ENRC v Decherts and Neil Gerrard

Have we done this? 

https://www.judiciary.uk/judgments/eurasian-natural-resources-v-dechert-llp/

Potted summary:

"Over the period 2011-March 2013, the Claimant (“ENRC”), an international mining conglomerate and at the time a FTSE 100 Plc, retained the services of the solicitors’ firm Dechert which acted principally through its then partner, Mr Neil Gerrard. The initial purpose of Dechert’s retainer was to lead an investigation into some of the activities of an ENRC subsidiary called SSGPO which operated in Kazakhstan. 

....

On 9 August 2011, there appeared an article in The Times which was highly damaging to ENRC and clearly based on leaked documents, some of which were privileged (“the August Article”). Very shortly after, on 10 August, the Chief Investigator of the SFO, Mr McCarthy wrote to ENRC (“the SFO Letter”). 

...

The allegations against both sets of defendants are of the most serious kind. The core allegation against Dechert and Mr Gerrard is that over the period of the retainer (and in one case beyond it) Mr Gerrard acted not merely negligently but deliberately or at least recklessly, without the authority of ENRC and plainly against its interests.  ENRC says, first, that Mr Gerrard was himself the instigator of one or more of the leaks which led to the August, December, and March 2013 Articles.

...

In my judgment, I found that Mr Gerrard was indeed the instigator of all three leaks to the press. I further found that he engaged with Mr Alderman without authority prior to the August Article, at least alerting Mr Alderman to it. Mr Alderman then tipped Mr Gerrard off about the forthcoming SFO Letter and Mr Gerrard was informed about it on the day it was sent. "

 

Have there ever been more egregious findings against a solicitor? Certainly must be up there.

 

FAOD I have no idea what views Mr Gerrard holds in relation to Brexit. 

(not wishing to derail the thread but is accusing someone of being a Brexiteer defamatory?)

Really? Is there anything in the judgment which reflects on the firm as a whole rather than Mr Gerrard personally?

Is it really egregious? Or is it where we currently are, on the road from legal professional privilege being impregnable except if it is actually helping in a crime:  via the obligation on lawyers to make money-laundering STRs, and to advance-report tax structures to HMRC; to ... where, next?  

um... there's a difference between assisting a crime (bad) and confidentially advising a client who has been accused of or indeed may have committed a crime (what we are supposed to do)

mutts, your input please

Wasn’t he a former police officer? It sounds as if he never quite adapted to being a legal adviser.

Yeah, he was. I once met him in the Banana Bar in Val d'Isere before it burned down. He wore a helmet, which was quite unusual at the time. 

I remember reflecting that his brain was probably worth protecting but perhaps he should have spent less time protecting his brain and more time filling it with information about legal professional privilege and ethics.

Firms like this always house dodgy money making bandits. General lack of compliance oversight plus the ability of a single partner to pull rank over others means there's v little daylight shone until the shit hits the fan. I always get the feeling at banks that it's poacher and gamekeeper between compliance and deal teams, but in a law firm it's basically a "Private Property" sign against poachers. 

He was head of the dept. Massively high profile case.

Clearly questions to be asked about the oversight, or lack of it, of his work.

Any misconduct by a high profile Partner in the course of his work for the firm, surely  affects the reputation of the firm. 

Are you seriously suggesting that their reputation is unaffected by this…?

He got fired from Dechert this week or whenever they knew about the result in the last week before publication - pretty sure he was still on as a consultant despite "resigning" at the end of 2020 officially leaving at the beginning of 2021, in view of this case

He headed up the Dechert white collar team, ranked tier 1 in the city - I think he was listed in the hall of fame or was a leading individual in the legal 500.

The bigger issue is that he's 67 and now retired apparently. He joined the partnership at Dechert at 56. The question is why would he have worked so long, what was the point. Do they pay partners in contentious regulatory less?

My input as requested

  • The summary of the judgment is really scathing - that tends to be Waksman J's way (either fully exculpatory or damning based on completely an exhaustingly forensic approach to the evidence). On this occasion Gerrard is on the receiving end of a significant dose of the latter. 
  • The gentleman in question is known for having taken a robust route through the last two decades. He decided to leave DLA and join Dechert. In doing so he got stuck into fierce litigation over covenants.  That reflected badly on him and the DLA partnership at the time.  
  • I have worked with him. He represented a senior person in my prior organisation. Very bullish. His view at the time seemed to be that everyone except him and his client were handling the SFO wrong and that he was in independent discussions with an SFO person who etc etc.  He was arguing his relationships could influence the process. I am therefore unsurprised by the finding in respect of his communications with Alderman. I think Gerrard had a very strong opinion of his own value and was prepared to do as he pleased to get the end he was aiming for. This judgment suggests so.  
  • As a partner at DLA and Dechert he was one of those flashing blade, big spending, big noise types who had favoured associates who could cope with working for him and went far. but he also scared the shit out of a lot of others and created very highly charged working environments.
  • From a client perspective, it always felt that Gerrard would run through walls for you and was one of the few that was prepared to call a spade a spade, speak truth to power, give and take serious feedback openly. he did not seem dishonest, but very combative and it was all rather exhausting. 
  • He was a police officer in the Met who was at one point involved in training at Hendon. I had a line report who had been a recruit under his management when a recruit.  Many tales.  
  • On the findings, the worst possible thing for a lawyer is an allegation that you cannot maintain a confidential matter confidential or that you are not telling your clients a straight/the whole story.  Any established finding of that nature is far reaching, whether retired or not. The rules are pretty clear. 
  • Dechert were quick to hire him and have stood by him, so there is major reputational damage to be had for the firm. Put aside the insured / uninsured risk issues, it just looks like a place bad people inhabit.  I am sad about that as a very competent person has just taken over head of that team and could find the platform severely damaged. 

If they were being truthful, most city lawyers will have assisted crime / criminals at some point in theircareer

not really.

Anyway, that's not the point. How many will have gone off to the prosecutor, set up a two-way information sharing behaviour, leaked information coming out of that process into the press "without the authority of a client and plainly against their interests"? Not me.  

 

Absolutely mad. Para 256-269 of the judgment particularly damning - suggests he had lied about the amount of business he would bring to Dechert and leaked things to the SFO in order to ramp up billing on this matter, since SFO involvement would justify more work.  Appalling.

 

The bit where Waksman says he was negligent or reckless in giving "wrong advice about ENRC’s potential criminal liability, the risk of raids by the SFO, potential penalties, the risks involved in engaging with the SFO in the way that ENRC did, and not suggesting a different course;" seems v strident.

Giving advice on this subject at the time he did was very tricky.  How the SFO would implement its move to self-reporting was not clear. How to advise clients has become clear in light of the way the SFO conducts itself and has done for the past decade or so, but it has taken a long time.  Up to then it's hard to say people are clearly reckless or negligent for the way they advised on this.  Better point is that he was massaging appetite at the SFO to ensure the SFO came knocking, so that ENRC would ask him to do £13m worth of work when he would otherwise have done £2m.  

I think the more interesting thing is how can the SFO still survive? I mean, serious brah. It fvcks up literally everything. 

They're proven to be a bunch of dishonest fvcks time and time and time again. They're not competent. They're totally corrupt.

When is the gov going to pull its finger out and reorganise it. Maybe the big balls white collar lawyer would feel the need to inflate his fees if the SFO did its job and investigated properly and competently.

The fact that white collar lawyers think they can make a career by dishing back and forth to the regulatory body to make up fees is crazy - and the fact the regulator is cool with all this is crazy. If this guy had done it all the time in this matter, why would he have no in other matters too?

I'm not encouraging everyone to sue Dechert and the SFO, but they probably could and should.

if I had a dollar for every year in which there has been a debate about the future of the SFO based on another fook up during my working then i would have... well ...$32

but you are right

"SFO largely cleared of wrongdoing after UK court battle with ENRC"

 

the following findings of Waksman J do enable that headline, sadly:

23. As for the SFO, I found that, acting by Mr Alderman and/or Mr Thompson and/or Mr Gould, it was in serious breach of its own duties in relation to 15 out of the 30 DCs, which included engaging with and taking information from Mr Gerrard which was plainly unauthorised and against his client’s interests. On the facts, I found that (subject to proof of causation and loss) the tort of inducement to breach of contract on the part of Mr Gerrard had been established. Some, but not all of the elements of misfeasance in public office were also established, but not sufficient to make out the tort itself.

24. As for the other allegations against the SFO, I found that none of them was established. They were: (1) Failing to deal with a whistleblowing letter sent in July 2012, referred to in the judgment as “WB2”; (2) Leaking to the press its decision to launch the criminal investigation before it had been made public; (3) Making use of the June 2013 Material being at least reckless as to its privileged nature; (4) Deliberately suppressing or destroying a notebook of Mr McCarthy’s which covered the period July to December 2011, referred to in the judgment as the Beige Notebook; and (5) Failing to remove any reference to Kazakhstan in the SFO website until January 2016.

25. I also found that in acting wrongfully as the SFO did, this was not because it had a particular desire to assist Mr Gerrard to earn more fees, rather, it was what I have referred to in the judgment as 6 “bad faith opportunism” in relation to the relevant pieces of information wrongfully communicated to it by him.

Although an equally accurate headline would be: "SFO unlawfully induced lawyer to breach duty of confidentiality"

I am honestly not seeing this as strange or unexpected as the rest of you are. 

Lawyers, as service providers, always have a principal-agent problem.

They need clients to have problems. It is in their interest for things to be prohibited, and for licences and permissions and  notifications and clearances to need to be obtained from regulatory bodies. 

Separately, there has been a twenty year shift, in regulation, from

 - the straight criminal law, fox-hunting, approach that the onus is on the copper to prove someone did something, to

 - requiring people to self report what they are doing and then prosecuting or fining them for the simpler-to-prove offences of not making reports

- and then in turn extending that reporting duty to advisors, including lawyers

- who can take the view that they are not helping their client by not reporting them, because it is in the better interest of the client  - the corporate entity- to be reported and sanctioned and improved.

Do we think the lawyer should say 'Don't ask me to act for you because you look like someone I need to report on' or should take on the client and start reporting on them?

47 days in court from May to September, lovely for nine silks and Tim Akkouh who took silk during $$$

He probably got where he is by bullying and rain making. Maybe not even understanding the compliance.  Article in the FT about him being involved in hacking in another case and rehearsing the trial with him playing Judge and X examiner in a hotel room in Switzerland. 6 of his mobile phones apparently lost or stolen. The SFO have also been found to have lied to the court.  

Ronald, what regulator do you think requires a regulated entity’s lawyers to report their clients privileged admissions to it?? This is not a thing.

He doesn't come out of the rof story well does he?

Fortunately his global amnesia means he will have no recollection of this tawdry series of events. 

That story is a pretty thorough analysis of the difficult bits of the judgment. Good job. Oh
my God the details of the evidence, the decision to hire, the way he behaved etc reflects poorly on the profession. It is an extreme example but it is not unique. this bit disturbs: 
 

His plot involved working with a 'security consultant' called Cameron Findlay, who at one point collected a sealed envelope from Dechert's London reception containing documents prepared by Gerrard, which was passed to another security consultant in a clandestine meeting in a park, and then provided to a journalist.

Findlay testified that he met Gerrard in a coffee shop the day after the SFO informed ENRC that it was looking into the allegations contained in the newspaper article, where he found the partner "rubbing his hands and saying 'right boys, I’m in rape mode'", and crowing that he was going to "screw these fookers for 25 million".

Referring to the "shocking" ‘rape mode’ expression, the judge said, "it is so obviously appalling that one has to question whether it is really likely that a solicitor would use it, especially in a restaurant where others might overhear". Gerrard denied the allegation, while the judge conceded that Findlay, who received fees amounting to over £1.1 million from ENRC to give evidence during the marathon case, was "capable of lying when it suited him". However, "I regret to say that Mr Gerrard, being the volatile character that he is, was in my view capable of saying it", said Waksman J.

Also the bit about his claims, creds, offers to others  and a partner at Dechert writing a very considered email querying the hire were very alarming: 

His ego drove him to make extravagant claims, said the court. On one occasion, Gerrard allegedly promised an SFO officer that he could get him a “big fook off job” at Dechert. "I have to say that I think this is the sort of remark which Mr Gerrard might very well have made", said the judge. Gerrard's boasts extended to his profile on Dechert's website, which asserted with "no evidence" that he was once "shortlisted to be Director of the SFO".

Gerrard was caught in another fib when he testified that, when he was headhunted by Dechert from DLA Piper in 2011, "at no stage...did I indicate how much I would bill or generate". Emails promptly surfaced which showed Dechert partners in the US discussing how their hot new hire was promising he could walk over $20-$30 million in fees from DLA Piper.

A “prescient” London Dechert partner did ring an alarm bell about Gerrard's character before he was recruited. "Just a short note on Neil Gerrard with whom I understand we are in an advanced stage of discussions", the unidentified partner told his colleagues. "The DLA team did not come across as an elite group in the many meetings I spent on the opposite side of the table to them", he said. "If you had asked me or AlixPartners at the time whether the advice Neil’s team was giving was unduly negative and to an extent scaremongering in order to increase DLA’s fees the answer would have been a resounding yes". His warning was ignored.

 

 

that last bit -yikes. What’s the point of partner soundings if management heads get turned by eye-watering number bulldust?

 

 

The allegations against both sets of defendants are of the most serious kind.

it then goes on to describe the allegations which are either deliberate or reckless. Are both classes breach "of the most serious kind"? 

Is Dechert one of those firms where there are multiple interviews/soundings but it's all window dressing and 3 old men in the Wichita office (each of whom has a million origination points) take every decision?

Greed Mutters, greed.

Also, a Partner wanting to move at age 56 is quite unusual, and in itself is enough to ring alarm bells.

Jellymonster20 May 22 11:10

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The allegations against both sets of defendants are of the most serious kind.

it then goes on to describe the allegations which are either deliberate or reckless. Are both classes breach "of the most serious kind"? 
 

yeah. In the context of a solicitor’s duties to his client… he prepped the opposition with confidential info, without informing the client, giving the SFO a basis for ramping up the scope. He drove the investigation wider by doing so and charged 20m + for managing the orchestrated larger case. He leaked confi info to the press. He lied to his client and witheld information from them.  He lied to the court. So yeah.

Gerrard is ex-Manchester CID.  And, yes, a partner wanting to move at 56 is indeed very unusual.

I would suggest doing it deliberately would be an allegation of the most serious kind.  Doing it recklessly would be slightly less, but still rather, serious.

How can that not be classed as deliberate. Oops I contacted the SFO and tipped them off and leaked stuff to the press there I go again, dammit I wish I concentrated more silly me.

come on.

 

I am less wowzers about someone moving firm at 56. He was late to the profession then he was frustated by DLA which was, at that time, a firm in disarray. it was expanding like the bejeesus all over the world under Sir Nigel, and its UK offices were a forced together bunch of people who had no common purpose. Dibb Lupton Broomhead from the south, Alsopp Wilkinson and Marshall from the north. Manchester, Leeds, Birmingham were good enough offices with decent lawyers. London was odd. It had a load of arbitration lawyers and no commercial litigation standing.  There were two financial crime chaps in Lon,  Gerrard and another.  They fitted like a cactus in a pair of y-fronts. It was never going to stick ,and eventually Gerrard got excited by Dechert's money and he moved then the other did too.  

"Emails promptly surfaced which showed Dechert partners in the US discussing how their hot new hire was promising he could walk over $20-$30 million in fees from DLA Piper."

He fulfilled that promise.

Muttley - you are absolutely right about DLA at that time.  It was a disjointed, unhappy place with no clear focus.  The expansion was so rapid and it just didn't work.  But Sir Nigel was not the driver.  

MP? no I am not an MP. My initials aren't MP either. I am not a Managing Partner or a Medical Practitioner. 

 

 

nothingschanged20 May 22 13:09

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Muttley - you are absolutely right about DLA at that time.  It was a disjointed, unhappy place with no clear focus.  The expansion was so rapid and it just didn't work.  But Sir Nigel was not the driver.  

 

 

no but he did like to take creds for it.  I think Gerrard and Legrand were never going to get along for long.

Yes, he absolutely did take the credit for it.  But, the firm was a total mess for a long time.

Thanks for clarifying the MP point.

Yes, the poster child for how not to expand a firm. I always met partners from that place that said they didn't feel like partners in a business, no say in how it ran etc.  They also backstabbed each other all the time, really nasty dark culture of ripoffery.

The whole time I was interested in law in the UK (i.e. from applying for training contracts until I left at 3PQE) DLA was a byword for being a complete shit show. 

The management team distrusted each other - never a good call.  There was indeed a lot of backstabbing.  As I said before, it wasn't a happy place to work.

I didnt meet many really good lawyers from DLA.  There were a couple of partners in Leeds who really knew their onions.  Hugh Evans. Now retired I suspect. He had a genuine interest for what happened in court and an encyclopedic knowledge of caselaw on banking and finance, insolvency etc from the 80s to present day and could always answer a question with a clear decision. Top man.   Adam Ibrahim in the same office.  Smart, committed, modest ,hard working and creative.  What a great pair.  All over the rest of the organisation there were shites tripping each other and nicking each other's cheese.  

They also had really shit Service Directors.  But the management team were so busy infighting, they didn't actually see that they were being strung along by a bunch of incompetents.

Agree with you about the two you mention.  One more - the late Russell Orme.

Russell Orme was a great man.  Liked by all who came into contact with him and a truly great lawyer.

DLA was a strange place to work.  One figurehead but many beneath him fighting with each other.  I'm glad I left.

He is pretty strident, old Waxy.  Likes to boil evidence and witnesses down to the polar extremes - entirely satisfactory or downright blatant lie. Little in between.  Wonder if anything in the judgment will come unstuck through overcooking.

Heh. 

A client of my m8 Dave's got very firmly Waxed; findings of fraud, the works. Bikini line in tatters.

Got absolutely blasted to bits on appeal.

He does like to lay it on a bit thick doesn't he.

Muttley: so the DLA team of financial crime all moved to Dechert? So now Dechert has a tainted team. Who would want to touch them after this.

Also looking into this - the market for financial crime / this Gerrard chap's area is so unbelievably niche. Is it profitable / have a future? Is this why he had to run to the regulator because it's so up and down with work? Seems like there are only a handful of firms which really do this with 1 or 2 partners concentrating on it, most seem to have litigators who have a go when something comes in.

Was he really that cash strapped, do they pay that much less to certain teams?
 

He billed a single matter for £13m, imagine he was getting paid

Greedy, dishonest bastard who richly deserves his comeuppance. A disgrace to what used to be a profession.

Some interesting insurance coverage and contribution issues, I expect

 

 

Yeah but he had to bill that fraudulently, and it doesn't explain the tie.

Why can't you just have a go with this stuff? Doesn't sound very technical. Get a compliance consultant in to have a look, you scratch your head, get some juniors doing doc review, interview some employees, and then put together an internal report exculpating everyone and buy a new tie with the proceeds.

Thanks, dead, for the para 256 reference  - very interesting stuff:

"256. As to earnings, in December 2009, having had a meeting with Dechert, he told the
recruitment agent that a minimum of £20 million or possibly up to £30 million in fees would
leave with him if he left DLA. He later said in January 2010 that another firm had recently
offered him a guaranteed salary of £2 million per year for two years, which he turned down
because of his international profile. In an email from Steve Feirson, a Dechert US Partner
who was involved in the possible recruitment of Mr Gerrard and his team, he noted that they
would be expected to generate about $21-22.5 million in the first 12 months. He noted that
they had said that $15 million was “already in the door and is being worked on. The
remainder would come in from work in the pipeline or to be pitched”.

257. Later on, as discussions continued, on 3 February 2011, Mr Feirson emailed Mr Levander,
another US Partner, to say that Mr Gerrard needed to be assured that if he produced a £12
million practice, he could easily reach £2 million by way of remuneration from the firm
(there being a base amount of £1.75 million).

258. However, in cross-examination, Mr Gerrard denied that there was an expectation that if he
was hired, he would deliver a £12 million practice. He said that “at no stage in any of the
discussions I had with Dechert did I indicate how much I would bill or generate.” In the light
of the emails just quoted, that cannot have been true. The point is not so much that there is
necessarily anything wrong with giving a predicted earnings figure; it is that Mr Gerrard saw
fit to deny that he had done so."

"264. Notwithstanding Mr Gerrard’s assurances about fee income in the event that he moved, the
only client that came to Dechert through him was ENRC, prior to April 2013, with some very
small exceptions. Almost all of his income from April 2011-April 2013 was drawn from the
profits from the £13 million billed to ENRC.

265. However, at the start of his retainer with ENRC, that amount of work was far from being
guaranteed and was a long way from the original £400,000 estimate. Here, context is
important. In some kinds of legal work, for example acting for the purchaser of a company or
for a party in a piece of litigation, there is, in a real sense, a finite object, to acquire the
company on suitable terms or to win the case or settle on suitable terms. Of course, the
precise amount of work done and fees charged will vary, depending on the number and
seniority (and hourly rates) of the fee earners involved and the extent of the work judged
appropriate in order to further those objects. In addition, sometimes unexpected developments will increase (or decrease) the costs. But the kind of exercise which Mr
Gerrard and the Dechert team were hired to undertake was much less structured and was, or
became, more vulnerable to expansion in my view. First, the initial work was that of
investigation where it was possible for the number or size of the investigations to expand (or
not). Second, at least at the outset, there was no counterparty in place. Nor would there be
until and unless the SFO took an active interest, as it did by the SFO Letter. Before then, it
was a putative counterparty only, albeit an important one. It has also to be recalled that it was
open to ENRC to self-report under the 2009 Guidelines and in fact take the initiative without
any prior engagement of the SFO.

266. It therefore stands to reason that the more trouble ENRC perceived itself to be in, with regard
to matters that might be of interest to the SFO, or indeed simply to itself as a matter of good
governance, the more work would be generated for Mr Gerrard and Dechert, among others.

267. That is why, in my view, Mr Gerrard was able to email Mr Feirson while in Kazakhstan on 2
June 2011, to say that “we have found great incriminating evidence - so good”. One would
have thought that if they found nothing untoward in the Kazakhstan operations, that would be
a good result. And later the same day he emailed “it’s been utterly unbelievable. Could be a
great case if it goes the way it should.” The “should” can only be some form of expansion
because more trouble had been found. In cross-examination Mr Gerrard said that he thought
that the evidence found about the “false office” in Rudny, Kazakhstan (see below) was in fact
“great” because he wanted to be successful in getting to the bottom of the problem. Later, he
said that it was good for ENRC to have been able to get so far in its investigations. The mere
fact that it could mount an investigation and get to the bottom of it was great for a company. I
regard all of that as disingenuous. It ignores the fact that if the investigation in Kazakhstan
had disclosed no real problem, this would have been the best outcome for the company. Mr
Gerrard’s email comments were obviously about the prospect of further, perhaps substantial
further, work which he would now be instructed to do." That same lack of frankness can be seen when Mr Gerrard was asked about his email to Mr
Pickworth dated 8 November 2011: “... The company has agreed to self-report and...
Dechert will be the lead law firm. Hooray.” The “hooray” was obviously that Dechert had
got the job as lead law firm. Mr Gerrard could just have accepted that interpretation, and said
it was innocuous. Instead he said that it meant he was “pleased that we had clarity and were
moving forward” (on the self-report). That, again, is simply to ignore the obvious sense of his
own remarks."

 

I worked with this guy for several years. I didn't enjoy a single minute I had to spend in his company. Not at all surprised by any of this. I wonder how the other case in the news involving him will work out. 

Interesting arguments and verdict on the limitation of liability in Dechert’s engagement letter. Ouch...

Can always be sure to expand the vocab sheet a notch when skimming these judgments. “Timeosly” and “bore an animus” are new entries.