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From the trustees’ point of view if your chairman is also a partner of the firm

Posted on 27 September 2010

From the trustees’ point of view, if your chairman is also a partner of the firm presenting the colossal invoice, it is bound to be harder than it otherwise would be to query the size of the fee and demand, for instance, that the firm’s time sheets be examined.Then the fund, still chaired by Mr Julius, decided to sue Franklin. This big American producer of collectibles of various kinds had begun to sell items such as Diana dolls. If we take £200 per hour as a charge-out rate, then some 45 hours a day were being worked, which in turns equals six to seven solicitors striving full time for 11 weeks to set up the charity What an incredible performance And this is where the conflict of interest comes in. This means helping people living on the margins, both here and overseas. It is developing services, for instance, for young, unaccompanied refugees and asylum-seekers. To take another example, it works abroad to enhance awareness of palliative care in the management of HIV/Aids.In other words, the Diana fund is an admirable charity which has, at least temporarily, been put out of business by poor legal advice.

It is no use the dozens of lawyers with whom the trust has been involved both in the UK and the USA saying that all their advice has been sound when the net result is that the charity’s work has been brought to a complete halt – and this after extracting literally millions of pounds in legal fees.Unfortunately the fund was constructed with a fatal flaw. It incorporated a conflict of interest into its very foundation. For until March 1999, its chairman was Anthony Julius, who was also a senior partner at the fund’s solicitors, Mishcon de Reya. The sheer effrontery of some solicitors never ceases to amaze me Let me imagine how the subject was introduced by Mr Julius.

“Actually my firm, Mishcon, has a lot of experience in the kind of work the fund will need doing. Of course I won’t play any part in the preparation of advice That would be quite wrong But the firm operates in watertight compartments It will all be perfectly proper. Everyone agree? Yes, good.’”No, wrong, wrong from the start.A few months later Mishcon presented its bill for 11 weeks’ work It totalled £500,000! Do the sums The bill represented £9,000 per working day. The fund was established to receive charitable donations from members of the public, so that is where the money comes from that is at risk in California.

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