They say everything’s bigger in Biglaw, and that includes the losses. Last week, Dechert and its former white-collar crime head, Neil Gerrard, lost a case against former client Eurasian Natural Resources Corporation (“ENRC”) in London’s High Court. And by lost, it’s more like got demolished.
Gerrard was hired by ENRC to investigate a whistleblower complaint about its Kazakhstan operations (the engagement began in December 2010 when Gerrard was at DLA Piper, but the matter moved to Dechert when Gerrard did in April 2011). But as reported by the Law Gazette, the matter expanded quickly. And as the High Court judge in this case, Mr. Justice David Waksman, found that was to Gerrard’s financial benefit:
The investigation, which was initially estimated to cost £400,000 but racked up fees of around £13m, expanded to include allegations relating to operations in the Democratic Republic of Congo and also looked into whether an ENRC subsidiary had sold material to Iran in breach of sanctions. ‘Almost all’ of Gerrard’s income between April 2011 and April 2013 came from the profits arising from the £13m he billed to ENRC, Waksman noted.
Indeed, Waksman found that the pecuniary interest was so strong that Gerrard leaked confidential client information to the Serious Fraud Office and the press in an attempt to expand the investigation because he was “obsessed with making money.”
Gerrard – who was described at last year’s blockbuster trial as ‘Machiavellian’ and accused of treating ENRC as a ‘cash cow’ – was ‘the instigator’ of three leaks to the media, the judge ruled.
He found that the first leak to The Times, resulting in a ‘highly damaging’ article in August 2011, was ‘instigated’ by Gerrard and said it ‘shows that he lied continuously on this particular issue [and] suggests that he was capable of very serious professional wrongdoing’.
‘For a solicitor instructed on behalf of a client to cause a leak of the kind in issue here is extremely serious conduct which it might be thought would be almost unimaginable in the case of a straightforward competent solicitor,’ Waksman said. ‘I regret to say that I do not regard it as unimaginable in the case of Mr Gerrard.’
This matter has previously come to the pages of Above the Law because of the allegation Gerrard referred to billing in the case as “rape mode.” During the trial, Gerrard denied the allegation, but the judge has his doubts:
‘As for the shocking expression “I’m in rape mode”, 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,’ Waksman said.
‘For his part, in cross-examination Mr Gerrard indignantly denied it. However, I regret to say that Mr Gerrard, being the volatile character that he is, was in my view capable of saying it.’
And the judge took a dim view of all the leaking of client information:
He added that Gerrard was also ‘in gross breach of duty to ENRC’ in relation to leaks leading to articles in The Sunday Times in December 2011 – which caused a 5.6% drop in the then-FTSE 100 company’s share price, wiping £400m-500m off its value – and the Financial Times in March 2013.
Waksman found that Gerrard was ‘at least in reckless breach of duty’ in respect of 22 unauthorised contacts with SFO staff – including former director Richard Alderman, who ‘tipped Mr Gerrard off’ about a letter from the SFO to ENRC in August 2011 – during his investigation.
The judge said on Monday that Gerrard, who retired at the end of 2020, was ‘negligent and for the most part reckless’ in unnecessarily expanding his investigation in relation to ENRC’s operations in Kazakhstan and the Democratic Republic of Congo. He was also found to be negligent over his failure to record his advice in writing and in giving wrong advice about ENRC’s potential criminal liability, failing to determine the scope of the SFO’s concerns and failing to protect ENRC’s privilege.
The judge also offered this startlingly honest assessment of Gerrard: “I very much regret to say that in general I found [Gerrard] to be a highly unreliable and at times dishonest witness. His evidence was often inconsistent with the documents or implausible and, on more than one occasion, he was plainly lying.”
Gerrard is reportedly “devastated” by the decision. Saying, “After over 30 untainted years as a solicitor, I remain sure of the appropriateness of my actions, of my advice in relation to my former client and of my personal and professional integrity. I gave evidence to the best of my ability and believed I was telling the truth at all times. I would like to thank Dechert for their support.”
But a Dechert spokesperson offered this statement on the matter:
Trust among partners is integral to any partnership and, throughout this litigation, Dechert has always acted in good faith in reliance on the assurances given to us by our former partner. The court has now found Mr Gerrard to have committed conduct which is completely at odds, not only with our values, ethos, and culture as a firm, but also with the high ethical and professional standards adhered to on a daily basis by our lawyers the world over.
Maybe that “support” is over.
Kathryn Rubino is a 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).