Her Honour Judge Hilder’s 2024 decision in Irwin Mitchell Trust Corporation v PW & Anor is one of the most significant recent authorities on conflicts of interest in the Court of Protection. While framed as a fiduciary dispute, its implications extend well beyond deputyship practice and into costs, risk management and professional liability.
Two years on, the imminent follow-up judgment will shed greater light on whether fiduciary arrangements are infected by conflicts of interests and if they are, whether they are voidable or should be retrospectively ratified.
For firms operating in the personal injury, clinical negligence and Court of Protection space, particularly those with integrated financial services, the judgment demands careful attention.
The case concerned the appointment of an investment manager for PW, a protected party who had received a substantial personal injury award following catastrophic illness. Irwin Mitchell Trust Corporation (IMTC) acted as deputy for PW’s property and affairs. In that capacity, it appointed Irwin Mitchell Asset Management (IMAM), a company within the same corporate group, to manage a significant portion of PW’s funds.
The core issue was whether that appointment gave rise to a conflict of interest in breach of fiduciary duty, and if so, whether it could stand.
The court reaffirmed the orthodox equitable principle that fiduciaries must not place themselves in a position where their duty and interests conflict. The rule is strict. It applies even where there is no evidence of bad faith or actual loss. The relevant question is whether there is a 'real sensible possibility of conflict,' not whether the fiduciary in fact acted improperly.
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As a deputy under the Mental Capacity Act 2005, IMTC was in a fiduciary position. Its obligation was to act solely in PW’s best interests when selecting an investment manager.
The court held that a real conflict of interest existed. IMTC stood to benefit financially if IMAM was appointed. That alone was sufficient to engage the self-dealing rule.
Second, the court found that process cannot eliminate conflict where the underlying financial incentive remains. However robust the procedures, IMTC still had an interest in the outcome. The conflict was therefore not theoretical but actual and ongoing.
Third, the court was particularly critical of reliance on family involvement. While relevant to best interests decision-making, family members cannot provide consent to a fiduciary conflict. Only the court can authorise or ratify such arrangements on behalf of a protected person.
Fourth, the court rejected the suggestion that previous authority or regulatory practice had legitimised such arrangements. No general approval had been given and each case required scrutiny.
In conclusion, the appointment of a connected investment manager by a deputy gave rise to a conflict of interest unless properly authorised. Internal processes, even sophisticated ones, did not remove that conflict. The only effective mechanisms are avoidance of the conflict or court approval.
The immediate consequence of the 2024 judgment (and potentially the imminent 2026 judgment) is to cast doubt on historic arrangements involving connected entities. For many firms, this raises difficult questions about past conduct, voidable transactions and recovery of fees.
From a costs perspective, the judgment could open the door to more aggressive challenges. Opponents (or even the court itself) may argue that costs linked to conflicted arrangements are unreasonably incurred and/or unreasonable in amount, the choice of provider was tainted by conflict and therefore unjustified, or that alternative, independent providers may have offered better value
This may not only affect the recoverability of investment-related costs, but also the broader assessment of costs incurred in managing the claim or deputyship.
There is also potential exposure to negligence claims. Claimants (or their representatives) may argue hey were not adequately advised about the conflict, not informed of alternative options, or suffered loss through higher fees or suboptimal investment decisions
Even if such claims are difficult to prove, the cost of defending them, both financially and reputationally, may be significant.
Finally, firms may also face increased attention from the OPG or Solicitors Regulation Authority. The failure to identify and manage conflicts appropriately may be framed as a systemic issue, particularly where similar practices have been applied across multiple cases.
If the retrospective risks cause pause, the forward-looking implications are equally important. The judgment potentially reshapes the landscape for firms operating in this space.
The clearest message from the case is that procedural safeguards are not enough. Firms can no longer assume that beauty parades, panel selection processes or family consultation will insulate them from conflict.
Where a financial interest exists, the conflict exists. The focus must therefore shift from managing conflict to avoiding or formally authorising it.
Firms with integrated financial services now face a choice: avoid using connected entities altogether in deputyship and similar contexts; or seek court approval in each case where such an appointment is contemplated Avoidance may reduce revenue opportunities, while court applications increase cost, delay and the administrative burden.
In terms of client care, firms must now consider how clearly conflicts are explained to clients (or their representatives), whether clients are given a genuine and informed choice and how advice is documented
There is a particular risk where clients are vulnerable or lack capacity. In such cases, reliance on informed consent will not necessarily be sufficient.
From a costs perspective, firms must anticipate greater scrutiny of choice of providers, fee levels and value delivered. Where a connected entity is used, the firm may need to justify not only the decision to appoint it, but also why it represents best value compared to independent alternatives.
This may have a chilling effect on costs recovery and increase the likelihood of disputes.
The case is a reminder of the enduring strength of fiduciary principles. The court’s message is clear: conflicts of interest cannot be engineered away through processes where a financial incentive remains.
For firms, the implications are far-reaching. Historic arrangements may be vulnerable to challenge, with potential consequences for fee recovery and liability. Looking ahead, firms must adopt a more cautious and structured approach, either avoiding conflicts altogether or seeking explicit court approval.
The decision also signals a potential increase in scrutiny, disputes, and a demand for advice. In a landscape where costs, compliance, and fiduciary duties increasingly intersect, the ability to navigate these issues will be critical.
Nick McDonnell is a director & costs lawyer with Kain Knight
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