The Levitt Report: Independence Frayed

The Levitt Report into trouble at RICS is a document which may reverberate for a while. To anyone who has expressed doubts about whether an independent review is really independent here we have a blow by blow account that will give sceptics, especially any who have had cause to doubt a Fieldfisher review, a hefty draft of very detailed evidence. It also contains a very concerning tale of corporate legal bullying, which draws one GC and two firms into its orbit.

Buckle up. This is a long post.

It is an extraordinary and embarrassing story for the lawyers involved with Alison Levitt QC raising a number of concerns which have potential professional misconduct implications. It shows how important not understanding who one’s client is; and provides an exceptional example of what rubbish the claim that ‘I am a merely the adviser the client decides’ can be. It would be hard to do the report justice in a blog post, but let me highlight some specifics.

Levitt plainly does not feel the lawyers involved have provided all the information that they could have or perhaps should have to her Inquiry. She has also considered apparently privileged material without RICs waiving privilege. Only her persistence revealed how extensive Fieldfisher’s involvement was in a saga which led to non-executive directors being wrongfully dismissed, and the report of an independent audit of financial problems being badly mishandled. Some in RICs had sought to present a different picture. She points out, “RICS has not been minded thus far to waive privilege. It is my hope that once it has read my report Governing Council will change its mind in the interests of transparency.” And at the end of her report she seems to invite RICs to consider taking matters further with Fieldfisher.

RICs General Counsel, who is not referred to by name in the report, qualified, trained and practiced at Fieldfisher. Having been seconded to RICs she became their General Counsel in April 2018. It is a familiar pattern, and one which Levitt has concerns about. Levitt emphasises her conscientiousness, sincerity, and her assistance to the Inquiry including as a voluntary witness. “However, I have concluded that in performing her role in relation to these events, she placed excessive reliance on advice from her previous employer, Fieldfisher, who were RICS’ chosen external legal advisers.” One really has to read the report to get a sense of how dependent on the firm, one partner in particular, for advice the GC was. As Levitt says, “It may be that her inevitable professional closeness to the firm that trained her was at least partly the cause of this. In any event, it did not serve her well.” It may also be, although Levitt does not discuss this, an indication of how difficult the transition from a firm to the isolated and embedded role of General Counsel can be. She plainly took extensive advice on matters legal and non-legal.

The key concern about the GC’s behaviour, this dependence on Fieldfisher aside, is that (along with the other lawyers involved) she failed to understand properly who her client was. Rather than see RICs, which ultimately meant it’s Governing Council, as her client. She was guilty of “taking sides” in a dispute between the COO and CEO and four non-executives. It also led to the Governing Council not getting the information that Levitt plainly thought it should have. As every lawyer should know, it is a professional obligation to ensure the client is properly informed of all matters material to their instructions. Because of this taking of sides, and the cumbersome constitutional arrangements of RICS, Levitt’s report says this did not happen. That taking sides appears influence how instructions (to Fieldfisher) and advice are given.

The lead partner at Fieldfisher on the case was Matthew Lohn. He had a longstanding relationship with RICs. On this case the first request for advice comes from the COO not the GC in RICs and “appears to seek advice primarily for herself and the CEO. To the extent that she [the COO] was asking for advice for RICS itself, she appears to have assumed that her interests (and those of the CEO) and those of their employer were largely coterminous.”

It is a flawed and common assumption, often driven by the professional relationships which are cultivated as part of any longstanding commercial-client relationship. A key problem is that a suggestion is made that the four non-Executives intended to try and unseat the CEO, the COO or the Chair of the Management Board, in the absence of any evidence. The lawyers get their ‘facts’ from those they have a friendly, professional relationship with, not the ‘real’ client. They did so even though they formed an early view that the matter could have been better handled by the senior management from whom they were taking instructions.

Early in the story the GC suggests Fieldfisher be commissioned to conduct an independent review into what has been going on. Unhappily, Levitt concludes the result of that review had been predetermined. ”At this early stage,” says Levitt, “I would have expected Fieldfisher to have kept an open mind and to have given advice looking at the matter from both sides. I am surprised by their having reached a firm conclusion at such an early stage, without having seen any of the Minutes or the other documentation.” There was, “strong evidence that the result was a foregone conclusion.”

Curiously too, there seems to have been some desire to conceal, or at least a failure to reveal, the the extent of Fieldfisher’s involvement from the Inquiry. The COO amongst others “downplayed the extent of Fieldfisher’s involvement”, the CEO did not give, “a candid or transparent account of the [their] knowledge of the part played by Fieldfisher.” In fact, “General Counsel constantly asked for their input, including on matters which were not issues of law. …barely a day went by without her consulting them on some aspect, frequently several times a day.” Their involvement in pre-planning meetings was extensive and unusual in Levitt’s judgement. In relation to one meeting,

”The clear impression given is that Fieldfisher were deciding what should happen at that meeting. The fact that they may have believed that they were acting in the best interests of RICS is neither here nor there. Neither General Counsel nor the Chair should have allowed this to happen.”

When selling their services lawyers like to portray themselves as business savvy fixers; when things go wrong lawyers fall back on the idea that they are mere advisers following their client’s instructions. The mere adviser argument is often a weak one, it enables lawyers to distance themselves from accountability; whereas they not uncommonly actively shape events and, to a point, their outcomes. Levitt does not buy the mere advisor argument here.

Similarly, “General Counsel said that she was not a decision-maker and that she only gave advice. This email is one of a number of pieces of evidence which suggest that although she may not technically have made decisions, her involvement went much further than merely giving advice.”

At various points the taking of sides gave rise to what Levitt indicates may have been an actual or perceived conflict of interest. At one stage, the COO was, “involved in a conversation about restricting the terms of reference of the [supposedly independent] review so as to ensure that it did not examine her own actions and behaviours.” A review that it is emphasised more than once by Levitt, “was a foregone conclusion.” There is also a curious impression given that “General Counsel was conducting the review herself; I find it inexplicable that the Board was not told about the involvement of the external lawyers, particularly given that concerns had been raised about the suitability of General Counsel to conduct it. …symptomatic of a lack of transparency and a failure to give the Management Board the information it needed in order to make fully-informed decisions.” This appears to suggest another failure to keep the proper organs of the client properly informed.

A related, and worrying point made by Levitt was that:

I am afraid that I am unable to accept the explanation that this was merely an exercise in reassurance, particularly in the light of the material within the Fieldfisher file. When I interviewed General Counsel I had not been provided with the Fieldfisher file (though I had asked for it a fortnight earlier) and so had no idea about the substantial role they had played in the review. Knowing what I now know, I am very surprised that she was not candid with me about their involvement, given that she knew that I had not seen the file and it was not clear at that stage whether I ever would.

The SRA will need to investigate this, as well as many other elements of this case, if they are to be seen as taking professional ethics in corporate practice seriously. Independent reviews are a staple of corporate governance and rely on proper professionalism for any semblance of genuine worth.

This taking of sides, if Levitt is right about that, had concrete and important consequences on the lives of the non-execs. Interestingly, the non-execs sought agreement that the company fund legal advice on the governance point they were raising. This was declined. Fieldfisher gave advice on that. Levitt concludes, “in giving this advice, Fieldfisher failed to consider what was in the best interests of their client, which was RICS, not the Executive or the senior leadership.”

“From the evidence I have seen it was clear that her [the GC’s] independence was indeed compromised and not only for the reason that the non-Executives had feared. It was not just a question of her feeling constrained in relation to possible criticism of those under whom she worked but that she had in fact formed a highly partisan view of matters (which included having reached a conclusion) well before the review was even commissioned.

…General Counsel had engaged a third party to conduct the bulk of her review, but withheld this fact from the non-Executive members of the Board.

Criticism of Matthew Lohn is also extensive. He (not the client, she thinks) “drove the ‘terminate now’ agenda” against one of the non-execs. They are asked to give advice on “an area which was self-evidently fraught with risk for them as external legal advisers because their client was RICS itself” (on threats that the CEO/COO – who they were effectively supporting – might resign and claim constructive dismissal). Levitt records:

Because this was potentially such a significant meeting, I was very anxious to see an attendance note. I was sure that one existed because the meeting was a long one and one of the junior Fieldfisher lawyers had claimed on the bill for the preparation of the note. After a number of requests, in early July 2021 General Counsel sent me a short note of the meeting, which she had made and which she indicated was incomplete. I did not receive Fieldfisher’s attendance note until 28th July 2021, despite numerous requests. I am told that it had been misfiled.

She mentions this delay and misfiling in the conclusions as well as the body of the report. When the note is revealed:

It is my view that the note reveals that this meeting, if not amounting to a formal conflict of interest in the regulatory sense, was deeply unwise.

Matthew Lohn, she says, gave unequivocal advicen :

(i) The non-Executives had to go;

(ii) The President and the Chair were letting the organisation down by not dealing with this in a robust manner; and

(iii) The CEO and the COO should issue threats to encourage the President to take action.

As Levitt puts it, “The effect of this meeting was that Fieldfisher handed the pistol to the CEO and COO which would subsequently be held to the head of the President.” It is, she says, “an extraordinary document”.

What is of significance is that, having identified that Governing Council was the controlling mind (and thus Fieldfisher’s client) and therefore  the power to act lay with the President, Matthew Lohn then advised the CEO how to persuade the President to act in the way that he and the COO wanted, primarily by threatening him that they would leave and that the threat should be couched in terms which mirror the language of constructive dismissal.

…This is not, as it is suggested, advice to RICS, in the sense that it is advice to the controlling mind or embodiment of RICS. It is advice to the Executive as to how to persuade the controlling mind into a particular course of action.

I have carefully reflected on  the letter of representations sent to me, but despite their contents, I have concluded that Fieldfisher unnecessarily and disproportionately inflamed this matter by:

(i) advising that the 11th November letter from the non-Executives to the President should be shown to the CEO and COO (which on any view was unnecessary); and

(ii) by giving advice to the CEO and COO that they should threaten the President.

At another point:

I am concerned, but not surprised, that it was even contemplated by Fieldfisher that they would consider withholding information from their own client. It is difficult to see any wisdom in such advice, and indeed to see how it could be described as appropriate to the solicitors’ clear areas of responsibility. Whether this amounts to a regulatory breach of the solicitors’ rules is not for me to judge. What I can say with confidence is that the evidence shows that Fieldfisher had entered the fray and there was little sign of objectivity.

The suggestions that there is a lack of independence, a failure to act in the best interest of the client (although Levitt concedes they thought they were so acting), and a failure to keep their proper client informed is traceable back to the confusion about who the client is. The practical problems engendered by the lawyers not standing back and thinking clearly about who there client is quite nicely captured in this section of the report. Lawyers think their client is the one with the most power in an organisation, who it so happens also pays their bills, but the law says their client is the organisation:. The GC says this to Levitt

“This is where it becomes very difficult when it’s your entire sort of leadership group that are the people who are involved in this matter. It’s a bit like, we’re in the situation we’re in now as in who is the mind of RICS if not those people and in their roles so the view was … it became very confusing what [the four non-Executives] actually wanted …the view was that operationally for the organisation those key individuals of the Chief Exec, Chief Operating Officer, Chair of Management Board and Chair of Audit Committee needed to know that this is what the four members of that Management Board were saying at that point in time and that for the organisation there needed to be an understanding that that is what was trying to be achieved and what was the organisation’s response to that from those people in those roles.”

Levitt says this in response:

I am not sure that I understand any of this. It is quite clear, as a matter of law, that Governing Council is the ‘controlling mind’ of RICS.

The question raised by Levitt seems to be whether the lawyers have, engaged in, strategized for, assisted, even perhaps led, a plot to assist one part of the organisation against the other. The lawyers think they have just been acting for the client (who they see as manifest in the executive directors) in a tricky situation.

A second limb of the saga is opened up by RICS threatening defamation proceedings against members of GC2019 (a group of members of RICS governing council who had been critical of RICs actions in this case).  This led to Sheridans LLP being involved as Fielfisher referred RICs to them for the defamation matter. Well, kind of. Levitt forms the view that “Fieldfisher felt unable to act in this matter because …members of GC2019 were viewed as having been Fieldfisher’s client in 2019. Self-evidently, they could not issue letters threatening their own client.” Kind of, because, “the letter which Sheridans was to send later that evening to GC2019 had been drafted by Fieldfisher. It was provided  by Fieldfisher in a document which said at the top “To be sent on Sheridans letterhead”. (For longstanding readers, to lighten the load of this long blog, I note that the Bar Council once thought this was okay too). Sheridans quickly reviewed the letter, suggested “some hopefully uncontroversial stylistic amendments” and then sent it:

Although Sheridans is a firm with expertise in media law and defamation, the reality is that it appears to have had a limited amount of input into the letters that were sent, not least because of the speed with which they were sent out.

Fieldfisher, through their solicitors Clyde & Co, have made the point to me that it was Sheridans’ professional responsibility to ensure that they were content with the letter as a matter of law.

Unquestionably, that is right in terms of the regulatory requirements and I am satisfied that Sheridans would not have sent it unless they believed that they were entitled to do so. That said, I make the following observations:

(1) I have seen no record of advice, either from Sheridans or Fieldfisher, as to not merely whether as a matter of law what the GC2019 members had said was defamatory (which in my view was debatable) but the broader question of the wisdom of sending this letter; and

(2) It is my view that the members of RICS will be very surprised to learn that, in effect, their subscriptions were being used for their external advisers to use a second law firm to send a threatening letter to other members of the Institution.

What is without questions is that at 2240 on 20th January 2021, the members of GC2019 each received a letter from a top media law firm, on behalf of RICS, threatening legal action for defamation in respect of the further circulation of their letter, and giving them until 10am the following day to respond. I remark in passing that one of the charges levelled against Simon Hardwick was that he had sent his email of 26^th July 2019 to the Chair of the Management Board at just before 10pm. On any view, that was a considerably less disturbing and upsetting letter than that sent to the GC2019 members. As will be apparent, there was literally no prospect of all these surveyors being able to obtain legal advice within the time frame they had been given to respond. It is my view that this went further than a serious error of judgement and looked very much like bullying.

This, in my view, raises the question of whether Sheridans and Fieldfisher have behaved with professional propriety and whether Fieldfisher have properly managed the conflict of interest that Levitt identifies; it looks, on the facts as we have them in the report, like rather than act, they have acted through a proxy. The allegation of bullying falls into the territory explored by the SRA in their Balancing Duties in Litigation document. Levitt opines, “This was a bullying tactic, wholly unjustifiable in the circumstances. A moment’s reflection would have shown that this was oppressive.” Moreover, “insufficient analysis was undertaken, and certainly no recorded advice was given, on the merits of a claim for defamation, in order that RICS could weigh all of the relevant factors in deciding whether the “nuclear option” of a threat of legal action was appropriate and proportionate.”

On the positive side, “It would appear that Sheridans felt the need to constrain General Counsel and Fieldfisher.” Recognising that following up on the letter hastily, “risked looking oppressive. They were also concerned that RICS should consider whether it would and/or should pursue formal legal action, as threatening it and then failing to do so risked losing all credibility.” Threatening it without intending to do it can also raise issues of conduct. Nonetheless they sent the chaser letter they were instructed to do.

Advice was given in ways that removed or inhibited the ability of RICs officers to make a reasoned choice. Their advice does not present a “balanced analysis from which Fieldfisher’s client might make a decision as to the appropriate course to take.” Their advice,

“does not read as the provision of advice upon which RICS could come to an informed decision. It appears instead to be a document drafted in order to fortify a decision which has already been made … a document that may be relied upon by RICS, should its decision to dismiss the non-Executives later be subject to scrutiny… 

 partial and partisan advice had been given from the outset in order to sustain and support a decision that the CEO, COO and Chairs should be protected at all costs… 

conclusions were presented by Fieldfisher with a level of apparent confidence that was inappropriate in the circumstances and which did their client a disservice.

In asking, “Did Fieldfisher have a conflict of interest?” Levitt concludes with the view that, “There is nothing in the documentation, disclosed apparently with reluctance and at a late stage, which demonstrates that Fieldfisher considered that there was a  possibility they had a conflict of interest in advising both (a) their client, RICS, and (b) employees of RICS whom they thought might have possible constructive dismissal claims against their client.” But also, that, “It is not necessary for me to make a finding on the issue of conflict of interest and I do not do so. What I have concluded, as I have said elsewhere in this report, is that Fieldfisher became demonstrably and inappropriately partisan in their approach to the governance questions in play and they provided legal advice which fails the test of objectivity.” She also says later in the document, “I have concluded that Fieldfisher had more than one potential conflict of interest which they appear to have either ignored or misjudged.”

The report draws to a close with some more general observations:

Throughout this episode RICS was not well-served by its lawyers. No doubt those reading this report will think that it is richly ironic that I, a senior barrister, have concluded that RICS has been too dependent on external legal advice. I am sure that Fieldfisher and other lawyers have given RICS much sound advice over the years in relation to what I would describe as legitimate legal matters, but the lawyers were seriously over-used here. What was needed was not legal advice but judgement, common sense and the courage to stand up to the Executive as appropriate.

I believe that the Executive and the senior leadership know in their heart that this is right, because nothing else would explain the extraordinary lengths to which they have all gone to conceal from me the extent of Fieldfisher’s involvement. When I finished conducting the witness interviews I had not been given the file and I believed – because that is what I had been led to believe – that Fieldfisher’s part had consisted solely of the preparation of the 18th November 2019 Advice that resulted in the dismissal of the four members. The only reason I asked to see the file at all was because I was puzzled by the unequivocal and uncompromising nature of that Advice. I remarked at the time that it read not like an Advice but like a document written to give legal ‘cover’ to a decision which had already been taken. Yet when I interviewed him, the President was adamant that he had read that Advice with an entirely open mind. I asked to see the file because I wanted to understand the nature of the instructions which had been given to Fieldfisher and who had given them.

In more general terms, Levitt makes some interesting points, perhaps of general application:

iv) There has been an over-dependence on rules, process and external legal advice at the expense of good judgement, sound governance principles and plain common sense;

13. General Counsel or Head of Legal should not have a pre-existing relationship with RICS’ external legal advisers.

14. RICS’ external legal advisers should be invited to tender every three years, with a presumption that there will be a regular change of provider.

15. RICS should consider replacing its external legal advisers, ideally by putting the matter out to tender.

There is also an open invitation for,

“RICS may wish to scrutinise the involvement of Fieldfisher in this matter, particularly in relation to: a. Possibly unwise decisions, bearing in mind that RICS – not the Executive – was Fieldfisher’s client; b. Whether advice was given on legal matters only or whether it strayed into other areas and whether it could be described as non-partisan; c. The level of spend.”

I was denied access to some documents in the file on the ground that they were internal Fieldfisher communications and thus did not belong to the client (RICS). I disagree with this view and suggest that RICS might consider making a request of Fieldfisher in order to see the internal discussions which took place.

The thought that there may be even more to here on this, rather boggles the mind. I would be deeply disappointed if the firms involved have not raised the matters with the SRA themselves; and of course, as we see hints of a defence in the lawyers letters to Levitt trying to get her to change her mind. The evidence that the role of in-house proper regulatory support and scrutiny and that independent investigations too need to be considered more broadly grows. But it is also a compelling and, if the report’s authors judgements are as fair as they are well-reasoned, deeply concerning account of how independence in private practice can be compromised by the relationships established with ‘good’ clients.