The Court Case Between ENRC And Law Firm Dechert
Dechert has lost a High Court challenge to its £16m legal bill for 23 months’ work assisting a FTSE 100 mining company with an internal governance review for the purpose of “self-reporting” to the Serious Fraud Office following allegations of fraud and bribery by a whistleblower, writes New Law Journal.
Ruling in Eurasian Natural Resources Corporation (ENRC) v Dechert, Master Jason Rowley at the Senior Courts Costs Office said the “vast discrepancy” between Dechert’s estimates and the costs actually billed was a “special circumstance” that justified closer scrutiny. He noted the estimates were based on “highly unrealistic” assumptions as well as being “brief”, “only produced reactively” and “invariably underestimates”.
ENRC said it would now continue its claim for recovery of costs against Dechert in the High Court.
A Dechert spokesperson said: “We look forward now to proceeding with the costs assessment process.”
The court case between Eurasian Natural Resources Corporation (ENRC) and law firm Dechert is interesting. ENRC has accused Dechert of “systematic and gross overcharging” after the firm billed the London-based mining company (which has some “interesting” history itself) £16.3m for 2 years’ work back in 2011-13 relating to a criminal investigation by the Serious Fraud Office. Last week, a high court judge said that the case could move to a formal “costs assessment” probably next year, and indicated that Dechert’s fee estimates were based on “highly unrealistic” expectations. ENRC is disputing £11.6m of the fees.
But you do wonder why the process was not managed properly during the work? The invoices were paid at the time as well, so you have to question ENRC’s contract management processes, although the judgement does explain to some extent why payments were made. Reading that judgement, it certainly suggests buyers of legal services need to be clear about the value of getting “cost estimates” from their legal firms.
Eurasian Natural Resources Corp. Company has restructured, but is still contending with corruption investigation. ENRC has moved its HQ to Luxembourg and renamed itself Eurasian Resources Group, or ERG.
ERG is the holding company with the three founding shareholders, Mr. Machkevitch, Mr. Ibragimov and Mr. Chodiev, owning in aggregate a 60% stake, and the Kazakh government as the single largest shareholder with a 40% stake.