'New' lawyers 'revisiting' conflicts

Conflicts of interest are interesting things. Humans are very bad at recognising them and even where they do recognise them, they are bad at managing them.

UPDATE: Counsel for the Post Office, to paraphrase, denied that the statement made by Hodge Jones and Allen below is correct and, if I understood correctly, implied that HSF did not advise on the Bates litigation at all until a board meeting after the recusal application. In other words, in the terms of the discussion below, HSF may have been genuinely new lawyers, getting involved only after the recusal application. The point was left somewhat unclear: Counsel appearing for HJA asked whether this meant HSF had no role at all in Bates prior to that Board Meeting. That question went unanswered. The Chairman, sensibly I would say if it allows for clarification to occur properly, intervened to move the hearing on.

This means that in the discussion that follows, the concerns about actual or potential conflicts of interest, and particularly the potential that the Inquiry was mislead, has considerable less, and on the misleading point perhaps no, force. [UPDATE TO THE UPDATE, Having read Counsel for the POs intervention on the point, she is not admitting or denying the involvement of HSF, which suggests either she does not know or cannot deny involvement]. I don’t think, even if it turns out HJAs point is completely misplaced the concerns about HSF prior role on the scheme disappear, but we should now wait to see what happens.

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Conflicts of interest are interesting things. Humans are very bad at recognising them and even where they do recognise them, they are bad at managing them. For instance, the literature suggests that in commercial settings the go-to response of choice is to declare a conflict of interest and then participate in a decision anyway. The research shows pretty clearly that this doesn’t work. Decisions are taken that favour the holder of the conflict.

The difficulty with conflicts is that they really do affect judgement. Let’s say I am a Newcastle United fan, and you, poor soul, are a Sunderland fan, and you come before me seeking a fair deal on some matter in my power. I solemnly disclose my prior allegiance and assure you I am a lawyer, a professor no less, and will nobly put my own allegiance out of mind. You have nothing to worry about.

The research suggest I won’t, and you do.

Not because I am a mendacious Magpie, but because I just can’t help myself.*

Conflicts can lead to tricky situations where those with the conflict rightly are, and should be, doubted. Now, let’s imagine a trickly factual situation rears its head, and I am a lawyer asked to describe it for a neutral tribunal, and I describe it for my client where I have a prior interest. The lesson is I will struggle to do that fairly, even if I am trying to be fair, and my judgement on that will forever, rightly and properly, be subject to a measure of doubt.

In essence: on anything controversial that relates to my own interest, in one light what I say on behalf of my client might look misleading, and in another, it might look merely accidentally self-serving. Either way, I am exposing myself and my client to risk by being involved.

Which one it was intended to be is hard to speculate on but the prior conflict has corrupted, in the non-criminal sense, both the judgement I made when formulating the representation and its perception. I am both biased and perceived to be biased. It is better if I am not involved.

The difficulty of identifying actual bias is one reason why the legal test for bias involves a fair-minded assessment of the risk of bias itself and the ‘mere’ appearance of bias. It is much easier to form a fair view of the appearance of bias without insinuating something more serious for the decision maker (ironically, as the decision-maker probably does not recognise their own bias, particularly if they are prone to what is known as objectivity bias; something lawyers and judges are perhaps too prone to ignore). Put another way, a readiness to act on perceived bias is a good thing, because it also tackles the substantial, and under-appreciated risk of actual bias.

It is against that background that I note in Hodge Jones and Allen’s latest submissions to the Horizon Inquiry the following statement:

Yet more troubling, disclosure of the unredacted minutes of the Postmaster Litigation Subcommittee has revealed HSF’s role in advising the Post Office on the conduct of the GLO before advising on settlement. It transpires that Alan Watts of HSF advised POL on the highly controversial decision to seek Mr Justice 4 Fraser’s recusal. Section D of the List of Issues, headed Conduct of the Group Litigation, makes it clear that decisions around the recusal application will be a very important issue in Phase 4 of the Inquiry.

I have been raising for some time concerns about the role of HSF in the Horizon Inquiry and Compensation schemes. I do not here comment on the implications for the Compensation scheme, which I now need to reserve for my discussion with the Advisory Board on Compensation. But what I wanted to note in this regard was how their involvement was previously portrayed to the Inquiry.

Last year UKGI’s submissions to the Inquiry, in relation to the involvement of HSF in Bates, UKGI’s submissions say this (para. 215):

 In the event, the recusal application was made, dismissed by the Judge, and a subsequent application for permission to appeal refused. Accordingly, Fraser J continued to hear the Horizon Issues trial. UKGI provided the Secretary of State with an update on the current state of the litigation on 12 April 2019243, including the fact that, following intervention by the Chair and the Shareholder NED, POL had refreshed its legal team, including internally reorganising its legal team and replacing its General Counsel and employing a new firm of solicitors, HSF, to 'revisit the approach to the litigation' in respect of both substance and tone. As noted in the update, this was a welcome development from UKGI's perspective, and was a step that it had been encouraging POL to take: "Given the unexpected outcome of the Common Issues trial we have been pressing POL to ensure that their litigation strategy is considered with afresh set of eyes, so this is a good outcome and we expect it to have a significant bearing on the way the litigation is conducted. " [my emphasis]

What HJAs submissions suggests is that HSF were not a new team of solicitors ‘revisiting’ the approach to the litigation, they were involved, perhaps significantly, in the recusal application. The recusal application is of great importance to the Inquiry itself. It is one of the central events relevant to understanding PO’s conduct during Bates and the knowledge of its Board and the involvement of lawyers in that process.

At the time I wrote to UKGI to query their submission and say this:

As I understand it, HSF were involved in advising Post Office prior to the point indicated above, including in and around the recusal application, and possibly from quite an early stage. They were not a new firm save perhaps in the very limited sense of coming onto the record to deal with the settlement. This suggests to me the UKGI response may be misleading, presumably in error. I am considering writing something on this and I wanted to give you the opportunity to respond to the point.

I also ask you if HSF were involved prior to the point of the internal prior to the aftermath of the recusal. And if they were whether your and or your organisation was aware of that by the time your submissions were made?

I also ask if UKGI has considered, in representing the shareholder, whether HSF have an actual or potential conflict of interest in representing the Post office in the Inquiry and in relation to the Compensation Scheme?

I was inviting them to correct what seemed to me (and still does seem to me) to be a misleading perception and they decided not to. What they said was this:

UKGI’s preliminary reflections in its opening statement set out the position as we understand it to be currently. We expect the inquiry to make a thorough examination of the evidence submitted to uncover the detail and establish the facts and we will give every possible assistance in this regard.

 As you might imagine, while the inquiry is ongoing UKGI cannot engage with you or any person external to the inquiry on matters of evidence.

And I replied to them to say this:

I take this to mean UKGI were not aware that HSF were not new lawyers at the point your submissions indicated. I don’t think I am asking you to comment on the evidence, certainly not in relation to the conflict point.

Now we do not know what the actual situation was, how the story about HSF being new lawyers came about, whether HSF or PO were themselves were involved in that, and whether UKGI did anything to correct an impression that the Inquiry had been misled.

Perhaps they simply thought I had raised a duff point. You can judge that for yourself.

But, in the absence of an explanation, it points back to the significance of a conflict of interest, or if a lack of independence, at the heart of the PO and their representation. It may signal a failure to recognise that such conflicts can impact both on behaviours (what the Inquiry is told) and how that behaviour is perceived (whether they have wiped the slate clean as desired for instance).

There is no doubt that the Inquiry will now partly need to become involved in considering the issues posed by having a firm involved in the recusal application, advising and representing a core participant before it.  The solicitors may need to be witnesses in their own client’s cause; their previous advice on the recusal application is certainly now in play. They are part of the past which UKGI say the PO wanted to distance itself from. They considered afresh things they had already considered. They were not new but shopworn.

Whether they have behaved properly or not, they deserve scepticism.

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*Those of you who know me personally will recognise the 54 years of hurt lying behind this story.