Herbert Smith Freehills (HSF) and its client the Royal Bank of Scotland have been criticised for their role in a ‘less than compelling’ and ‘unfocused’ disclosure process in the long running £4bn shareholder dispute against the bank.
In a judgment handed down from the High Court this morning, Mr Justice Hildyard decided ‘with very considerable reluctance’ to an adjournment of the trial until 6 March 2017. RBS and its lawyers HSF had requested the delay, claiming it was impossible to prepare the evidence required.
The shareholder claimants opposed the extension, claiming that the disclosure process had already taken many months and, questioned why there needed to be a re-review of all the disclosed documents without explanation.
In his ruling, Hildyard J described ‘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.’
One of the most high-profile features of this case has been costs, and Hildyard said while the court does not ‘intend by any means to peer behind the curtain of legal privilege, 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.’
Hildyard J said 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’.
In accepting the need to move the trial date, Hildyard J observed that a submission made by the claimants ‘to the effect that the defendants must re-think their approach and strategy and must be able to achieve better progress in the future carries force’.
Last month several Lloyds Banking Group institutional clients broke away from the shareholder action group and instructed Mishcon de Reya instead of Signature Litigation. The action is brought against the bank’s former chief executive Fred Goodwin and three other directors, and relates to a rights issue in April 2008, in which RBS sold its shares at £2 per share. The claimants allege that the prospectus on which the rights issue was based was ‘defective’ and contained material misstatements and omissions.
The RBS Shareholder Action group is the largest of three currently in dispute with RBS, with the others represented by Quinn Emanuel Urquhart & Sullivan and Stewarts Law.
HSF continues to defend RBS in both cases, with a team lead by partners Adam Johnson, Simon Clarke, Kirsten Massey and James Norris-Jones.
HSF declined to comment.
sarah.downey@legalease.co.uk
