Appointed Experts May Owe a Fiduciary Duty of Loyalty: The Ruling’s Impact
In this interview I had the opportunity to ask the Head of Diales, Mark Wheeler, about the impact of the recent case in the TCC: a Company v X,Y,Z  EWHC 809 (TCC).
In this case the claimant successfully continued an injunction restraining the defendant’s consultancy firms from acting as Expert Witnesses for another party in ICC proceedings against the claimant. Articles published elsewhere in the industry have questioned the impact that this might have for the larger global Expert Witness firms.
First of all, how is Diales coping with the current global pandemic? Has COVID-19 had any impact on your business?
Our business is very much a global one, as a matter of fact, we were already operating our offices in Asia Pacific on a home working basis for two months prior to the UK and Europe becoming part of the same lockdown situation. We used that time to ensure all of our Experts, and their assistants, were able to work effectively from home with the right IT equipment, connections, and back up etc., so I’m pleased to say there has been no real effect on the way we service our clients. All of our key Experts remain busy and are coping with some of the challenges that lockdowns and working from home can bring… including being unable to visit the pub!
I also think there are some dangers in implying fiduciary relationships between consultants and clients without clearly setting out the boundaries of those relationships.
It appears you have everything under control from that point of view, but this recent TCC case seems to cause some problems for global Expert Witness firms. What’s your take on that?
I must say I was surprised when I read the decision from a couple of perspectives, as the decision didn’t go the way I thought it was going to for whomever the respondents are, but for us there’s no real material impact of any kind.
When you say you were surprised at the outcome? Can you expand on that a little more?
Sure, I have always operated on the basis that there is no property in a witness, and if that’s true for witnesses of fact why shouldn’t it apply, very simply, to Expert Witnesses as well? I also think there are some dangers in implying fiduciary relationships between consultants and clients without clearly setting out the boundaries of those relationships. How long do they last after a commission has finished? What brings the relationship to a formal end? Is it the issuing of a decision or do you have to wait for the appeal? Or is there some other occurrence, or period of time that would then permit you to work on the opposite side to a former client? What if you do a small piece of work, just an advice note on something for a day or so and then nothing more, does that create a relationship that prevents you working on other projects? I think these are all serious questions, that have been raised by this issue, and need some careful consideration.
How do you see this situation affecting your business moving forward?
I don’t see any effect for us at this time, or moving forward, although I am interested in the outcome.
Can you clarify why there is no effect to the Diales team in your view?
Yes, absolutely. We have a Conflict Check Policy in place within the Group, which means every opportunity coming into the business is checked to see if it creates the potential for conflict. We divide those conflicts into two different categories.
However, even if there is no theoretical or technical conflict of interest, and a client on a project has paid you a great deal of money for your work, whilst they might understand that we act independently and that the relationship won’t affect the outcome of our report, it’s still difficult for a client to come to terms with seeing you on the opposite side of a matter
Can you explain those categories and how you manage the process?
The first category is the straightforward ‘Professional Conflicts’ of interest. These would involve having worked directly on the project, or directly for or against either party, all of the things that are simple to identify as a conflict issue generally. Sometimes things are a little greyer around the edges, but generally I always say that if you need to think about it for more than 60 seconds it probably is a conflict.
The second category is what we would term as ‘Relationship Conflicts’. These are projects where upon there is no strict professional conflict and we are confident that acting would not create such a conflict in real terms, but where we have an existing relationship either on a current commission, or series of current commissions elsewhere in the world, where we know a client will take a view, possibly negatively, about us accepting instructions.
So, are you saying some clients don’t expect you to work against them if you work for them?
Yes. I think that’s true in many instances. However, even if there is no theoretical or technical conflict of interest, and a client on a project has paid you a great deal of money for your work, whilst they might understand that we act independently and that the relationship won’t affect the outcome of our report, it’s still difficult for a client to come to terms with seeing you on the opposite side of a matter, given that you were working with their own legal team and internal commercial team fairly recently.
I’m surprised, to a degree, of the outcome, but it won’t affect us, or our business model moving forward.
So, how does Diales deal with this in practice?
As I said earlier, we have a written Conflict Check Policy to which we strictly adhere. In the event that a set of circumstances arose, like the one in the case you mentioned, where part of our business, say in Asia, was acting for a client on a particular project and the business in the UK, the Americas, or Middle East etc. received an enquiry to act on the same job, albeit for different parties, our Policy requires us to decline the commission unless both parties have consented in writing to us acting.
How do you manage that from a confidentiality point of view?
It’s quite easy really. We would simply advise the second party that came to us with an enquiry that we were unable to act in the matter because of a potential conflict, although this could change if they will permit us to ask for the consent of the other side to proceed.
Does that ever happen?
Frequently, of this type of enquiry I’d say over 60% are resolved with the consent of both parties. Often clients that we’ve worked with appreciate that they are going to get an independent product of high quality. Therefore, it might be a safer bet to have a Diales Expert on the opposite side because at least they know what they get will be fair, reasonable, and independent, and if they go to someone else they don’t necessarily know that is what they’ll be facing, which could be quite wasteful in terms of costs.
So, you don’t really see any impact of this case on the Diales business moving forward?
No. We weren’t involved in this particular case and like I said I’m surprised, to a degree, of the outcome, but it won’t affect us, or our business model moving forward. We are going to retain our stringent conflict checking process and be quite transparent about it.
Head of Diales – Quantum and Technical Expert
Mark has 30 years’ engineering experience within the construction industry. He trained as a mechanical and electrical engineer, with a firm of specialist contractors.
Undertaking a wide range of building services installations in commercial buildings, on both a pre-designed and design and build basis, Mark gained site experience in office developments, industrial projects, and a number of schools and hospitals. This has involved work on a wide range of contracts including JCT; PPC2000; BE Collaborative; FIDIC; and the NEC3 form, with which he has worked extensively.
Mark has acted as an Expert Witness in both technical mechanical and electrical (M&E) matters and quantum disputes. He has also been instructed as expert in NEC3 disputes, from both a project management and quantum perspective.