By Nick McDonnell
Director & Costs Lawyer

​HHJ 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.

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But why are we talking about this judgment two years on? 

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Well, her imminent follow-up judgment will shed greater light on whether fiduciary arrangements are infected by conflicts of interest and, if they are, whether they are voidable or should be retrospectively ratified. 

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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. 

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This article summarises the decision and explores both the retrospective and forward-looking consequences for firms, deputies and costs recoverability.

Key Takeaways

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• A deputy who appoints a connected investment manager acts in a position of conflict.

• Internal selection processes do not eliminate fiduciary conflict where a financial interest exists.

• Only avoidance of the conflict or court approval (prospective or retrospective) can legitimise such arrangements.

• Historic appointments may be voidable and exposed to challenge.

• Cost recovery, regulatory scrutiny and professional negligence exposure are likely to increase.

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What Does Irwin Mitchell Trust Corporation v PW Mean for the Court of Protection?

The decision reaffirms a strict application of fiduciary principles. It confirms that conflicts of interest in deputyship cannot be neutralised by procedural safeguards alone and that the Court of Protection retains exclusive authority to approve or ratify connected arrangements on behalf of a protected person.

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Summary of the Judgment

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 Legal Framework: Fiduciary Duty and Conflict

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. 

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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 Alleged Safeguards

IMTC argued that any theoretical conflict was neutralised by its internal processes, including:
 

• The use of a panel of investment managers 

• A “beauty parade” process in which multiple firms tendered 

• Scoring systems and decision-making frameworks 

• Involvement of family members in the selection process 

It contended that these safeguards ensured that IMAM was selected on merit and that no real conflict arose.
 

​The Court’s Findings

The court rejected that argument in clear terms.

First, it 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 the 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.
 

​Key Conclusion

The appointment of a connected investment manager by a deputy gives rise to a conflict of interest unless properly authorised. Internal processes, even sophisticated ones, do not remove that conflict. The only effective mechanisms are:

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• Avoidance of the conflict; or 

• Court approval (prospective or retrospective) 

Can a Deputy Appoint a Connected Investment Manager?

Yes, but only with court approval.

Absent authorisation, the appointment gives rise to a conflict of interest and is prima facie voidable, regardless of whether the decision was made conscientiously or resulted in demonstrable benefit.

Are Conflicted Deputyship Arrangements Automatically Void?

No. Such arrangements are voidable, not void. The means the Court of Protection may set them aside unless it is satisfied that retrospective ratification is appropriate. Ratification is discretionary and cannot be assumed.

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Retrospective Risks for Deputies and Law Firms

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 Ratification

Where a fiduciary enters into a conflicted transaction, it is generally voidable (as opposed to void). In the Court of Protection context, that means the court may set aside or refuse to approve the arrangement.

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This creates a real risk that historic appointments of connected financial advisers or asset managers could be:

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• Challenged by the Office of the Public Guardian (OPG) 

• Reopened on application by litigation friends or successors 

• Scrutinised in detailed assessment proceedings 

Unless such arrangements have been expressly authorised, they may require retrospective ratification, which is not guaranteed.​
 

Recovery of Fees

If ratification is refused, questions then arise as to the recovery of fees already paid. These may include:

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• Investment management fees 

• Advisory fees 

• Related administrative or transactional costs 

There is a potential argument that such fees were incurred in breach of fiduciary duty and should be repaid or disallowed. Even where services were competently performed, the strict nature of the rule means that benefit alone is not determinative.​

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Impact on Costs Assessments

From a costs perspective, the judgment could open the door to more aggressive challenges. Opponents (or even the court itself) may argue that:

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• Costs linked to conflicted arrangements are unreasonably incurred and/or unreasonable in amount

• The choice of provider was tainted by conflict and therefore, unjustified 

• 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.

Professional Negligence and Regulatory Exposure

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There is also potential exposure to professional negligence claims and solicitor-client costs disputes. Claimants (or their representatives) may argue that:

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• They were not adequately advised about the conflict 

• They were not informed of alternative options 

• They 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.

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Regulatory scrutiny

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Finally, firms may face increased attention from:

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• The OPG 

• The Solicitors Regulation Authority 

• Internal audit and risk committees 

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.

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Forward-Looking Risks for Court of Protection Practice

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.

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End of “Process as Protection”

The clearest message from the case is that procedural safeguards are not enough. Firms can no longer assume that will insulate them from conflict:

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• Beauty parades 

• Panel selection processes 

• Family consultation 

Where a financial interest exists, the conflict exists. The focus must therefore shift from managing conflict to avoiding or formally authorising it.

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Structural Choices for Firms

Firms with integrated financial services now face a choice:

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1. Avoid using connected entities altogether in deputyship and similar contexts; or

2. Seek court approval in each case where such an appointment is contemplated 

Both options have practical and commercial implications. Avoidance may reduce revenue opportunities, while court applications increase cost, delay, and the administrative burden.

Enhanced Client Advice Obligations

The judgment also has implications for client care. Firms must now consider:

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• How clearly conflicts are explained to clients (or their representatives) 

• Whether clients are given a genuine and informed choice 

• 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.

Costs and Proportionality Pressures

From a costs perspective, firms must anticipate greater scrutiny of:

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• Choice of providers 

• Fee levels 

• 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.

Operational and Compliance Changes

Firms are likely to need to:

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• Review and update internal policies on conflicts 

• Train staff on the implications of the judgment 

• Implement clearer decision-making and escalation processes 

• Consider independent oversight in certain cases 

For larger organisations, this may involve significant restructuring of how legal and financial services interact.

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Litigation and Satellite Disputes

Finally, the judgment could very well generate satellite litigation, including:
 

• Applications for retrospective approval 

• Challenges to historic arrangements 

• Costs disputes and detailed assessments 

• Professional negligence claims 

For some firms, this may represent a risk and become a recurring, resource-intensive issue.

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Conclusion

Irwin Mitchell Trust Corporation v PW 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.

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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.

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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.