No smoke without fire? HSF and RBS set off judicial alarm

There is an interesting story in Legal Business about the conduct of RBS’s defence by Herbert Smith Freehills in a £4bn shareholder dispute. Hildyard J is reported as saying the following which seems to question HSF’s competence in managing their client’s disclosure* (it could of course be the bank’s fault, or the judge could be wrong):

what appears to be an unfocused disclosure process, which has fanned out exponentially and extravagantly without sufficient control and direction… the commitment of increasing resource to the identification of documents, leaving a diminished resource for their assimilation, without properly taking stock as to whether the process had overtaken the purpose.

But more importantly perhaps he says this:

…the lack of clear evidence is all the more worrying given the apparently small percentage of their allotted budget for witness statements the defendants’ legal team have so far spent on this process.’

And is reported as saying that:

some of the evidence provided by the defence has been both ‘unsettling’ and ‘less than compelling’, and cited a description provided of the pleaded issues as ‘incredibly broad and complicated’.”

Whilst there may be a number of explanations, one plausible one is that the mounting of a smokescreen defence, designed to wear down their opponents in the hope of a cave in or parsimonious settlement is being unpicked by the judge. Another is incompetence (in the bank – I know, unthinkable or at Herbies). A third is unfairness, or a rush to judgment, on the judge’s part.  There may be others. Place your bets and await the – now postponed – trial. The judge’s remarks may have made parsimonious settlement less likely, so perhaps the shareholders will get a more generous settlement and HSF and RBS’s woes will disappear.  That there may well be troubles to expose is suggested by this other remark attributed to the judge made by way of apparent preface for his criticisms. Hildyard said while prefacing his criticisms that the court does not,

intend by any means to peer behind the curtain of legal privilege.

Perhaps someone should. Perhaps he means yet.



* An interesting point that was made to me shortly after the blog was published was that RBS (or indeed HSF) may have contracted the management of parts of the disclosure process out – if so an interesting example perhaps of the perils of unbundling.

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