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🚰 PwC leaves the taps running

In today's email, we've got:

  • PwC not keeping a secret

  • England and Wales becoming the king of the jurisdictions

  • an awesome legal news site goes social

If you take just one thing from this email...

Breaching client confidentiality is bad. You could get in trouble yourself. Your firm could get sued losing money and (more importantly) their reputation).


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🚰 PwC left the taps running

Credit: Giphy

What's going on here?

PwC is facing a £63m lawsuit as the Big Four firm faces accusations that it leaked confidential information about the insurance firm Watchstone, its former client (a company previously called Quindell - remember this or things get confusing!).

What happened exactly?

It’s a bit complicated but, put simply, it goes like this:

  • Quindell suffered negative publicity because of bad accounting practices at the company

  • In 2014, PwC had been paid £5m to conduct “project Goldfish”, a review into Quindell’s finances, offering restructuring advice to improve its reputation

  • a senior partner at PwC had access to sensitive information about Quindell and allegedly shared it with an investment banker from Greenhill & Co

  • the investment banker then shared the information with its client, Australian law firm Slater and Gordon which was looking to buy a part of Quindell’s business

  • Slater and Gordon then used that information to its advantage to submit a lower bid for part of Quindell’s business

  • Quindell sold part of the company to Slater and Gordon for about £637m

What's wrong with that?

The allegations are that after PwC spoke to the investment banker, he sent an email to colleagues saying that Quindell would run out of cash in “mid-2015” and this helped Slater and Gordon to submit a lower bid.

This was a breach of PwC’s duty of confidentiality to its client, which gave the bidder Slater and Gordon an unfair advantage in negotiations (meaning Quindell lost out on money).

What will happen now?

The case has yet to go to court. Watchstone is asking for £63m from PwC for disadvantaging it during the negotiations by leaking the information.

PwC will argue that it did not leak the information and that even if it did, the leak did not affect the price Quindell would have received.

Why should law firms care?

This story is a demonstration of how professional ethics (and breaching such duties) can have real, commercial consequences.

The allegation of PwC’s breach of confidentiality (if proven to be true) would mean they would have to pay compensation to Watchstone - although they would likely have insurance to cover the cost of this.

But damage to the PwC’s reputation and credibility in the industry can't be undone by insurance. Losing client trust could lead to longer-term financial loss.

This story illustrates the potential consequences of breaching confidentiality rules, which also apply to law firms. As trusted business advisors, lawyers also have access to lots of sensitive information - breaking these rules can be costly.


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  • 🥊 Octopus is taking on everyone: The energy companies trade blows with its competitors in court over Octopus' deal to buy Bulb. British Gas claimed the energy supplier benefited from "hugely advantageous" terms in landing the deal, while Octopus labels rivals "desperate".


  • 🗞 Legal news: You've probably heard of 'The Lawyer' magazine. If not, it's the most established UK (and global) legal news website out there. Most of their stuff is usually for subscribers... but now they're on Instagram!

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