The court found that the SFO was unlawful in launching a criminal investigation into ERG in 2013. This was influenced by unauthorized information provided by former Dechert partner Neil Gerrard.
The investigation, which concerns ERG, ended in August 2023 due to insufficient evidence. It led to unnecessary labor costs and financial costs for the company. The decision, handed down by Judge David Waxman in the High Court, revealed law enforcement officials' misuse of a lawyer as a confidential informant and also revealed the financial implications for ERG.
The High Court decision determined that the SFO and law firm Dechert must pay costs and damages to ERG. ERG initially sought compensation of more than £21 million. However, Dechert has already paid out about £9 million. A claim of almost £12 million remains unpaid. The court concluded that the SFO was liable for a quarter of the assessed damages, while Dechert and Neil Gerrard would be jointly liable for the remaining amount. The final amount to be paid by the SFO, Dechert and Neil Gerrard will be determined at a hearing scheduled for early 2024.
In addition to damages, ERG is seeking up to $1 billion in damages for future losses. They are related to a criminal investigation and will be dealt with in separate court hearings. The SFO, under new director Nick Ephgrave, and law firm Dechert are currently reviewing the High Court verdict and preparing to address damages issues. This case serves as a clear warning against the inappropriate use of lawyers by law enforcement agencies. It focuses on the potential financial and reputational risks associated with this.
In addition, this case draws attention to the important aspect of compliance with the rules and regulations in the field of legal ethics. Abuse of attorney-client privilege and the use of lawyers as secret informants for law enforcement agencies is being challenged not only in court. It also raises serious questions about compliance with professional and legal standards.
ERG, by insisting on compensation, is trying to protect its reputation and financial interests. This case may serve as an important precedent and strengthen clients' assurances in relations with law firms and law enforcement agencies.
Ultimately, the decision in this case will have far-reaching consequences. It has the potential to change standards and practices in the areas of legal compliance, confidentiality, and cooperation with attorneys in the context of criminal investigations.