Lord Justice Christopher Clarke’s cost judgment in Excalibur Ventures v Texas Keystone and others  EWHC 4278 (Comm) is out. To precis the most interesting points, the implication of the judgment is that Clifford Chance have for their clients:
- aggressively pursued serious and wide-ranging allegations of dishonesty or impropriety;
- without any apparent foundation in the documentary evidence for those allegations;
- courted publicity for those allegations both before and during the trial;
- pursuing a claim which was irreconcilable with the evidence.
You can read the full judgment here.
The judge on a number of occasions makes the point that the approach employed was “no doubt upon instructions.” For reasons which will become clear this is not as prophylactic as it appears.
He also says this:
The claims put forward were an elaborate and artificial construct which… ….were reverse engineered from the position in which the Wempens [Excalibur’s guiding mind] found themselves on the facts. They were replete with defects, illogicalities and inherent improbabilities.
An interesting question is who was doing the reverse engineering? The clients or their lawyers? Or was it a shared endeavour? We do not know and for current purposes it does not matter, save that lawyers are increasingly comfortable with deflecting any responsibility for their conduct onto their clients. It is a mistake.
The judge directs a good deal of criticism at the de facto clients and failings “in an expert [that] are outside the norm” Also:
Excalibur’s case on [a particular]… topic …had involved it (a) contradicting itself, and (b) developing theories which (i) were not open to it in the light of the way the case has developed …and (ii) were unsupported by the evidence.
…the deceit claim …had all the hallmarks of a lawyer’s artefact. It did not make sense. [I don’t think the judge means to say lawyerly artefacts do not generally make sense, but that this claim was particularly poorly made]
There appears to be a suggestion that the allegation of deceit was not properly put to the relevant opponent’s witness (presumably this is partly Counsel’s responsibility if this is what the judge is saying). He reminds us:
…the making of deceit claims, even in the alternative and even if of a subsidiary character, is a strategy which has important consequences for those against whom they are made.
Another claim of dishonesty was made even thought it was “unpromising” and failed.
There is a more general comment on the conduct of the case by solicitors:
I have been spared sight of much of the 5,000 pages of inter solicitor correspondence. It is apparent to me, however, from what I have seen that some of the correspondence from Clifford Chance has been voluminous and interminable, in some circumstances highly aggressive and in others unacceptable in content. These have included ill-founded allegations of criminal conduct in the form of insider dealing, misleading the market and misleading the public about the relationship between Gulf and Texas. Whilst interminable and heavy-handed correspondence is becoming a perverse feature in some commercial litigation, it is not in any way to be accepted as a norm and parties whose solicitors engage in it should not be surprised if, in a case such as this, they end up paying the costs on an indemnity scale.
The communications between Excalibur’s lawyers and the Gulf legal team on occasion completely overstepped the mark. To do him credit Mr Panayides accepts that on occasion that was so.…
…In respect of disclosure, a number of important documents were wrongly made the subject of claims to privilege… Very extensive expenditure had to be incurred by Texas in the three separate sets of 1782 proceedings [that] …produced a substantial number of highly relevant documents….
…A number of the documents should have been disclosed by Excalibur …because Clifford Chance adopted, at any rate at one stage, the position that Eric Wempen’s UBS emails were not in his possession.
The judge discusses the impact of the litigation on the successful claimants as “a major source of disruption to Gulf’s business… [on top of] the amount claimed by Excalibur [which] must have created, by its sheer size, financial uncertainty in relation to the value of Gulf and its shares.” The judge is sympathetic to arguments that this seriously impeded at least one of the claimants’ business.
It is a truly extraordinary case. Not least, on the judges view, is the point that such a weak case should be funded by litigation funders (and who may now end up meeting the costs burden) who will have – one assumes – done significant due diligence on the case and its associated risks. I am more immediately interested in the issues posed by the conduct of the case (and it is worth noting in passing that he is not without criticism for the defendant’s opponents, we just have no detail on his concerns there).
The judge deals only with the costs point and thus treats the matter as a question of whether the client should bear extra costs because of the way the case was conducted. There are other dimensions.
First there are the professional principles that bind the solicitors. In particular, they must:
- uphold the rule of law and the proper administration of justice;
- act with integrity;
- not allow your independence to be compromised;
- act in the best interests of each client;
Is acting on instructions to conduct a case in this way consistent with the first three principles? We could debate it, but this post is already overlong. There is at the very least a decent argument that these principles are engaged. And, of course SRA Handbook guidance states:
Where two or more Principles come into conflict the one which takes precedence is the one which best serves the public interest in the particular circumstances, especially the public interest in the proper administration of justice.
That argument is strengthened by a consideration of the more detailed rules. Solicitors are obliged not to “attempt to deceive or knowingly or recklessly mislead the court;” (O5.1) or to be “complicit in another person deceiving or misleading the court” (O5.2), as well as to , “ensure that evidence relating to sensitive issues is not misused” (O5.7). Indicative behaviours for these outcomes include not doing the following:
“constructing facts supporting your client’s case or drafting any documents relating to any proceedings containing: (a) any contention which you do not consider to be properly arguable; or (b) any allegation of fraud, unless you are instructed to do so and you have material which you reasonably believe shows, on the face of it, a case of fraud; (IB5.7) and
“suggesting that any person is guilty of a crime, fraud or misconduct unless such allegations: (a) go to a matter in issue which is material to your own client’s case; and (b) appear to you to be supported by reasonable grounds; (IB5.8)
The judge’s analysis of the evidence suggests that the solicitors in this case may have done just that. He clearly cannot see reasonable grounds upon which the allegations could be supported. It does not mean there are not such grounds. The judge will not examined evidence from the solicitors as to what they in fact believed when they drafted relevant allegations or made relevant suggestions, so we need more evidence to take a clear view. Nor should one underestimate the difficulties of dealing with clients with weak cases and strong views about how they run those cases, but such difficulties do not as a matter of professional rules (let alone broader understandings of ethicality) excuse the lawyer from responsibility for their actions. They are not automatons simply acting on instructions, however convenient that fiction is. On top of that there are questions over the discovery process, and in particular, whether privilege was abused. On the face of it there are serious professional conduct concerns that require investigation by the SRA (and Clifford Chance’s Head of Legal Practice – who I assume has reported the matter to the regulators). A more cynical view would be that CC can sit back and take comfort in the fact that proceedings of such exceptional complexity and cost will not be re-opened by a regulator with any great enthusiasm. Will the strength of the judge’s concerns be sufficient to countermand that reluctance? We will see.
Update: July 2017, https://www.thelawyer.com/issues/online-july/cc-hires-clydes-sra-launches-probe-firms-handling-excalibur/
8 thoughts on “Excalibur raises serious professional conduct concerns for Clifford Chance”
Very Interesting. Sadly with the SRA not upholding / not investigating 96% of complaints (2012 figures*), I’m sure CC can indeed sit back and relax.
(* SRA figures taken from Freedom of Information Act request and published on this blog: