either deliberately provocative (it was bound to breed mistrust amongst the survivors of the Scandal) or wrong-headed (the optics and administration of a compensation scheme was always going to be subject to searching criticism, but using HSF magnified that).

Those decisions would have been informed by advice from lawyers within Post Office and the interesting question for me is how far are they involved in running the Post Office’s Inquiry response and how involved those same in-house lawyers were in the history of the case: Bates in particular. Because the allegation there is that PO lawyers knew, or ought to have known, that PO had a lot to hide, and hide it they did. So the question for me is, with those allegations hanging over the organisation, and soon those individuals, can the people involved be involved in Inquiry related work at all? And were they? Are they?