High Court judge rules Dechert £16m ENRC bills ‘highly unrealistic’

A High Court judge has thrown into question the legitimacy of a £16m bill charged by Dechert to FTSE 100 mining giant ENRC.

The ruling permits ENRC to have the bill assessed and gives a green light to the company and its lawyers, Signature Litigation, to pursue Dechert for recovery of its costs.

In his decision, handed down today, Master Rowley said that Dechert’s estimates were “considerably awry on every occasion” and were based on “highly unrealistic” assumptions.

He added there was a “vast discrepancy” between Dechert’s estimates to ENRC and its final bill.

Dechert billed ENRC for around £16m for 23 months of work, with partner David Neil Gerrard leading for the client.

Gerrard took the mandate over to Dechert when he left DLA Piper in 2011. The judgment revealed DLA Piper, which was originally instructed by ENRC to carry out the investigation, estimated the cost of the probe at “£350,000-£400,000 plus VAT and disbursements”.

The rising costs were first noted by Addleshaw Goddard partners Clarissa Coleman and Louisa Caswell, who were seconded to ENRC. Rowley’s ruling states, “the reaction of the defendant [Dechert] to the modest queries raised by Addleshaw Goddard showed how unreal the concept of challenging the bills formally would have been during the course of the defendant’s retainer”.

ENRC had applied to the court for the detailed assessment of 15 invoices from Dechert from 2012, which will now go ahead.

The mining giant accused Dechert of “systematic and gross overcharging” after it was instructed by ENRC to run an internal investigation into claims of corruption at the FTSE 100 business. Dechert charged £16m for its work on the investigation; ENRC is disputing £11m of it.

The ruling also questioned Dechert’s attempt to have the costs hearing heard in public, which was dismissed last year. The case so far has been heard in private but the judgment was made public following a Court of Appeal decision.

The Lawyer understands any evidence put before the court as part of a public costs hearing could have assisted an ongoing Serious Fraud Office (SFO) probe into ENRC, and damaged Dechert’s former client’s involvement in the investigation, which is ongoing.

Rowley criticised Dechert’s attempt to put apparently confidential information into the public domain “in circumstances where third parties were clearly interested in that information”.

Dechert’s investigation ran at the same time as the SFO probe of ENRC over allegations of fraud, bribery and corruption relating to its activities in Kazakhstan and Africa.

ENRC is involved in a number of other disputes including defending a civil fraud suit brought by the SFO over access to privileged documents. Last year it dropped Debevoise & Plimpton on the civil case in favour of Signature Litigation.

The company also subsequently dropped Debevoise from the criminal investigation, turning instead to Quinn Emanuel Urquhart & Sullivan.

The legal line-up

For the claimant, ENRC

4 New Square’s Benjamin Williams QC and Outer Temple Chambers’ Saaman Pourghadiri, instructed by Signature Litigation partners Graham Huntley and Daniel Spendlove

For the defendant, Dechert LLP

Temple Garden Chambers’ Simon Browne QC and Mersedeh Safa, instructed by Clyde & Co

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