by We’ve written … a lot about former Dechert partner Neil Gerrard – and that’s because the former head of the office department has been accused of rather questionable practices.
The main controversy concerns Gerrard’s representation of the Eurasian Natural Resources Corporation (“ENRC”). He was hired to investigate a whistleblower complaint about the Kazakhstan operations (engagement began in December 2010 when Gerrard was with DLA Piper, but matter shifted to Dechert in April 2011 when Gerrard did so). However, the initial affair for which they were hired quickly grew in scope, for which Gerrard was largely responsible as he treated the billing code as a “cash cow”.
The Biglaw firm and Gerrard lost their case in London’s High Court when the judge found they had breached their duty to ENRC. Although he denied this in court, Gerrard allegedly referred to the billing in the case as “rape mode.”
And the High Court judge in that case, Mr Justice David Waksman, found that Gerrard had leaked confidential client information to regulators (and newspapers) in hopes of widening the involvement. As one can imagine, the judge did not take this move well, calling it “at the very least, a frivolous dereliction of duty.” Gerrard was “so obsessed with making money from his work that he lost any sense of objectivity, proportionality, or loyalty to his client.”
For this breach of their professional duties, Dechert made an interim payment of £20m to ENRC for costs. And a trial begins this week to determine how much more the Biglaw firm may owe its former client.
Also, as reported by Bloomberg, there are more lawsuits arising from Gerrard’s work at the firm for another client:
Dechert faces two further lawsuits in the UK and two US lawsuits separately over the next year, stemming from a representation led by Gerrard for one of the United Arab Emirates. The company is accused of supporting a hacking operation aimed at perceived enemies of the Emirate of Ras Al Khaimah.
The allegations in this case also include hacking private emails and leaking the content:
The Emirate of Ras Al Khaimah hired Gerrard in 2013 to help an investigation into Khater Massaad, the former CEO of its state investment fund who was later convicted of fraud in the UAE.
A US aviation executive, Farhad Azima, who said he worked with Massaad to expose human rights abuses in the UAE, claimed that as part of Gerrard’s work, his emails were stolen and leaked online.
The emails allegedly showed that Azima had made fraudulent misrepresentations in a previous trade deal with the emirate’s investment fund. The fund successfully sued him in the UK for $4.2 million.
Azima is fighting that verdict, saying it should be overturned because it was the result of a hack and conspiracy to mislead the court.
Separately, he filed suit in the US, saying a hacking operation involving multiple parties and a cover-up he claims Gerrard ran and Dechert helped violated RICO law .
A former Wall Street Journal reporter, Jay Solomon, is also suing, claiming he was fired for leaking his emails with Azima.
Dechert and Gerrard said they were unaware of the hacking operation. It’s not surprising, however, that the plaintiffs are using RICO allegations to try to damage the firm’s deep pockets:
It’s not surprising that plaintiffs are using RICO to target the company, said Jeffrey Grell, a Grell Feist PLC attorney and RICO expert. “One of the reasons for using RICO is that it expands the scope of liability and you can get into deep pockets like banks and law firms,” he said.
But “it’s still a big hurdle to prove the law firm’s intent,” Grell said. “It’s one thing to have a rogue partner. It would all depend on what the law firm knew when they knew, so establishing the law firm’s liability even if all the allegations are true is still a pretty big step.”
Though Dechert and Gerrard are fighting the lawsuits and allegations of improper conduct, people are wondering what costs — both monetary and reputational — the firm will pay:
“Law firms have brands like everyone else,” said James Jones, senior fellow at Georgetown University Law Center and former managing partner of Arnold & Porter. “It can certainly take a toll.”
And professional indemnity insurance may only cover part of the exposure:
“Some companies have huge deductibles, which would be direct costs,” said Tom Sharbaugh, a Penn State law professor and former managing partner of operations at Morgan Lewis & Bockius. “The indirect costs are difficult to estimate, but they can have a negative impact on clients and recruitment.”
There is still a lot to be done. No wonder the company has distanced itself from Gerrard.
Kathryn Rubino is Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best so please connect with her. Feel free to email her with any tips, questions, or comments, and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.
