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‘Still monitoring’: Regulator silent on BHS inquiry as hearing continues

As MPs seek more documents for the BHS inquiry, the Solicitors Regulation Authority (SRA) said it had not yet taken a position on the actions of lawyers involved.

Partners from Linklaters and Olswang were questioned by MPs of the House of Commons Business, Innovation and Skills Committee and the Work and Pensions Committee last week as part of the ongoing inquiry.

Linklaters corporate partner Owen Clay and Olswang general counsel Stephen Hermer were among lawyers which appeared before the joint committee inquiry last week. Linklaters had advised seller Arcadia Group while Olswang had advised Retail Acquisitions Limited.

The lawyers involved were pressed by Labour MP Frank Field on their advice during the sale after it emerged BHS buyer, Dominic Chappell, had been declared bankrupt twice. However Field said last week the hearings had ‘prompted more questions than answers’.

The SRA confirmed it was not currently taking a position on the lawyers involved in the BHS inquiry, but it was still ‘monitoring’ until there was evidence of misconduct. A spokesperson for the regulator told Legal Business, ‘for now, this is a watching brief’.

The Work and Pensions Committee has now written to Arcadia Group, the firm owned by Sir Phillip Green which controlled BHS prior to the sale, and to Goldman Sachs’ Anthony Gutman to get more information relating to the sale.

Field said: ‘We have already asked nearly 1,000 questions in our hearings. These requests for information are the first steps of the next stage of our inquiry.

‘We expect these documents to shed further light on the sorry tale of BHS before our sessions with Dominic Chappell and Sir Philip Green. Yet despite all the complexities it is now clear that Sir Philip called all the main shots.’

The inquiry has seen advisers placed in a difficult situation before a Parliamentary committee, with several questions falling short due to client privilege.

A City partner told Legal Business it was questionable what could be gained by interrogating legal advisers. ‘It has been pretty unusual, to date, for professional advisers to be hauled in before Parliament in this way.’

They added: ‘The challenge for everyone concerned is that solicitors will be bound to abide by a duty of confidentiality to their client, which potentially gives the impression that they are being evasive in their answers when in reality they have no choice as to what they are permitted to say. Given this, I would question the value of the process.’

Another senior City partner suggested lawyers would be ‘naïve’ to think they might not have to face similar inquiries.

They added: ‘Lawyers need to be better at this sort of thing and there needs to be better training as junior lawyers. We are in a profession where it is right that this may happen to us and we should expect it to happen. Get yourself prepared for it.’