Sympathy for Silk Street
“It’s a disgrace” may not be the first words you’d associate with a commercial decision by a bank but the expression neatly sums…
June 26, 2008 at 08:03 PM
2 minute read
"It's a disgrace" may not be the first words you'd associate with a commercial decision by a bank but the expression neatly sums up opinion across the Square Mile regarding JP Morgan's decision to blacklist Linklaters thanks to its role litigating against Bear Stearns.
Forget schadenfreude – Linklaters may not be the kind of firm to typically elicit much sympathy from rivals but JP Morgan's strong-arm tactics have rekindled the solidarity usually well buried in City lawyers' hearts.
After all, Linklaters had accepted the instruction from Barclays Capital months before the stricken lender collapsed as a result of its exposure to the plunging credit market and months before JP Morgan in March agreed to buy the bank for a fraction of its previous value.
Linklaters had also been open with JP Morgan's legal team about the litigation at the time of the takeover. Initially, Linklaters had the impression that JP Morgan was taking a pragmatic stance; it is widely accepted that Linklaters' position, while commercially awkward, was not a legal conflict. But, apparently, when the bank's executive team became aware of the issue they took a rather less charitable view. Hence Linklaters being asked to stand down or else.
Given US bar rules and its client commitments to Barclays, that gave Linklaters little option but to regretfully tough it out and see itself, temporarily at least, frozen out by one of its top banking clients.
To drive home the point, JP Morgan general counsel Stephen Cutler is believed to have sent round a strongly-worded email making it clear that Linklaters was not to be instructed under any circumstances until further notice.
While partners are trying to remain philosophical there's no denying they feel hard done-by. But there is also widespread support for senior partner David Cheyne's handling of the affair, which is seen as striking the right note of pragmatism with backbone.
While it could be argued that Linklaters was a touch na
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