AAR Situation Room at Code Red as Investigations Continue into Alleged Conflicts

Since we last wrote about AllensGate, we’ve had earthquakes, meltdowns, and the world’s most wanted man has been discovered, shot and killed.  A covert outfit apparently named Rainbow SEAL Team 6 — whose existence is not officially acknowledged — executed a carefully rehearsed plan to bring the mastermind behind the 9/11 attacks to justice.

Just as SEAL Team 6 were beaming live images of Bin Laden’s demise into the White House Situation Room, another team of a very different nature was busily sorting through intelligence cables, tip-offs and dusty old memos to bring you this update on the country’s most intriguing (and, unlike Bin Ladarmageddon, under-reported) legal saga.

Recall that five complaints were made earlier this year in relation to an alleged conflict of interest between partners at Allens Arthur Robinson and Aconex, the company at the centre of the Allensgate saga that led to the apparent demise and resurrection of Michael Robinson, one of Australia’s most senior commercial lawyers.

Sadly, it sounds like progress is slow among the five state and federal regulatory authorities involved.  If they were hunting terrorists, their targets would be hiding in the hills of some Afghan border village by now.  Fortunately, Robinson and the large boxes of paper we understand have been filed sound like they’d be much slower-moving.  They also lack AK-47s.

So here’s what we know.  According to our anonymous sources, complaints are pending (meaning that investigations are ongoing) before:

1. Legal Services Commissioner of Victoria;
2. Legal Services Commissioner of NSW;
3. Legal Services Commissioner of QLD;
4. Legal Services of WA; and
5. ASIC,

against various Allens partners, including Robinson, Dwyer and others.  So take your iPad with you to the bathroom and get comfortable in your very own Situation Room – AllensGate awaits!

Firstly, our readers are probably still wondering why, other than a small article in Crikey, not a skerrick of information on the topic has been published in any Australian legal affairs media. We will let our readers form their own opinions on the issue.  Australia’s very first superinjunction?  We’ve been in contact with a couple of journos from the AFR, The Australian and the SMH, and nobody seems to want to touch the story.  Got to hand it to Allens – they certainly know how to keep the reins on the (mainstream) media.  But not us.  Anyone with inside info: do feel free to share it in the comments.

Meanwhile, it looks like Allens is getting its Homeland Security in order.  We understand that on 4 April 2011, a firm-wide AAR email was sent relating to the personal use of AAR email and reiterating all other firm policies on various misuses of position (we haven’t seen the text of the email, but we’re sure it makes for pretty yawn-worthy reading).   Here’s the fun part: this email was apparently sent shortly after a support staff member from the firm’s Melbourne office was sacked for running a personal business (we are hearing rumours it was a conveyancing business) whilst at work and with the use of the AAR email address.

Sound familiar?  Drats, guess that means no more Facebook notifications to the work address.  Do partners’ online dating accounts count?

Next up, we have word that the Victorian LSC investigation is slowly progressing.  Word is that they are going after Aconex General Counsel James Cook for unprofessional conduct.  Basically, this means another file and another investigation has been opened.  Much more than that we cannot confirm, except to recall that, under regulation 9.1 of the Professional Conduct and Practice Rules (which are binding on Victorian lawyers by the Legal Profession Act 2004 (Vic):

9.1 A practitioner must not, in any dealings with a client —-

9.1.1 allow an interest of the practitioner or an associate of the practitioner to conflict with the client’s interest;

9.1.2 exercise any undue influence intended to dispose the client to benefit the practitioner or an associate of the practitioner in excess of the practitioner’s fair remuneration for the legal services provided to the client;

9.2 A practitioner must not accept instructions to act or continue to act for a person in any matter when the practitioner is … aware that the person’s interest in the matter is … in conflict with the practitioner’s own interest or the interest of an associate.

And further:

32.1 A practitioner who engages in the conduct of another business concurrently, but not directly in association, with the conduct of the practitioner’s legal practice must:

32.1.1 ensure that the other business is not of such a nature that the practitioner’s involvement in it would be likely to impair, or conflict with, the practitioner’s duties to clients in the conduct of the practice;

32.1.2 maintain separate and independent files, records and accounts in respect of the legal practice, and the other business;

32.1.3 disclose to any client of the practitioner, who, in the course of dealing with the practitioner, deals with the other business, the practitioner’s financial or other interest in that business; and

32.1.4 cease to act for the client if the practitioner’s independent service of the client’s interest is reasonably likely to be affected by the practitioner’s interest in the other business.

These are the main rules that the LSB will be applying to determine Cook and Robinson’s culpability in the matter.  Given the overlapping email use, it seems likely that there will be at least a nominal violation of regulation 32.1.2, though whether that would result in more than a regulatory slap on the wrist seems doubtful.  The more pressing issue is whether the Board will find a violation of regulations 32.1.4 or 9.1.1.

If Cook goes down, then Dwyer and several others from Allens are likely to fall with him for the same reasons.  Their files are, according to our source, sitting in a pile waiting further review at the moment – pending the outcome of Cook’s investigation.

Cook is apparently being represented by professional liability wizard Stephen Warne, of lawyer’s lawyer fame.

Just don’t expect anything to happen overnight. It could take as long as the hunt for Osama, if the following passages from an excellent AFR article (29/4) are anything to go by:

VCAT questioned why it had taken three years for the state’s legal services board and legal services commissioner to finalise their investigation [into the highly dodgy franchising practices of Maurice Blackburn Lawyers and a franchisee lawyer named John Hugh McCristal]… Michael McGarvie, who became Victoria’s [legal services] commissioner … in December 2009 said the delay was “utterly intolerable”… The difficulty of having the [legal services] board and the [legal services] commissioner work as “twin regulators” in Victoria had been “the left hand not knowing what the right hand is doing”, he said.

With 3 years as the current benchmark, we might see the Aconex GC in strife in early 2014, followed by the AAR protagonists in AllensGate at some point in 2017.  By which time they’ll likely be sitting on some remote island of the Maldives, sipping pinacolada and reflecting on the Glory Days.

Where does this leave us?  As of 1 May, Allens appear not to be acting for Aconex on anything, and the rather bizarre EGM resolutions we reported on earlier in the year are now being canvassed in a formal s 237 notice as part of what we understand is a shareholder derivative action being launched under pt 2F.1 of the Corporations Act 2001 (Clth).

It’s probably too early to speculate whether the Legal Services Board will find against Cook.  If they do, the personal penalties that can be applied range from a temporary restriction on his practising certificate (holy regulation, Batman!) to being struck off.  The LSB’s Removal from the Roll policy states that the Board will usually apply for a practitioner to be struck off from the roll if:

the lawyer is not a fit and proper person to hold a practising certificate and

concerns about the lawyer’s fitness cannot be adequately addressed by temporary restrictions on the right to practise … because of the seriousness of the circumstances and

the circumstances include any of the following: …

• indicate a material risk of serious harm to consumers of legal services
• indicate a material risk of serious harm to the administration of justice
• indicate a material risk of serious harm to the integrity of the legal profession

unless there are mitigating circumstances.

Time will tell.

Meanwhile, in Allens land, the firm has advertised for an “experienced Graphic Designer” to become part of its “dynamic Marketing & Client Services team” in Melbourne.  Time for a rebranding, anyone?

We’ve also heard distinctly unsavoury rumours about an SA/Partner hook-up in Allens’ Sydney litigation department that lead to the SA “leaving” the firm, the Partner being sent to Singapore, and an email sent to all Allens’ partners that informed them of the said affair and a comment on how classy it all was…  Naturally, a copy of the said email wouldn’t go astray.  Don’t let us down, Sydneysiders.

AAR Situation Room at Code Red as Investigations Continue into Alleged Conflicts, 4.6 out of 5 based on 29 ratings