With the majority of Dechert’s attorneys located in the U.S., it may hope the Atlantic Ocean is sufficient to separate them from the stain left by the actions of former London partner Neil Gerrard, who served as the co-head of the firm’s white-collar practice.
But after a London High Court ruling last week found both the firm and Gerrard responsible for misconduct aimed at extracting maximum profits from client Eurasian Natural Resources Corp., including instigating leaks to the press and investigators as well as misinforming the client about potential criminal liability, the playbook calls for more than just hope in order to mitigate against the specter of severe reputational risk.
Given the magnitude of the wrongdoing committed by Gerrard, the absence of immediate fallout for the firm in the U.S. is somewhat surprising. A number of academics who study the legal industry and public relations professionals reached by Law.com professed unfamiliarity with the long-running court case and the London High Court’s ruling this week.
Zach Olsen, president of PR firm Infinite Global, has been paying attention, and says Dechert needs to be taking proactive measures to mitigate not just against negative publicity from the recent ruling but future harm when damages from the matter emerge.
“Neil Gerrard violated on so many levels the trust that’s core to the attorney-client relationship. The potential risk to Dechert can’t be understated,” he said.
When another PR professional, who sought anonymity because his employer maintains a relationship with Dechert, reviewed recent coverage of the matter, he was also struck by how glaring Gerrard’s conduct was, particularly because it cut straight to the heart of one’s duties as a lawyer.
“Any time litigation involves the fundamental value proposition or fundamental ethics of an industry, that resonates longer than a similarly grave matter that doesn’t have that same relevance,” the PR professional said.
“When a lawyer is giving bad advice on purpose to defraud a client, that points right back towards what a lawyer is trusted to do,” he continued.
Since the malfeasance occurred in the firm’s white-collar practice, Olsen emphasized that the core of the firm’s response should stem from that unit. “I’d be utilizing the global heads of the white-collar group and their relationship partners to get out there to protect their relationships with marquee clients,” he said. “They need to be establishing that Gerrard’s actions were his alone, not those of the firm, and that’s not how it rewards and incentivizes lawyers.”
The PR consultant who sought anonymity, however, suggested that it might be hard to take this message seriously. After all, Gerrard was once a member of the firm’s management committee and evidence was presented in the U.K. proceeding indicating that other Dechert partners were leery of Gerrard when the firm was recruiting him from DLA Piper because of suspicions over his ethics. According to the judgment, Gerrard told a recruiting agency that £20 million or possibly up to £30 million in fees would leave with him if he left DLA.
“One lawyer can’t bill those fees alone. The whole promise was that he would build a practice that he’d use to feed those other lawyers,” the consultant said. “Someone should really have known.”
Both the anonymous consultant and Olsen shared the opinion that Dechert was coming across as particularly guarded in its public statements in response to the judgment, arguing that this was a missed opportunity for the firm. A spokesman for the firm declined to comment specifically in respond to an inquiry about how it was communicating with clients and the public in response to the judgment, providing the American Lawyer with a copy of its prior public response.
“Dechert can use this as an opportunity to communicate who the firm is and what it stands for,” Olsen said, arguing that the firm’s leadership could regain trust and loyalty by acknowledging that something had happened and showing how it had learned from these past missteps. A key part of that effort is spotlighting the actions the firm is taking.
“They need to communicate what systems they have to monitor these issues in the future,” Olsen added. “Having an answer to that question is paramount to winning this reputational battle.”
A Manager’s “Nightmare”
At the same time, there’s no magic set of safeguards that can be implemented to ward off future missteps. That goes for Dechert and other large firms, particularly those with a presence around the globe.
“As law firms get larger, and open offices beyond the U.S., the challenges increase and I suspect this may have been a result of one of those challenges,” said Abe Reich, the chair emeritus at Fox Rothschild and a lecturer on legal ethics at the University of Pennsylvania Carey School of Law.
Reich added that the scenario was the “nightmare” for any manager in a large firm.
“It’s a challenge every major firm in the world has to worry about. I’m confident that Dechert is as responsive as they could be on this situation. It’s just the cost of doing business in a multinational arena,” he said. “When the opportunity to walk next door into someone’s office and ask how they’re doing is not available, the challenges over supervision become greatly heightened.”
New York University School of Law professor Stephen Gillers believes Gerrard’s conduct is an aberration among Big Law attorneys, but he said in an email that the bare minimum for large firms and even those of modest size is a general counsel’s office, potentially with multiple attorneys, who serve one client alone: the firm.
“Today, that’s not enough for these big firms where one bad act by an ignorant or malicious lawyer can cause great financial harm and harm to reputation,” Gillers said.
Firms should also be engaging in consistent education in the rules governing lawyers, ideally on a bimonthly basis, and creating mechanisms that allow lawyers to report suspected misconduct without fear of retribution.
Whether that’s enough to overcome the structural changes to the profession that have created a space for bad apples to operate in large firms remains to be seen.
“When firms were small, quality control could be informal because personal relationships created individual and firm loyalty, increased the likelihood that bad or foolish behavior would be discovered early, and reduced risk of harm. But today, firms with large populations worldwide cannot rely on personal relationships and firm loyalty,” Gillers added.
And, in comparison to today’s frothy talent market that’s led to an unparalleled degree of mobility, in the past, partners in particular rarely moved between firms.
“Today, every lawyer is to some degree a free agent without the former sense of institutional commitment,” Gillers said.
