HOLIDAY!!
If you’re in a partnership that is facing allegations of possibly the deepest conflict-of-interest involving a law firm in Australia’s legal history it’s time for the good times. Forget about the bad times, oh yeah!
And with that in mind, Allens Arthur Robinson partners are today taking just one day out of life, travelling from all corners of the globe to descend on BrisVegas for the firm’s annual partnership conference. It’s time to..
We received the following intel from an anonymous AAR spy yesterday:
You guys and gals at FS are going to L O V E this one. It is almost too good to be true. Today and tomorrow the entire Allens partnership group are gathering in the home state of AllensGate partner Chelsey Drake at the luxury Brisbane Sofitel. ”Named Best Hotel Day Spa” (you can phone the conference centre yourself to verify they are all there) [ED yes we called and yes they're all there. The full complement of conference rooms are booked but the entertainment tonight is apparently "off-site" - perhaps it will be cancelled last-minute like the firm's Christmas party?].
A friend who is amongst the crowd who is a little bit coy reports that despite the delight at being away from the office (and significant others) and joy at being treated to some of life’s little luxuries such as a foot massage or facial, and above the usual droll presentations on trends in billable hours, profit per partner, and competitor analysis…a darker cloud hangs. My source tells me…Allensgate muttering and discontent is casting a pall over proceedings.
One can only speculate on what the ”Aconex partners breakout Group” is discussing.
Rumour has it that some partners are staying back to discuss Allensgate issues after the official two days are over. But maybe they are just staying back to enjoy more of the Brisbane Sofitel luxury and to do a bit of Brisbane sightseeing.
No doubt FirmSpy can look forward to a considered view and perhaps even some comment from Allens after they have all had a chance to discuss Allensgate together as a group for the first time
Yes maybe we will finally receive a comment from Allens on this issue, but rather than formulating a unified strategy on a counter-attack, we view this more as one day to come together to release the pressure.
We later received the following intel from two separate anonymous AAR spies:
Spy 1
Michael Robinson is not invited …
Spy 2
You may be onto this already as a story, but Allens are having annual partners meeting in Brisbane tomorrow. Michael Robinson not invited – was last year as ’Honorum ex-Chairman’. Must be too busy on other things this time?
Yes perhaps he was too busy this year, but surely Mr Robinson also needs to bring back all of those happy days!! Was he consulted? Was he sent an email?
Meawhile, we’re informed by another anonymous AAR spy that AllensGate is creating a real need to let love shi-hine:
In a financing transaction with Allens acting for one of the parties. The Allens partner has seemed a bit distracted past couple of weeks. Maybe he has been reading Firmspy? Even if he hasn’t maybe he’s picked up that we’ve all been cracking jokes behind his back about conflict of interest. Anyway, it is a rush to get the deal done but now heard that he will be ’unavailable’ over this coming weekend due to a previously unmentioned ’partner retreat’. Hope it is relaxing and informative.
This got us thinking about the conference itself. We found ourselves wondering whether the topic of “Information Barriers” might make its way onto the agenda. Perhaps a refresher course, of sorts? It could reference things like the NSW Law Society Information Barrier Guidelines which helpfully provide:
An information barrier does not remove the duty of undivided loyalty which a law practice owes to a client… The doctrine of imputed knowledge means that all solicitors in a law practice are implied to have the knowledge of all other solicitors in the practice
An Information Barrier Powerpoint Presentation might also cite the proposition laid down by Brereton J in the noteworthy conflicts case Kallinicos & Anor v Hunt & Ors [2005] NSWSC 1181 that:
The court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice … The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.
Or maybe the comments of one of our favourite judges – Justice Byrne – in Village Roadshow Ltd v Blake Dawson [2003] VSC 505 where his Honour said:
It is a notorious fact that a good deal of commercial litigation in this state is conducted by a handful of very large firms. How is a client to obtain the services of one of them if the conflict rule is applied too strictly? To my mind, this is the price which the clients of such firms and the firms themselves must pay. The firms have found it commercially convenient to become large. This is but one disadvantage of this trend. It is certainly no reason for the courts to weaken the traditionally high standard of a practitioner’s loyalty to the client which have characterized the practice of law in this State.
Supposing Mr Robinson has transmitted all his Aconex director correspondence onto AAR email servers (we expressly dont know whether this happened – it is a pure hypothetical, for argument’s sake), and, consistent with NSW Guidelines that knowledge is imputed to the entire firm, AAR would now presumably (again – we’re hypothesising) possess on its servers a full set of Aconex director correspondence (board papers, memos, discussions about which law firm to use, etc) since February 2006 when Robinson joined the Aconex board. This would make things very interesting if a derivative action were commenced because AAR might (if all of the proceeding allegations are true – which we expressly don’t know) possess the ability to access all Aconex info for the purpose of defending itself. Unless there was a satisfactory information barrier, of course…
But hey, today is about celebrating in every NAY-TION!
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I enjoy gossip as much as the next person, but it seems as though there is some slightly fuzzy conflicts analysis going on here. If the company gave its informed consent in accordance with its constitution and there was compliance with the provisions of the Corporations Act, then where is the conflict? To be fair, you pointed this out in your original post, but it seems to have been lost sight of since then. (Of course it’s a different matter if the advice received was negligent as you also suggested, but that’s not a conflict of interest problem.)
Other things which seem to have been overlooked are that there is a question as to whether Robinson was a partner at the time of the “conflict” (which is relevant to imputation of knowledge, despite how the Law Society frames it) and this is a conflict of duty and interest case, not a conflict of duty and duty ie not a conflict between clients (which is, at least, relevant to the Chinese Wall issue). Also, the cases that you’ve referred to are cases involving attempts to restrain lawyers in litigation against former clients. Arguably, different considerations apply in litigation cases because of the administration of justice issues that exist (and which are referred to in the passage quoted by you).
I’m not saying that there isn’t an issue here, but if you’re going to call something a duck, make sure it quacks.
I would have thought a different Madonna song is more appropriate here – Allens’ hopes of getting out of this one are Just Like a Prayer!!
Dr Zaius I think you’ve touched on the real issue here – “informed consent”. How can the consent, if any, be valid when it is informed by AAR legal advice?
I also don’t think the analysis is that fuzzy; the case extracts purely show the high regard courts think practitioners should give to the duty of loyalty to the client. Tough to be truly loyal to the client when you’re simultaneously part of the client and representing its shareholders…
… and potentially inducing the client in the directorship role, to give the legal advisors more cash, or to overlook bad advice
The real story here is that a 30-year veteran of the firm who is clearly getting on in years is prepared to fight so hard to maintain both his consultancy role and the directorship. When is enough money and responsibilty enough? Why do these fossils stick around at firms when throngs of senior associates are ready, willing and able to take the reigns and ensure the providence of the firm? It is not because of some unidentifiable altruistic aim; it is because of greed. To compromise the integrity of his entire firm through this directorship, whether or not it is proven to later amount to a breach of duty, should be exposed for what it is – greed. Retire! Play golf!
To all the juniors watching this unfold – get out now or you also might find yourself compromising your scruples for cash
You have posted four times on this topic and made a lot of noise, but so far you have not provided a shred of evidence that Michael Robinson has been using his AAR email address to send or receive emails as an Aconex director. You a describing a moot point of hypothetical information management failure if he has been using a separate email address. For all you know, he could have been.
Where is your evidence?
If the allegations can be substantiated, this may go down in history as the greatest FirmSpy post yet.
Looking forward to see you substantiate the main allegations.
I absolutely agree that if Allens provided advice about whether the Board should be providing informed consent then there may be a problem (depending on exactly what the advice related to) but from what I’ve read there is no suggestion that they actually did that. (And I have to say that, whatever faults AAR has, it would be a pretty significant error of judgment if they did so.) The usual way these things are dealt with is that disclosure is made of the nature of the potential conflict and the person who is to provide the consent is advised to seek independent advice. It would be unusual to say the least for the person seeking consent to then advise as to the merits of whether consent should be provided. The other issue is that this guy seems to have traded in his equity, so what differentiates his position from that of a secondee from a firm to a client (who often have far more say than a director over which law firm is retained for a job)?
I also think that when professional people are named in a public forum, it is actually important that some care should be exercised in defining exactly what it is suggested they may have done or not have done. Presumably this guy has a family and kids, let alone what it does to his livelihood.
Again, I’m not trying to defend these type of arrangements, because I don’t think that they are a good idea (and situations like this are why a number of firms expressly ban partners from acting as company directors) but its a leap from that position to then suggest that a derivative action could be brought against AAR and tar and feather an individual for breach of professional obligations.
As response to Dr Zaius, if there was informed consent why haven’t Allens given that simple explanation a long time ago when this was first posted? Why don’t Allens come out with a statement to explain?
If there is no good explanation, I suspect what there may be is an ‘Oh, shit!’ breakout group at the Sofitel.
Ave Maria!
What a cracking story!
Can’t wait for the next installment
I would have thought at the very least that informed consent required “independent” legal advice
I think we can take it as a given that some Aconex directorship corro has been sent to Robinson’s email account. Whether this gives rise to a sustainable “imputation of knowledge across the firm” claim will be a qn of fact that will probably come down to consideration of the ease with which partners can access consultant emails. This question will be intersting to see play out at court in and of itself.
But the REAL story here is the chance that, for the first time that I’m aware of, a major law firm could be exposed to an account of profits remedy. We might even learn how much AAR partners earn. Imagine that!
Having been involved in the law for 25 years, I comment on this fascinating story
1. So far, it is all just allegations and stories. An astonishing read, but nothing more. Hard evidence is missing from the story. Allens and people named are owed the benefit of the doubt in the meantime and can be presumed to have done the right thing until evidence emerges to the contrary
having said this…
2. In my experience, Allens are notable for a level of arrogance well above other big firms
3. I have had direct experience several times of Allens’ arrogance extending into a certain bullishness on conflict of interest and seeing them taking positions on the issue that other firms would not. Just because they can get away with it because…well, just because they are Allens.
4. If the (unconfirmed) reports are substantially true, this may be a case of a coming unstuck from too much arrogance. It may then become a case of Allens getting what has been coming to them for a while. If so, there will not be much sympathy from other firms.
Duck has hit the nail on the head. There is an inherent conflict and it is not solved by an abstention on a vote. The relevant director can exercise subtle and not so subtle influence outside the boardroom. Invitations to dinners, events, clubs etc are all ways of a director exerting influence over others and getting decisions his way – all without ever even having a discussion in the boardroom.
The bottom line is that if you are a lawyer on the board and associated with a firm, that firm should not be providing legal advice to teh company. If the advice is bad, and some advice is, the director will end up being in an impossible position of conflict.
This story could have the potential to develop into another Adrian Powles affair for Allens.
Thanks for making Friday afternoon even more enjoyable. Keep the gossip coming!
Like the video choice, but maybe a better Madonna song would be Bye Bye Baby?
Bye bye baby bye bye
It’s your turn to cry
That’s why we have to say goodbye
So say goodbye
FS should do another AllensGate story with evidence of use of the aar email address and of other allegations – assuming FS can get its hands on some smoking gun evidence
You FS spies sure know how to spoil a party! Leave us poor Allens partners alone to have a holiday!
The real lesson in all this is how dangerous it is to be on a board and have your own firm supplying legal advice at the same time. Danger. Danger. Danger.
allens runs like an old melbourne gentlemen’s club. the partners don’t care about conflicts of interest. as long as you’re ‘in’, they old boys will look after you. its the most antiquated of the top tiers!
(one of my professional highlights was hearing an allens partner describe mallesons as ‘second tier’ with a straight face, no joke – he honestly believed it)
Re Anon # 3 and Adrian Powles.
As I recollect, Allens were successful in showing that Powles was acting alone and while his conduct was culpable, Allens as a firm could not be blamed except perhaps that there were inadequate processes to catch him sooner.
However, if FS has it right, how can Allens cut Robinson loose and say he was acting alone? On the surface, it looks like Allens may have knowingly benefited from the arrangement of Robinson being their consultant on the board of their client. Not clear whether this gives rise to any claims against Allens – it would depend on whether there was informed consent and what problems for Aconex could be said to have been caused by this arrangement.
Intriguing story. I wonder what the Allens partner meeting consensus will be and what they will have to say if anything. Going by Allens usual ‘we are better than you’ attitude, they will probably try to ride out the storm by ignoring it. Checking both websites 5 mins ago, Robinson is still a director of Aconex and still a consultant to Allens.
That ‘Mallesons is second tier’ comment is an absolute joke. It’s time AAR reminds itself why NAB uses Mallesons and refuses to use AAR despite repeated expensive attempts by AAR to win work. By the way, I am not an MSJ or ex-MSJ lawyer.
How has this been kept secret for so long? Reading these stories this morning after getting a text about it from a friend is the first I have heard of all this. Wow. This is a very big story if it is true.
Re Lis, I was in a case several years ago with Allens involved where they took an outrageous view on conflict. They acted against a small client for one of their big clients while running another matter for the same small client. All they would say was ‘the conflicts partner approved it’ because there was ‘no overlap in facts or knowledge’ and they said they would stop acting in the first matter. Are you kidding me? Haven’t they heard of fiduciary duties? Fiduciary duties have nothing to do with ‘overlap’ or ‘conflicts partners’. They got away with it because the small client was not in a position to take them on. The arrogance of it was unbelievable.
Not just Mallesons, to Allens partners everyone else is second tier at best.
Great story. What a mess for Allens.
Joining the throng, the “Mallesons is not top tier” comment recited above made me chuckle.
I currently work in a lowly mid tier firm for a partner who left the Allens partnership of his own volition. He has previously remarked how his former partners could not comprehend why he would leave Allens to work anywhere else. After all, Allens = Everest. That response affirmed his decision to leave.
On the topic of former senior Allens partners/management continuing to use AAR email addresses after they have “retired” from Allens, I’ve witnessed this before and have even been on deals where company directors use AAR email addresses to receive confidential information (some of which would be subject to LPP) concerning transactions in which AAR lawyers were acting on the other side.
A curious and dubious (mis)use of Allens IT?!?
Back to “tiering”, I’ve found that the “tier” group your law firm sits in is only meaningful to first year grads (who are trying to justify the terrible hours and terrible pay) and senior partners who have never worked anywhere else. I’ve also found that clients don’t care what “tier” the firm thinks they sit in. Demonstrated expertise and relationship/client service are what clients shop for (at the right price of course). Otherwise why would top tier partners risk leaving for mid tier firms or risk setting up their own shops?
I started my career with a “top tier” Sydney firm, spent time with a “magic circle” UK firm and returned to a “middle tier” Sydney firm whose partnership is predominantly comprised of “top tier” refugees. So I like to think I’m more mongrel than mid tier …
Great story. What a mess for Allens.
Allens have arrogance and maybe it is that aarogance (pardon the pun) that has got them into all this trouble.
Reading back through the earlier posts I saw that Robinson has been on the board of the client as an Allens consultant for FIVE years!! There must be quite a few Allens partners who have worked with the client with the benefit of this arrangement in place. They can’t ‘cut Robinson loose’ now, there are too many of them already caught up in it.
You quote NSW Law Society’s statement on ‘undivided loyalty’. This is surely one of those cases of divided loyalty.
These Allensgate posts are getting even better. Very very funny. Foot massages and facials? Luxury resort? Major client conflict catastrophe to discuss? Perfect.
The imputation of knowledge consequences here are interesting. Why wouldn’t Allens partners beyond those actually serving Aconex also be held responsible, if a wrong has been done?
According to the Allens website, Michael Robinson joined the firm in 1960. He’s been there 51 years. He can pull seniority rank on anyone in Allens. Maybe this explains why other Allens partners have been unwilling to challenge him about his role at Aconex?
One of the things that is notable about ex-Allens lawyers working in other firms is that they don’t have nice things to say about the place or many friends left there.
If Michael Robinson is a consultant to Allens on the board of a client, how does he reconcile his duties to Allens with his duties as a company director? How does Allens reconcile its duties as a legal adviser with the director’s duties of their consultant?
This sort of thing appears to work fine — until there is some reason to question the advice or the fees. Then the different duties collide.
Getting informed consent (which presumably is what has happened here otherwise Allens could not be acting) can be difficult because of the conflict of one of the directors – he needs to have nothing to do with the discussions about obtaining the consent except suggesting that it needs to happen. The consent needs to be refreshed each time a new ‘issue’ of possible conflict arises.
never been on firmspy before, never even heard of it, until someone told me last night to check out your story about allens
reading the story made my day, thank you!
it will be very interesting to see how it plays out
The odd thing about this whole story is why doesn’t Allens management just ask Robinson to either give up his consultancy/email etc with Allens or give up the directorship? Why are they putting their firm’s reputation at risk – if the allegations are true – by allowing him to keep both roles? It seems a simple fix that should have been done already perhaps even when he started as a director of a client.
To the people whining about allegations and saying that you shouldn’t put names up until you have proof;
1) this is a gossip site; and
2) allens and Michael had a chance to respond via email Prior to the post going up. they chose not to.
I wonder when Allens are going to respond? Or maybe they are hoping this will all just blow over.
this story illustrates why the trend at most big firms is to ask elder partners to leave completely rather than stay on as ‘consultants’. i’ve seen many ex-partner consultants think they are still partners act like they are. this can cause all sorts of problems, without even getting into the problem of having them sitting on boards of clients
I am sorry to rain on the parade of all the posters who have been commenting on how Allens are about to get their comeuppance. Move along, there’s nothing to see here. The first FirmSpy post was 3 weeks ago and it made all the main allegations. If Allens had a problem as big as FirmSpy says it does with this client then by now 1. Robinson would have resigned from the board, 2. Allens would have kicked him out from being a consultant and 3. it would be all over the papers. Sorry folks. There are very likely some simple answers to the allegations, e.g. informed consent, use of other email accounts or information barriers, etc. Allens people are probably just laughing at the people here getting themselves in a lather about nothing.
Re Tony, there’s an earlier FS post quoting Allens’ response and it is that Robinson’s only relationship with Allens is use of an Allens office. This is clearly deficient as an answer because Robinson is also using Allens email and is stated on the Allens website to be a consultant to Allens. No mention of informed consent of the client. Robinson is quoted by FS saying there is ‘no conflict’ for him or Allens. If he and Allens think there is ‘no conflict’ then their view would also be there is no need for informed consent. It’s not apparent how there can be ‘no conflict’ being a consultant to Allens while sitting on the board of a client if Allens. There is a manifest conflict of interest.
@Lis
“… It’s time AAR reminds itself why NAB uses Mallesons…”
I have come across a series of banking and finance documents drafted by AAR where NAB is the leader of a consortium of lenders.
By the way, I am not an AAR / NAB or ex-AAR / ex-NAB employee.
I am curious as to why there are a number of people here asserting the “arrogance” of AAR as if that is incontrovertible fact. In all my dealings with AAR, its lawyers have been competent, effective and mild-mannered – as much as is possible from the other side of the fence, they have been a pleasure to deal with.
I have had far bigger problems dealing with Mallesons lawyers (and their egos) than those from Allens.
@Uncle Boonme @Online
**Assuming that FirmSpy has the story straight over the last few weeks and the important allegations are based in facts not rumour…..
AAR would jump at making Michael Robinson into an Adrian Powles lone agent and wash their hands of the whole thing. But it’s hard to see how AAR have as clean an exit here as in the Powles matter. This might be why AAR are saying and doing nothing and why Robinson is still up there on the AAR website as an AAR consultant. Maybe they don’t know what to do to make it go away and AAR have realized anything they do such as sacking Robinson would just draw more attention to the problem without actually fixing the problem.
….end assuming**
Very interesting…
But I’ll withhold any judgment until there is more meat in the story
I have been a client of Allens on several matters and have found them to be absoutely first class lawyers and advisers, friendly and not at all arrogant.
I am very doubtful of the allegations made on this website against Allens. They seem to be without any substance and based only on rumour and inneundo. I am surprised that a website like this is allowed to exist and make these sorts of allegations against a firm of Allens standing without providing some substantiation.
The most interesting question in all of this is what should AAR do now to control the situation and minimize the damage? I can’t see a clear answer.
I love Allens! Their clerks are way hot. I want to go there when I get to 4th year. First year college boys are so dull. I like that they have the nicest offices. Before daddy left, he used to work there.
Being on the board of a client of your firm is a recipe for disaster.
Allens are doing nothing about the situation because that would be an admission of sorts that there is a problem. Given how long it has gone on (five years?), the whole partnership is already implicated in any wrongs suffered. Their only hope is that it has been smooth sailing, no harm done and there is nothing for anyone to complain about. Otherwise they are all already on the hook.
@VeryDoubtful – of course they were, you were the client. But there are good and bad eggs in every big firm. And of course the allegations are based on rumour and innuendo, that’s what FS is. As for whether it should be “allowed” to exist… is that you, Stephen Conroy?
@passer by
@Lyca
Just looked up the Allens website, and he is not there. Where did you find his profile?
Allens appear to have deleted Robinson’s profile from their website. Maybe they are following some of the “advice” of FirmSpy commenters and have decided to “cut him loose”??