1 Clifford Chance is at the forefront of this movement. See “Clifford Chance Plans Faltz & Kremer Merger” (1999) vol. 13, issue 31 The Lawyer 1. In a recent survey (1996-98), more than 70% of firms questioned said that they had approached or been approached by another firm with a view to a possible merger. See “Inside Track: Merger Outlook” The Financial Times 24 November 1998.

2 For some exceptions, see Flood, J., “Mega Lawyering in the Global Ordering: the Cultural Social and Economic Transformation of Global Legal Practice” (1996) 3 International Journal of the Legal Profession 169CrossRefGoogle Scholar; Mayson, S., Making Sense of Law Firms (Blackstone Press, 1997)Google Scholar chap 12; J. Harrison, “To Merge or not to Merge” (1988) 132 S.J. 102; and R.G. Lee, “From Profession to Business: The Rise and Rise of the City Law Firm” (1992) 19 J.L.S. 31.

3 Sometimes known as “former client conflicts”. See, Finn, P., “Fiduciary Law and the Modern Commercial World”, in McKendrick, E. (ed.), Commercial Aspects of Trusts and Fiduciary Obligations (Oxford, 1992) 1 at p. 27Google Scholar et seq.

4 See J. Griffiths-Baker, “Further Cracks in Chinese Walls” (1999) 149 N.L.J. 162 at p. 172.

5 See generally Law Commission, “Fiduciary Duties and Regulatory Rules” (Consultation Paper 124, 1992) and Law Commission, “Fiduciary Duties and Regulatory Rules” (Law Com. No. 236, 1995).

6 See Law Commission, “Fiduciary Duties and Regulatory Rules” (Consultation Paper 124) at para 4.5.2.

7 “Chinese wall ruling could help MDPs” (1999) vol. 12, issue 37 The Lawyer 5.

8 See, for example, Supasave Retail Ltd. v. Coward Chance (a firm), Lee David & Co (Lincoln) Ltd. v. Coward Chance [1991] Ch. 259; and Re a Firm of Solicitors [1992] 1 Q.B. 959.

9 See, for example, Mallesons v. KPMG [1990] 4 W.A.R. 357, 371-372, per Ipp J.

10 [1999] 2 A.C. 222. See generally G. Barboutis, “Prince Jefri Bolkiah v. KPMG: the rejection of an ‘inadequate’ Chinese Wall” (1999) 20 Company Lawyer 286; Griffiths-Baker (n. 4); A.D. Mitchell, “Chinese Walls in Brunei: Prince Jefri Bolkiah v. KPMG” (1999) 22 U.N.S.W.L.J. 243; and T. Petch [1999] C.L.J. 485.

11 Some of the information obtained by KPMG was likely to have attracted litigation privilege, albeit not solicitor client privilege, and it was conceded by KPMG that an accountant who provides litigation support services of the kind which were provided to Prince Jefri had to be treated in the same way as a solicitor. Ibid., at p. 234.

12 [1999] 3 All E.R. 524.

13 For a discussion of the case, see S. Allen, “Chinese Walls Still Stand After Case” (1999) 8 April, Law Society Gazette 8.

14 “City Law Firms at Risk” The Guardian 19 December 1998; and “Chinese walls are rocked by law lords’ landmark judgment” The Financial Times 2 February 1999.

15 See Mitchell, (n. 10) at p. 254: “It is submitted that the balance adopted by the Court of Appeal [in Bolkiah—which was favourable to KPMG—] better reflects modern day realities.”, and Griffiths-Baker, (n. 4), at p.175, in a rhetorical question implicitly endorsing Chinese walls: “Given the creation of mega-firms and the complexities of modern day practice, what other options are realistically available?”. There are also fears that Bolkiah could impede the move towards multi-disciplinary practices (MDPs) combining accountancy, law, and financial services. See J. Kelly, “A Conflict Within these Walls” (1998) October Accountancy and Business 12. See also Mayson, (n. 2) at p. 207.

16 The same point can be in relation to the Law Society's rules. See The Guide to the Professional Conduct of Solicitors (Law Society 8th edn. 1999) Chap. 15.

17 See Flood, (n. 2) at p. 197; and Mayson, (n. 2) at p. 9.

18 Lord Chancellor's Advisory Committee on Legal Education and Conduct, Multi-Disciplinary Practices (July 1999) at p. 12.

19 See Lee, (n. 2) at p. 42; Lord Chancellor's Advisory Committee, ibid., at p. 12; and Mayson, (n. 2) at p. 187.

20 Lee, ibid.

21 See Galanter, M. & Palay, T., “Large Law Firms & Professional Responsibility”, in Legal Ethics & Professional Responsibility by Cranston, R. (ed.) (Oxford, 1995) 189Google Scholar; The Law Society, Multi-Disciplinary Practices (Consultation Paper, 1998) at p. 17; and Lord Chancellor's Advisory Committee, at pp. 12-13.

22 See Brindle, M. & Dehn, G., “Confidence, Public Interest and the Lawyer”, in Legal Ethics & Professional Responsibility by Cranston, R. (ed.) (Oxford, 1995) at p. 115Google Scholar (citing W v. Edgill [1990] 1 All E.R. 835, 848).

23 MacDonald Estate v. Martin (1991) 77 D.L.R (4th) 249, 255 per Sopinka J.

24 Russell McVeagh McKenzie & Co. v. Tower Corporation [1998] 3 N.Z.L.R. 641, 665 per Thomas J. (dissenting). Although most clients probably do not have as their first concern client confidentiality when they relay confidential information to a professional intermediary, as Mitchell says, this is probably “because it is assumed that confidences are [indeed] protected'': see Mitchell, (n. 10) at p. 254 (footnote 64, and material cited therein).

25 MacDonald Estate v. Martin (1991) 77 D.L.R. (4th) 249, 256 per Sopinka J.

26 See J.R. Midgley, “Confidentiality, Conflicts of Interest” (1992) 55 M.L.R. 822 at p. 833, citing Morton v. Asper (1988) 45 D.L.R. (4th) 374 (Man. C.A.), at pp. 384-385. In that case, Jewers J. quoted with approval the following dictum in Bica v. Superior Court of Pima (1977) 567 P. (2d.) 1198, 1203: “We believe that strict adherence to the proscription against ‘appearance of impropriety’ will best serve to develop and foster the public's respect for and confidence in our legal system.'’ See also Bolkiah at p. 236 per Lord Millett, and note 65 below and accompanying text.

27 See F.M.B. Reynolds, “Solicitors and Conflict of Duties” (1991) 107 L.Q.R. 536 at p. 539 (emphasis added). However, it also follows that where confidential information is not privileged, it may be appropriate to adopt a less strict rule.

28 Quoted in Griffiths-Baker, (n. 4) at p. 175 (and in the words of another prominent City lawyer: “[i]f we all applied the rules about confidential information literally the City would grind to a halt. There just aren't enough good lawyers in the financial legal sector to go around.” at p. 175).

29 See Mitchell, (n. 10) at p. 254 and Griffiths-Baker, (n. 4) at p. 175. See also Note, “The Chinese Wall Defense to Law-Firm Disqualification” (1980) 128 U. Pa. L. Rev. 677: “Indiscriminate application of the law firm disqualification rule—a rule that was fashioned in an era when law firms were small and intrafirm relations informal—is no longer viable in a complex world of large law firm … [I]t is unrealistic.” at p. 714.

30 Prince Jefri Bolkiah v. KPMG (unreported, Court of Appeal, Otton L.J. concurring, Waller L.J. dissenting 19 October 1998): “To continue an injunction [against KPMG] would be to set an unrealistic standard for the protection of confidential information which would create impediments in the way … large international firms conduct their practice which are not justified” (at p. 17).

31 Re a Firm of Solicitors [1992] 1 Q.B. 959, 974: “the choice of solicitors open to the public should not be unduly and unnecessarily restricted”. (per Staughton L.J., dissenting). See also, Griffiths-Baker, (n. 4) at p. 175, R. Cranston, “Legal Ethics & Professional Responsibility” in Legal Ethics & Professional Responsibility by Cranston (ed.) (O.U.P., 1995) at 19, and Reynolds, (n. 27) at p. 537.

32 See Reynolds, ibid., at p.537, and Cranston, ibid.

33 See Cranston, ibid: “In the United States disqualification suits have become a forensic tactic, generating satellite litigation and, of course, costs and delay.”

34 Ibid.

35 Ibid., quoting Board of Education v. Nyquist 590 F.2d. 1241 (2d. Cir. 1979).

36 See Financial Services Act 1986, s. 48(2)(h) and Financial Services Authority's Core Conduct of Business Rule 36. See also B.A.K. Rider, “Chinese walls and Pragmatism” (1999) 20 Company Lawyer 61 at 62, fn. 5, and Nakajima, C., Conflicts of Interest and Duty: A Comparative Analysis in Anglo-Japanese Law (Kluwer, 1999) 284Google Scholar, fn. 224 (commenting on the Financial Services and Markets Bill).

37 See S.I. Galt, “Multi-Disciplinary Practices and Networks” (1998) Scots Law Times 95 at p. 96.

38 See Flood, (n. 2) at p. 179.

39 According to Gormley, “[economies of scale are widely held to be non-existent since a professional services firm's fee earning potential is fundamentally governed by its professional head count”. See P. Gormley, “Partner Caught in Computer Squeeze”, The Financial Times 27 October 1998. See also Mayson, (n. 2) at pp. 125-126 (and sources cited therein). It is also interesting to note that studies in the financial services industry reveal that existing methodological approaches do not yield conclusive results as to the existence of significant economies of scale and scope: Koguchi, Financial Conglomerates (1993) at p. 23.

40 See Galt, (n. 37) at p. 97.

41 In Italy, for example, the “Big Five” accountancy firms are currently under investigation in relation to an illegal price fixing cartel. See J. Kelly, “A Conflict Within these Walls?”, Accountancy and Business October 1998 12.

42 See Galanter & Palay, (n. 21) at p. 190 (and sources cited there), where the issue is considered. See also Lee, (n. 2) at p. 44 who appears more sanguine about these developments: “[T]he fact of mega-lawyering must be recognised, and its consequences better managed.''

43 MacDonald Estate v. Martin (1991) 77 D.L.R. (4th) 249, 255.

44 Morton v. Asper (1988) 45 D.L.R. (4th) 374 (Man. C.A.), at 385, per Jewers J. In the lower court, in MacDonald Estate v. Martin, Huband J.A. and Philp J.A. considered the above argument to have a corollary, namely that the court should take into account the effect of changing lawyer where the litigation was at an advanced stage and likely to create considerable inconvenience or expense for the client. See (1989) 58 D.L.R. (4th) 67, 79-80 and 82-83. On appeal, however, this argument was rejected. See (1991) 77 D.L.R. (4th) 249.

45 (1991) 77 D.L.R. (4th) 249.

46 Ibid., at p. 276. See also Sir Nicholas Browne-Wilkinson V.C. in Supasave [1991] Ch. 259 at p. 270.

47 Review of Investor Protection (the “Gower Report”), Part II (Cmnd., 9125) at para. 4.13.

48 MacDonald Estate v. Martin (1991) 77 D.L.R. (4th) 249, 271 (and at 266 per Sopinka J.). See also D. & J. Constructions Pty. Ltd. v. Head, trading as Clayton Utz (1987) 9 N.S.W.L.R. 118, 122-124, per Bryson J., Murray v. Macquarie Bank Ltd. 105 A.L.R. 612, 615 per Spender J. and Midgley, (n. 26) at fn. 82 (and sources cited therein).

49 See Reynolds, (n. 27) at p. 537: “The existing law as to the fiduciary duties of professionals stems from simpler methods of dealing and simpler professional structures than exist nowadays. The propositions to be derived from the cases need reconsideration in the light of modern conditions.”

50 See note 30 above.

51 See note 70 below and accompanying text.

52 The work involved the provision of services traditionally associated with law firms, such as drafting subpoenas, interviewing witnesses, and preparing ideas for cross-examination.

53 Specifically, KPMG sought to segregate personnel working on Project Gemma by ensuring that any work conducted outside Brunei was performed in a separate project room with restricted access in a building separate from that which housed the forensic department. In addition, efforts were made to ensure that all electronic information relating to Project Lucy was deleted from KPMG's server and that separate computer file servers were used for Project Gemma.

54 KPMG replied that since only a limited number of firms had the skills and resources necessary to conduct such an investigation, a replacement could not readily be found. KPMG also agreed to make a voluntary undertaking not to use or disclose any information about Prince Jefri's affairs acquired during Project Lucy. Meanwhile, the BIA pledged that it would not seek to require KPMG to make available to it confidential information about Prince Jefri's affairs and claimed it was reluctant to increase further the number of people and organisations in possession of confidential information concerning its affairs.

55 According to Lord Millett, to be granted an injunction the Plaintiff must prove that: (a) the firm is in possession of confidential information pertinent to him and that he has not consented to its release; and (b) the information is or may be relevant to a new matter in which the interests of the second party are or may be adverse to his. See Mitchell, (n. 10) at p. 248, who criticises this aspect of the ruling.

56 Whether an individual within a firm possesses confidential information was, according to Lord Millett, a question of fact which must either be proved or inferred from the facts of the case: Bolkiah at p. 527. See Mitchell, (n. 10) at p. 249, who heralds this as a “victory for common sense”.

57 MacDonald Estate v. Martin (1991) 77 D.L.R (4th) 249, 257 per Sopinka J.

58 “Mischief” in this context refers to the misuse of the confidential information in question.

59 [1912] 1 Ch. 831.

60 Bolkiah at p. 527.

61 See MacDonald Estate v. Martin (1991) 77 D.L.R. (4th) 249, 258, per Sopinka J.

62 National Mutual Holdings Pty. Ltd. v. Sentry Corp. (1989) 87 A.L.R. 539 (Fed. Ct. Gen. Div.), per Gummow J.

63 MacDonald Estate v. Martin (1991) 77 D.L.R. (4th) 249 per Sopinka J.

64 Bolkiah at p. 236.

65 Ibid., p. 528.

66 [1995] 3 All E.R. 482, 488-489 (derived possibly, in Lord Millett's view, from Carindale Country Club [1993] 115 A.L.R. per Drummond J. See Bolkiah at p. 237).

67 (1991) 77 D.L.R. (4th) 249, 269.

68 Bolkiah at p. 239.

69 Ibid.

70 [1999] 3 All E.R. 524.

71 Laddie J. found on the facts that “both parties … understood and acted on the basis that RR and Mr Attwood were retained as the names’ expert for the trial of the … actions brought against PKF.” (ibid., at p. 531).

72 See p. 384 below at note 79 and accompanying text.

73 Young at p.537.

74 Bolkiah at p. 528.

75 Young, at p. 530.

76 At p. 539.

77 At p. 539.

78 Ibid.

79 At pp. 539-540.

80 See Bolkiah, at p. 238.

81 See material cited in notes 92-95 below and accompanying text.

82 See p. 382 at note 65 above and accompanying text.

83 Although the plaintiffs did not get what they originally wanted, they did get physical compartmentalisation in relation to professional matters. Indeed, the lawyer who acted for the syndicate said, after the trial, that the defendants’ undertakings were “onerous”. See Allen, (n. 13).

84 See H.M. Treasury, Financial Services and Markets: A Consultation Document (Part I, July 1998, at para. 5.11). See also Nakajima, (n. 36).

85 Bolkiah, at p. 239.

86 At p. 236.

87 At p. 235-236.

88 At p. 235. It is interesting to note that at first instance, Pumfrey J. was of the same opinion, saying that Chinese walls were “not well adapted to deal with disclosure which was accidental, inadvertent or negligent” and that this alone ruled out reliance on the mechanism: Prince Jefri Bolkiah v. KPMG, (unreported, High Court, 15 September 1998) per Pumpfrey J. at 19.

89 Bolkiah, at p. 239.

90 At p. 531 (emphasis added).

91 See note 88 at p. 19: “[W]here it has been demonstrated that confidential information has been communicated the Court is … bound, on the authorities, to approach any question of the adequacy of the protective measures adopted with a very critical eye.” The courts have also been critical of Chinese walls in other jurisdictions. For example, in the Australian case of Mallesons v. KPMG [1990] (4th) W.A.R 357, 371-372, Ipp J. stated: “[The] nomenclature is obscure. It appears to me to be an attempt to clad with respectable antiquity and impenetrability something that is relatively novel and porous.”

92 [1991] Ch. 259.

93 At p. 270.

94 [1992] 1 Q.B. 959.

95 At p. 971.

96 Cmnd. 9432.

97 At para. 7.4.

98 Part II Cmnd. 9125

99 At para. 4.13.

100 Bolkiah at p. 236 (emphasis added).

101 At p. 239 (emphasis added).

102 Lords Browne-Wilkinson, Hope, Clyde, and Hutton.

103 And it will be absolutely impossible to eradicate the risk of “unwitting and inadvertent disclosure”. See Bolkiah at p. 239, per Lord Millett.