Do experts owe a fiduciary duty to clients?

01 February 2021

The courts have long recognised that certain professionals owe their client a fiduciary duty of loyalty - but does that extend to experts in litigation and arbitration? And what is the extent of an expert's duty to avoid conflicts of interest?

We previously reported on A v B [2020] EWHC 809 (TCC) - a case in which the Technology and Construction Court found an expert owed a fiduciary duty of loyalty to his or her client, and restrained a group of delay and quantum experts from acting both for and against a party in two separate arbitrations arising out of the same project. The experts appealed that decision.

In this article, we consider the Court of Appeal's resulting judgment in Secretariat Consulting PTE Ltd & Ors v A Company [2021] EWCA Civ 6.

Background and High Court decision

For more detailed factual background to the dispute, and coverage of the first instance decision, please see our earlier article - Do experts owe a duty of loyalty? (High Court decision).

To summarise, in the Technology and Construction Court, the judge found that a company providing litigation support and expert services (now revealed in this Court of Appeal decision to be Secretariat Consulting Pte Ltd ("SCL")) owed its client a fiduciary duty of loyalty. She held that this in turn meant that other companies in the Secretariat group, which provided similar services, could not act against this client in another arbitration arising out of the same project and concerned with the same or similar subject matter.

As Coulson LJ noted in the leading judgment in the Court of Appeal, "this was the first time in the English jurisdiction that an expert had been found to owe a fiduciary duty to its client". "No [previous] English case has addressed head-on a dispute in which… the same expert organisation will be supporting, advising and giving evidence for and against the same client about the same project and the same or similar subject matter."

Court of Appeal decision

On appeal, Secretariat raised four issues. We deal with the Court of Appeal's findings on each issue below.

Issue 1: Did SCL owe a fiduciary duty of loyalty to the respondent?

All three judgments in the Court of Appeal acknowledge that experts owe an overriding duty to the court or tribunal - but, as explained in Jones v Kaney [2011] UKSC 13, that is not inconsistent with a duty of loyalty to a client. Indeed, the judges expressed the view that it is typically in the client's interest that the expert's evidence is (and is seen to be) independent and unbiased.

However, finding a fiduciary duty between an expert and its client imports a lot of legal baggage. A fiduciary duty should not be found where there are other ways to dispose of the case.

In this case, the Court of Appeal found it was not necessary to decide by reference to the "nebulous" concept of fiduciary duty, as it could instead construe the terms of Secretariat's contractual retainer, which contained express wording on conflicts of interest.

Issue 2: If not, did SCL owe a contractual duty to the respondent to avoid conflicts of interest?

Based on the terms of the retainer between SCL and its client, the Court of Appeal found that SCL owed a clear contractual duty to avoid conflicts of interest for the duration of the retainer - that meant not only confirming there was no conflict at the outset, but also avoiding creating any future conflicts.

Issue 3: If so, was that duty also owed to the respondent by other Secretariat entities?

The Court of Appeal held that, although the retainer was between SCL and the client, the undertaking on conflicts of interest bound all the companies in the Secretariat group. There were various factors which pointed to this conclusion.

Most importantly, at the outset of the retainer, a conflict search had in fact been carried out across all the Secretariat entities. This supported the respondent's view that the group as a whole was to avoid conflicts of interest.

In addition though, the court noted that Secretariat International markets itself as one firm. The common brand name "Secretariat International" was used across the group, and featured in all email addresses, regardless of the particular entity. Their literature gave the impression of one international group with offices around the world, not a variety of different companies.

The court also referred to guidance from the RICS in its document Conflicts of Interest, and noted that Secretariat group companies had an increased risk of conflict of interest as a result of directors in common, common ownership, fee sharing and information sharing.

Issue 4: If so, was there a conflict of interest as a result of SCL's engagement in Arbitration 1 and SIUL's subsequent engagement in Arbitration 2?

The Secretariat entities' roles in the two arbitrations were wide-ranging - they performed an arbitration support role (what Secretariat's counsel referred to as a "roving expert"), not limited to providing evidence at hearings. However, the court found that was consistent with the normal role of delay and quantum experts, many of whom are engaged as claims consultants, but may go on to give evidence at a final hearing.

The overlaps between the two arbitrations on which Secretariat was acting were all-pervasive - there were overlaps between parties, role, project and subject matter.

These overlaps were of such a degree that there was plainly a conflict of interest - it was "impossible to see how the same firm (no matter how many global offices it had) could act for the employer and simultaneously against the employer's representative… in respect of the same or similar disputes on the same project".

What does this mean for the client / expert relationship?

Whilst Secretariat's appeal on this particular case was dismissed, the decision should in fact provide some comfort to both experts and their clients:

First, the court acknowledged that many experts are appointed on a wide-ranging role which involves advising the client as well as testifying. They will often form part of the "litigation team", and this is not problematic in itself - an expert's overriding duty (in proceedings governed by English law) to give the court or tribunal independent evidence serves the client's interests better than an expert who is perceived to lack objectivity. Those providing these services should however be aware that as the court did not accept Secretariat's proposed distinction between the duties owed by the "testifying expert" and the "roving expert", this decision could well apply equally to those who are engaged (initially or solely) as claims consultants rather than expert witnesses.

Second, the court declined to find a general fiduciary duty, rather than referring to the terms of the retainer. Whilst this did not assist Secretariat in this case, it does leave it open to experts to deal with conflicts of interest expressly in their contractual retainers.

Finally, the court acknowledged that this does not prevent the same expert acting both for and against the same client. Large multinational companies often engage experts on one project and see them on the other side in relation to a dispute on another project. That is inevitable. But a conflict of interest is a matter of degree - and in this case there was plainly a conflict of interest.

Spotting and avoiding conflicts of interest

Experts should carefully consider the wording of retainer letters on conflicts of interest. As Males LJ put it: "An expert witness group which operates on a global scale with separate subsidiaries in a variety of jurisdictions can, if it wishes, make clear that any conflicts search which it carries out and any undertaking which it gives is limited to the particular company being instructed and does not extend to other companies in the group, which remain free to act for parties opposed to the client in the same or related disputes." Whether such a clause would be commercially acceptable to a client in a given case is of course a separate matter.

If a potential conflict does arise, consider the practical test, quoted by Coulson LJ from Conflicts of Interest by Hollander and Salzedo:

"It's not difficult to work out what a conflict is. You put yourself in the client's shoes, and ask yourself 'would you like you doing what the other client has asked you to do?' If the answer is 'no', you've probably got a conflict."

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