"But we're in this together aren't weeeeeeee?" Dechert and Gerrard part ways.
Dechert has agreed to make an interim payment of £20m on account of costs, to former client Eurasian Natural Resources Corporation (ENRC).
In May, the court ruled that Dechert and its former head of white-collar crime, Neil Gerrard, committed deliberate acts of wrongdoing.
That verdict was the culmination of over a decade of twists and turns since Dechert was instructed by mining conglomerate Eurasian Natural Resources Corporation to review a whistleblower's allegations in 2010 that the company's operations in Kazakhstan were riven with corruption. The source alleged that ENRC's local directors had taken monthly kickbacks of up to $300,000, and were buying shoddy machinery for ENRC from their relatives at vastly inflated prices.
Dechert was sacked in 2013 when ENRC accused Gerrard, a former Met Police officer, of wrongly expanding the scope of his investigation in order to generate more fees. The High Court agreed, finding that the firm's rainmaking partner leaked information to the newspapers and liaised with the Serious Fraud Office, without his client's knowledge, in order to give it ammunition that would in turn create more work for the firm.
As a result of his innovative approach to client care, Dechert's bill swelled to £13 million when, argued ENRC, it should have been no more than £2 million.
Gerrard was "so obsessed with making money from his work that he lost any real sense of objectivity, proportion or indeed loyalty to his client", said Mr Justice Waksman.
At a hearing this week, the court was told that Dechert has since "jettisoned" Gerrard. And the firm has now agreed to make an interim payment of £20m on account of costs by 1 September (with Dechert’s insurers standing behind the firm).
Dechert and Gerrard are “jointly and severally” liable for ENRC’s costs. But since they have parted ways, the parties are no longer being represented together. Gerard has instructed Charles Fussell & Co, while Dechert is advised by Clyde & Co.
ENRC is seeking indemnity costs from Dechert and Gerrard on the basis of the parties' "aggressive resistance, unreasonable and uncooperative conduct and, most seriously, dishonesty".
ENRC's barrister, Nathan Pillow QC, told the court that Dechert and Gerrard's defence was "based on lies from start to finish", according to a report in the Gazette.
"Gerrard and therefore Dechert, vicariously...knew that ENRC’s case was essentially true and that he had committed some of the most serious professional misconduct an officer of this court could commit," said Pillow.
ENRC's barrister added that although Dechert has "belatedly parted company with Mr Gerrard...it does not disguise the fact that until June...they were standing shoulder to shoulder."
However, Dechert's position is that the original judgment in the claim made no finding of dishonest conduct on the part of the firm itself.
Both Dechert and Gerrard argued that indemnity costs are not appropriate.
Andrew Onslow QC for Dechert said that ENRC’s total costs for its claim against Dechert and Gerrard could be "in the region of £50m", compared to the approximate £26m quantum of the claim, and Dechert and Gerrard’s previously-forecast costs of £37.5m.
"It is immediately obvious that ENRC's likely level of costs vastly exceeds any potential recovery in damages. Yet an award of indemnity costs will deny Dechert any scrutiny of the proportionality of the totality of costs claimed," said Onslow.
A spokesman for Dechert told RollOnFriday: “We recognise the seriousness of the judge’s findings in relation to our former Partner, Neil Gerrard’s conduct. Trust among partners is integral to any partnership, and up to and including the trial, Dechert acted in good faith in reliance on the assurances given to us by Mr Gerrard.”
The hearing continues.