The large law firm, which is also Washington, D.C.’s biggest lobbying firm, will pay $15 million, express regret and withdraw from representing Ecuadorian environmental complainants to settle the oil company’s charges that it had participated in a litigation scheme that Chevron has called fraudulent and extortionate. “It also agreed to assist Chevron with discovery against the Ecuadoran plaintiffs and their New York-based lawyer, Steven Donziger,” as well as hand over its five percent share of any moneys the plaintiffs happen to win when the whole thing is over. [Washington Post; Paul Barrett, Bloomberg Business Week; our coverage of the case over years]
15 Comments
Wouldn’t it be unethical for a law firm to aid in discovery against a former client for actions taken while that firm was representing that client? Or is that counterbalanced by the fact they might have had to pay another ten bucks otherwise?
Bob
Naïve question: If Chevron’s counterclaims are all for intentional acts — fraud, conspiracy, extortion, etc. — how is it that the settlement is covered by insurance?
Everyday business activities commensurate with industry standards, thufir_hawat.
Bob
“Wouldn’t it be unethical for a law firm to aid in discovery against a former client for actions taken while that firm was representing that client?”
IANAL, but my understanding is that lawyer client privilege does not attach if the lawyer is an accessory to criminal acts on the part of a client. If it get’s brought up, Chevron will likely argue that the privilege does not apply because Patton Boggs became a participant in the client’s fraud.
The bet is several billion dollars if you loss against several million dollars if you win. Still, I’m glad that Chevron won.
However, MattS, Patton Boggs did not admit to any wrongdoing, nor are they accused of any. Why, then, the breach of privilege?
“the oil company’s charges that it had participated in a litigation scheme that Chevron has called fraudulent and extortionate.”
I don’t see how you can read that and say that Patton Boggs was not accused of any wrongdoing. If they weren’t accused of wrongdoing, what do you think they are they paying Chevron $15M for?
No, they did not admit to wrongdoing, but after the US courts ruled against the main US lawyer, Chevron pretty much had them dead to rights and they knew it.
But they haven’t been found guilty by a competent authority. Therefore legally they didn’t do it. Therefore privilege should still apply.
Bob
Bob,
“But they haven’t been found guilty by a competent authority. Therefore legally they didn’t do it. Therefore privilege should still apply.”
You would think Patton Boggs knows that, yet they agreed to cooperate anyway. That tells me that they know damn well they will be found guilty if it ever goes in front of a judge and jury. The no admission is just because they want to save face and not admit guilt publicly.
And everyone winks and nothing changes.
Bob
Patton Boggs wants to merge with another law firm that would never agree to merge so long as the lawsuit was pending. They settled for insurance limits, and likely for less than Chevron paid Gibson Dunn to litigate this case. That’s hardly an admission of wrongdoing. It’s entirely possibly a breach of ethics, though perhaps the crime-fraud exception applies.
Chevron got a raw deal in Ecuador (though they were the ones who demanded the case be litigated in Ecuador), but one can be more than a little concerned about their scorched-earth tactics against tertiary parties.
I agree that scorched earth policies are generally a poor idea. However, if some one came after me with a conspiracies of lies, subornation and bribed judges, I would want to make it clear to them that not only was it not going to work, but it would hurt anyone who was considering pulling such c**p on me that it was a bad idea. I would not have let them get away with paying my legal bills …. although when they are helping Chevron with discovery against their former clients, it will be interesting to see those clients put their feet to the fire over privilege.
Bob
It sure sounds unethical to settle a claim for your benefit and agree to work against your client, but the Vioxx settlement worked that way. To enroll your qualifying clients in the settlement, you had to agree to dump your clients who didn’t qualify. I’d figure this to be a big deal, but no one other than trial lawyers seemed to care.
I think the whole Chevron fiasco has been a terrible embarrassment to the American legal system — if the plaintiffs had tried the “mulligan” approach to jurisdiction and re-filed elsewhere after losing in their chosen venue, they’d have been sanctioned, rather than granted full relief — but this particular component reminds us of a very discrete point: plaintiff’s work is difficult and risky as hell.
One of the largest, most powerful law firms in the country tries its hand at plaintiffs’ work in a rather low-risk setting (enforcing an already-won judgment), and within three years, before even making it to an appeal, they’ve run away and paid their policy limits. The most favorable interpretation is that they didn’t do their due diligence, which is itself a reminder of just how risky and dangerous this work is.
It’s probably best that these biglaw folks stick to their rowboats on the smooth waters of corporate billable hours. If they can’t even see the storms on the horizon, they don’t have a prayer of surviving the rough seas of contingent fee litigation.
Apparently Squire Sanders, the people who have been thinking about merging with the fine folks at Patton Boggs, have had second, third and possibly fourth thoughts and have suspended their vote on the merger.
http://dealbook.nytimes.com/2014/05/22/potential-partner-for-patton-boggs-suspends-merger-vote/?_php=true&_type=blogs&module=BlogPost-Title&version=Blog%20Main&contentCollection=Mergers%20&%20Acquisitions&action=Click&pgtype=Blogs®ion=Body&_r=0
Bob
[…] ever hearing of another case where the plaintiff committed this kind of serious fraud. (Maybe the Chevron case or the Nicaraguan banana pesticide case, but both of those had elements outside of the United […]