Dechert has today conceded that a former partner contravened its ‘values, ethos, and culture’ after he was found by a UK judge to have leaked information about a client to the press.

In a High Court judgment handed down today, Mr Justice Waksman upheld a series of damning allegations about the behaviour of the US firm’s ex-London head of white-collar crime, Neil Gerrard, by former client Eurasian Natural Resources Corporation (ENRC).

The judgment followed a closely watched 47-day trial in 2021 in which ENRC brought proceedings against Dechert and Gerrard alleging reckless breaches of their fiduciary duties in connection with an internal investigation carried out by Dechert between 2011 and 2013.

The claims arose from Dechert’s instruction by ENRC, principally through Gerrard, in 2011 to investigate the activities of a subsidiary following a whistleblowing email.

In August 2011, an article appeared in The Times ‘which was highly damaging to ENRC and clearly based on leaked documents, some of which were privileged’, Judge Waksman wrote in an executive summary of his judgment.

Within days, the Serious Fraud Office (SFO) wrote to ENRC seeking a meeting with the SFO’s then-director Richard Alderman and urging it to consider self-reporting on corruption when considering internal investigations.

Following advice from Gerrard, ENRC decided to engage with the SFO, thereby ‘substantially’ increasing the scope of the investigation, according to the judge who said there were subsequently 30 ‘direct contacts’ either at meetings or by telephone between the SFO and Gerard at which ‘no representative of ENRC itself was present’.

Judge Waksman said there were two further ‘damaging newspaper articles about ENRC and the involvement of the SFO….both again, based on confidential leaked information’ before ENRC terminated Dechert’s retainer in March 2013, the firm having generated fees of £13m for its work.

In June of that year, the judge noted, ‘a collection of papers relating to ENRC was sent anonymously to the SFO in a brown envelope’ containing ‘confidential and in some cases privileged information’.

‘In my judgment, I found that Mr Gerrard was indeed the instigator of all three leaks to the press'
 

Summing up his findings, the judge wrote: ‘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.’

The judge added that Gerrard was in at least reckless breach of duty in respect of 22 of the contacts with the SFO and was ‘negligent (and for the most part reckless)’ in relation to several other allegations including: ‘wrong advice’ about ‘the risks involved in engaging with the SFO in the way that ENRC did’; ‘unnecessary expansion of the investigation’; and ‘being the sender to the SFO of the June 2013 material’.

The judge also found that the SFO ‘was in serious breach of its own duties’ in relation to 15 out of the 30 direct contacts and that: ‘On the facts…. (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.’

However, he found that a number of other allegations were not established and ‘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 “bad faith opportunism” in relation to the relevant pieces of information wrongfully communicated to it by him’.

We are considering the judgment to see what we should learn from it

Responding to the judgment on behalf of Dechert, a spokesperson said: 'We recognise fully the seriousness of the judge’s findings in relation to Mr Gerrard’s conduct. We are considering the judgment to see what we should learn from it. 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.'

In a statement, Gerrard, who retired in 2020, thanked Dechert of its support. He added: ‘I and my family are devastated by today’s judgment. 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.'

An ENRC spokesperson said: ‘We repeatedly urged both Dechert and the SFO to examine the evidence, and to draw the obvious conclusions. At every turn, we were rebuffed, and both Dechert’s and the SFO’s leadership chose, at great expense, to defend the indefensible.’

A team from Hogan Lovells, led by partner Michael Roberts, represented ENRC. The judge said a further hearing might take place in the near future to deal with questions of causation and loss.