Allegations of professional negligence against Conyers Dill & Pearman -- and lawyer John Collis in particular -- are without foundation because at all times proper legal advice was given regarding the 1991 split of Bermuda Fire & Marine Co. Ltd., a court heard yesterday.

Geoffrey Vos, lawyer for Conyers Dill & Pearman, yesterday denied claims by Bermuda Fire liquidator Ernst & Young that Mr. Collis knew the company was insolvent and should have advised against the transfer of assets to BF&M Ltd.

Mr. Vos said the evidence would show that Mr. Collis gave correct legal advice to Bermuda Fire's board and left the evaluation of the company's financial position to actuarial firm Tillinghast, auditors Cooper & Lines and ultimately to the board of directors.

The Supreme Court suit against Conyers Dill & Pearman raises the issue of the role of a corporate lawyer in Bermuda and whether that role extends towards giving business advice. Mr. Vos claimed that in Bermuda a corporate lawyer was not expected to give business advice unless specifically retained for the task. Mr. Collis, he said, was retained to provide legal advice, while other professionals were hired to provide financial advice.

Lawyer dismisses negligence claims against Collis He also said that board directors had rejected Conyers Dill & Pearman and Cooper & Lines' advice to create two sister companies under a holding company in favour of creating a completely separate company called BF&M Ltd. for the profitable domestic business.

At that stage Mr. Collis' advice was limited to advising directors that they had to be sure enough money was left behind in Bermuda Fire for creditors.

"John Collis advised correctly at every stage of the transaction as to the legal tests to be applied by the directors,'' Mr. Vos said.

"In particular, he advised correctly that the directors had to be satisfied that the BFMIC (Bermuda Fire) would be solvent after the reorganisation, and that its creditors would not be prejudiced.'' Mr. Collis on ten occasions advised directors that they must be aware of their duties to ensure that after the 1991 reorganisation enough assets were left behind for creditors, Mr. Vos said.

"John Collis knew that the company had a loss-making part of its business,'' he said. "He knew that one of the ways to allow the domestic business to flourish, notwithstanding the loss-making part of the business, the losses being made by the international business, was the reorganisation. He knew that there could be no reorganisation if BFMIC was insolvent, or would become insolvent as a result of the reorganisation, and he said so ten times.'' Mr. Vos referred in particular to a Conyers Dill & Pearman letter on September 6, 1991 advising the board of directors on the issues to be considered in distributing a special dividend of shares in BF&M to shareholders.

In the letter Mr. Collis said that the duty of directors was to act in the best interests of the company and that the interests of creditors were relevant when a company was insolvent or on the verge of insolvency.

"The position may be summarised as follows,'' Mr. Collis wrote. "The directors could be held liable for breach of duty if they distribute the assets of the company in an imprudent manner (ie without paying due regard to the future cash requirements of the business and the present and future solvency of the company) even though the statutory tests may be satisfied. The directors ought, therefore, to consider the likely impact of the redemption and the distribution upon the solvency of the company and only approve those transactions if they are satisfied that the continued solvency of the company is not prejudiced thereby.'' Mr. Vos said such statements contradicted the liquidator's "innuendo '' that Mr. Collis was part of a conspiracy to defraud international creditors.

"The allegation ignores John Collis's retainer, his status as the company's lawyer, and suggests quite wrongly that CDP was some kind of business advisor, which he was not, and that he could or should have evaluated the complex financial position of the company,'' Mr. Vos said. "We submit, my Lord, that was a trenchant and clear statement of the legal tests which no honest director could ignore, and we submit that it is wholly implausible that a conspirator, somebody who was participating in a fraud, would write such an open, straightforward and correct statement of advice.'' Supreme Court Puisne Judge Vincent Meerabux questioned Mr. Vos over whether in the case of Bermuda Fire 1991 reorganisation, which the liquidator's lawyer Gabriel Moss described as a "final break'', whether Mr. Collis had an extra duty in advising the board. He also questioned whether Mr. Collis' role extended further in that he helped devise the reorganisation.

"He was on the reorganisation committee, he and Cooper & Lines, and they were giving instructions to bring about this reorganisation or demerger, whatever you want to call it,'' Mr. Justice Meerabux said. "So his hands were busy building the structure, putting the structure together, putting the pieces together.'' Mr. Collis was simply performing the "normal'' function of a corporate solicitor, Mr. Vos said.

"The corporate solicitor is expert in devising the ways and means of achieving the client's object,'' he said. "What happened in this case was that John Collis advocated, on numerous occasions, a different route than that which was eventually adopted by the board of BFMIC.'' Mr. Collis' and Martin Lane of Conyers Dill & Pearman, and David Lines and Tom Miller of Cooper & Lines advised the board on a different structure for the reorganisation. The board rejected their advice to create a holding company under which the domestic and international business would be separate subsidiaries.

The board eventually adopted the plan that resulted in the 1991 split and creation of "subco'' which eventually became a separate entity called BF&M Ltd.

"He said to them, on 29th May meeting, `I suggest go with Holdco','' Mr. Vos said. "Mr. David Lines and Tom Miller of Cooper & Lines said the same.

Nonetheless, the board said, `Go away and think about Subco, think about that route', which was eventually followed. They came back at the Finance Committee meeting on 11th June, John Collis and David Lines again said, `Holdco is better'. The finance committee said, `No, go and investigate Subco'. On 24th June, the same month, they came back and then Martin Lane and David Lines persuaded the board to investigate Holdco a little further, but eventually on 3rd July, without Mr John Collis' involvement, Cooper & Lines and members of the Finance Committee agreed the route that was eventually to be followed.'' Mr. Vos said Mr. Collis' job was to devise a transaction which was legally effective. He could only have told the board they could not do the transaction if he really knew Bermuda Fire was insolvent or was going to be made insolvent.

"His duty was to devise a legally effective transaction, in accordance with his client's instructions, and to give advice as to the circumstances in which that transaction could be undertaken,'' Mr. Vos said. "He did that.'' Mr. Vos continues his opening defence today.

Geoffrey Vos BUSINESS BUC