The bizarre Ecuadorean lawsuit that destroyed a Washington institution.
In 2012, a remarkable battle unfolded in U.S. District Court in Washington, D.C. Patton Boggs, the D.C. lobbying-and-law powerhouse co-founded by Thomas Hale Boggs Jr., faced off against Chevron, the sort of multinational corporation Patton Boggs normally represents. To the amazement of legal observers, the giant oil company accused Patton Boggs of participating in an extortion campaign rooted in the rain forest in Ecuador.
Arguing for Patton Boggs, James Tyrrell Jr. sputtered with indignation. “If someone seriously suggests that the 50-year-old law firm of Patton Boggs would wreck, would risk its professional reputation for a group of Ecuadorians whose case we feel strongly about, that we would be involved in a broad fraud, I suggest [to] whoever might believe that: I have a bridge in New York I might like to try to sell them.”
Randy Mastro, a partner with Gibson, Dunn & Crutcher and Chevron's lead outside counsel, responded with equal vehemence: “Your Honor, Mr. Tyrrell asks the question, would Patton Boggs be risking their reputation on these Ecuadorian plaintiffs.” Mastro, a former mob prosecutor from New York, couldn't have framed the issue better himself. “The answer, unfortunately, from their own documents, is yes. The answer is: A firm getting a contingency fee on $18.2 billion will do a lot of things that shock the conscience, and what they did here shocks the conscience.”
The clash did not end well for Patton Boggs. In 2014, tainted by Chevron's allegations and hobbled by partner defections, one of the capital's best connected law firms lost its independence and was absorbed into a less august partnership based in Cleveland. As a condition of its rescue by the Squire Sanders firm, Patton Boggs did the unthinkable: On bended knee, it withdrew from the rain forest-contamination case, paid a $15 million settlement to Chevron and issued a public statement of regret. Tyrrell, the rainmaker who'd persuaded fellow members of Patton Boggs leadership, to jump into the Chevron case in the first place, left the firm humiliated by his ex-partners' acquiescence.
The tale of Patton Boggs' being brought low illustrates how even the most sophisticated law and lobbying firms are willing to gamble with their reputations and balance sheets in the face of stiffening competition. Other vaunted firms hit even harder than Patton Boggs include Washington antitrust ace Howrey, defunct as of 2010, and New York-based Dewey & LeBoeuf, which collapsed two years later.
The end of Patton Boggs' half-century as an independent firm brought down the curtain on a style of Washington influence-peddling that Tommy Boggs , who died at age 73 on Monday, helped invent and rode to phenomenal success and riches. Last May, when an enfeebled Patton Boggs — reduced to 330 lawyers from a peak of 550 — announced its merger into 1,300-attorney Squire Sanders, the PR spin was unpersuasive. Patton Boggs boasted that it had been “an industry game-changer” and “through our combination with Squire Sanders we are doing it again.” Hardly. The formation of the new Squire Patton Boggs revealed how a storied D.C. institution risked its standing for a quick score — and lost.
In 2010, Patton Boggs had an august Washington pedigree but an uncertain future. The scion of the Boggs political family from Louisiana — former House Majority Leader Thomas Hale Boggs Sr. and Lindy Boggs, who succeeded her husband in Congress after he died — Tommy Boggs worked in the Lyndon Johnson administration and then, in 1966, helped start the firm that became Patton Boggs. In the 1970s, he pioneered a combination of lobbying-and-law practice that defined a new industry just as “K Street” was becoming the premier address for corporate influence in Washington. In 2011, the firm had revenue of $340 million, according to American Lawyer and placed 83 rd on the trade publication's top-200 ranking of U.S. law firms.
In its heyday, Patton Boggs had grown alongside an expanding federal government, attracting top former officials as they moved through the revolving door to the private sector. Tommy Boggs had rivals — Robert Strauss of Akin Gump was one — but no one boasted more pull.
In the wake of the 2008 housing bust and recession, however, Patton Boggs faced head winds in a shifting business environment. Over the years, many major corporations had opened stand-alone lobbying offices. Industry-specific boutiques had proliferated, as had trade associations. The days were long gone when Tommy Boggs could pick up the phone and orchestrate a corporate bailout, as he did for Chrysler in 1979.
Yet even as competition intensified, Patton Boggs had expanded tremendously, increasing its overhead. During the 1990s and 2000s, it grew from a 150-lawyer firm to one with 550 attorneys and hundreds of other well-paid employees. Tyrrell's talk of a quick score against Chevron thus found a mostly receptive audience, although some Patton Boggs partners expressed hesitation about getting in bed with the kind of freewheeling plaintiffs' attorney who had been steering the case.
Patton Boggs' involvement in the Chevron case began in 2009, when Tyrrell, the lead partner in the firm's Newark office, pitched the D.C.-based executive committee on an unconventional and potentially lucrative assignment to enforce a multibillion-dollar judgment that didn't yet exist in Ecuador. Tyrrell, a member of the committee, explained that a New York hedge fund called Burford Capital was considering a major investment backing the plaintiffs in pending pollution litigation in Ecuador. Burford wanted Patton Boggs to enter the case at its side, so that if the plaintiffs were successful, the potent Washington law firm could make sure they got paid. Patton Boggs would get a quarter of the contingency fee.
This was a most unusual proposal. Patton Boggs typically worked for companies like Chevron, the defendant in Ecuador, not class-action plaintiffs. But Tyrrell pushed hard. The Burford investment — a form of speculation known as litigation finance — was the wave of the future, he argued. Hedge funds were putting millions into major litigation in exchange for shares of recoveries. Tyrrell knew top executives at Burford who, like him, had formerly been partners at the corporate law firm Latham & Watkins. In the wake of the 2008 Wall Street collapse and subsequent recession, Patton Boggs and other law firms had seen corporate clients retrench and were looking for new revenue streams. Tyrrell was wrapping up a profitable multiyear defense of the City of New York and its contractors in injury lawsuits brought on behalf of cops and firefighters in the wake of the 9/11 attacks. He needed a new big case.
Tyrrell's judgment on mass-tort litigation carried weight. A fastidious man in his early sixties, he'd been called “the Devil's advocate” by the New York Post but preferred another of his monikers, “the master of disaster.” In City of Dust , a book about the World Trade Center case, author Anthony DePalma wrote that Tyrrell's corporate and government clients “love him and pay mightily for his services,” while antagonists “accuse him of being rapacious and underhanded.”
The Chevron case, though convoluted, was going to be a gold mine, Tyrrell told his partners at Patton Boggs. It began in New York in 1993, when a group of American plaintiffs' lawyers representing poor farmers and indigenous tribe members sued Texaco over pollution in northeastern Ecuador dating to the 1970s and 1980s. Texaco persuaded a federal judge to dismiss the case on procedural grounds in 2001, the same year the company was acquired by Chevron. In 2003, though, the American attorneys restarted the litigation in Ecuador, now naming Chevron as the defendant. The solo New York lawyer who had taken control of the case, Steven Donziger, was gaining traction in the murky Ecuadorian court system. Donziger had turned the litigation into a media sensation, arranging for splashy coverage in Vanity Fair and on CBS's 60 Minutes and CNN. He'd solicited and helped assemble financing for a supportive documentary film called Crude, which debuted to critical acclaim at Sundance in January 2009.
Donziger had gone to Burford, a $300 million boutique litigation-finance fund, looking for an infusion of capital to finish the case in Ecuador. Burford liked the odds and was willing to put up $4 million, with $11 million more to follow, in exchange for 5.5 percent of a recovery Donziger estimated would run into the billions. But there was a hitch: Chevron had no assets in Ecuador, so if the company lost, it could simply refuse to pay; the plaintiffs would have nothing to seize and sell off. That's where Patton Boggs could help. Through its lobbying and trade-regulation work for major corporations and foreign governments, the D.C. law firm had impressive political connections. It also had developed a specialty in enforcing judgments in third countries in just the sort of scenario presented by the Ecuador case.
Chevron had raised troubling questions about Donziger's tactics in Ecuador, alleging that he'd fabricated evidence and paid off a court-appointed official whose multibillion-dollar damages estimate would play a central role in the case. Tyrrell dismissed these charges in a lengthy memo that persuaded both Burford and his colleagues at Patton Boggs. He said the oil company was “cleverly using the lens of U.S. norms to distort what transpired in Ecuador.” In other words, what went on in Ecuador might not have passed muster in American courts, but it was good enough for a provincial tribunal in the rain forest. Tyrrell got a green light.
Yet even Tyrrell had his doubts about Donziger. He particularly didn't like what he'd learned about the Harvard-trained attorney's dealings with the supposedly neutral Ecuadorian court-appointed damages expert. So Patton Boggs procured a fresh set of expert opinions from U.S.-based scientists. Tyrrell was looking ahead to the day he'd have to defend an Ecuadorian verdict before a judge in the U.S. or Canada or some other jurisdiction with more stringent standards than those prevailing in Ecuador.
In e-mail exchanges with Donziger, a lawyer on Tyrrell's team referred to this project as an “effort to ‘cleanse' any perceived impropriety” related to the Ecuadorian damages estimate. By late 2010, Tyrrell's group had put together a new report in which their Ph.D.s-for-hire calculated the pollution damages at a gargantuan $113 billion, four times more than even the dubious Ecuadorian expert had calculated. Patton Boggs also drafted the equivalent of closing arguments to be submitted to the Ecuadorian trial judge in the small jungle city of Lago Agrio.
In February 2011, that Ecuadorian judge delivered a 188-page opinion finding Chevron liable for harm to the environment and individuals and assessing damages of about $9 billion. He doubled the penalty when Chevron refused to apologize and concede liability. Anticipating this setback in Ecuador, the oil company filed a civil lawsuit back in federal court in New York against Donziger and his clients, alleging that the Ecuadorian campaign had evolved into an illegal shakedown, replete with phony scientific data, coercion, and secret ghostwritten court documents. Invoking the Racketeer Influenced and Corrupt Organizations (RICO) Act, Chevron also contended that Texaco had cleaned up a portion of its pollution and received a complete liability release from the government of Ecuador in 1998. Any remaining contamination, Chevron claimed, was the responsibility of Ecuador's national oil company, Petroecuador.
What had sounded like a sweet deal to Patton Boggs' executive committee started to sour. In September 2011, the Burford hedge fund turned on Donziger, accusing him of engaging in “a multi-month scheme to deceive and defraud in order to secure desperately needed funding.” By then, Chevron was escalating its counterattack, based in part on outtakes from Crude , the documentary film Donziger had himself arranged. The oil company obtained the raw footage via the discovery process in the United States. In one clip, Donziger talked about using “pressure tactics” to intimidate an elderly Ecuadorian judge. The American lawyer was shown saying, “This is how the game is played. It's dirty.” Chevron named Patton Boggs as a non-party co-conspirator in the alleged RICO scheme, suggesting that it helped cover up Donziger's dirty tactics.
Patton Boggs insisted it had engaged only in zealous advocacy, but its position deteriorated steadily. In April 2013, Burford, which had sold off its investment in the case, filed an affidavit accusing Patton Boggs of providing it with “false and misleading advice.” The same month, Stratus, a Colorado consulting firm that provided critical environmental research for the plaintiffs, disavowed its findings, alleging that it had been misled by Donziger. Stratus thus joined a parade of former Donziger allies who, under pressure from Chevron, accused him of deceit. One morning in June 2013, Patton Boggs partners woke up to find that the Washington Post had published a 5,600-word opus cataloguing the firm's travails.
In late 2013, U.S. District Judge Lewis Kaplan held a bench trial in Manhattan on Chevron's racketeering allegations against Donziger. In March 2014, the judge issued a scathing 485-page ruling concluding that the plaintiffs' lawyer had indeed violated the RICO statute. Donziger denied wrongdoing, accused Kaplan of bias, and is appealing. The plaintiffs' attorney emphasizes that Kaplan's ruling has the effect of overturning a judgment upheld by Ecuador's highest court. Meanwhile, he and other lawyers have gone to Canada and other third countries where Chevron has assets to try to enforce the Ecuadorian verdict. The oil company has said it will brandish Kaplan's RICO ruling as grounds for those jurisdictions to reject the Ecuadorian judgment as a sham.
The trouble didn't end for Patton Boggs. After ruling against Donziger, Judge Kaplan said Chevron could separately pursue fraud claims against the Washington law firm for seeking to cover up Donziger's misconduct. Patton Boggs issued a statement calling the allegations “baseless and unlikely ever to proceed to litigation on the merits.” On the latter point, Patton Boggs was correct.
In May 2014, the firm announced that it had settled its dispute with Chevron and would pay the oil company $15 million. That amount didn't bankrupt Patton Boggs, of course, but paying any settlement as an apology for its professional work symbolized the firm's weakness and desperation. Based on Kaplan's March ruling, Patton Boggs said in a statement, the firm “regrets its involvement in this matter.”
Chevron's general counsel, R. Hewitt Pate, said: “We are pleased that Patton Boggs is ending its association with the fraudulent and extortionate Ecuadorian litigation scheme.” Donziger and the Ecuadorian plaintiffs issued a statement decrying “this sad and unethical betrayal” by Patton Boggs. Donziger continues to deny any misconduct.
As it ran up the white flag, Patton Boggs was scrambling to throw itself into the arms of a more stable law firm. In late May, Squire Sanders announced it would merge with Patton Boggs. “Together we will be uniquely positioned to respond to the needs of business clients around the world,” Jim Maiwurm, chairman and global chief executive of Squire Sanders, said. He didn't mention taking any new assignments for class-action plaintiffs.
Editor's Note: This commentary was originally published by Politico on Sept 15, 2014. Petroleumworld reprint this article in the interest of our readers.
All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld. Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator. Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld welcomes your feedback and comments,
share your thoughts on this article, your feed. back is important to us!
We invite all our readers to share with us
their views and comments about this article.
The information in this web site is proprietary and is protected under United States and International Copyright and Trademark laws. No part of this web site may be reproduced or transmitted in any form by any means whatsoever, except with permission of the author/s..
Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond
'fair use', you must obtain permission from the copyright owner. Any use of this site or its material, in any form, without the express prior written consent of the author, is prohibited by law and is subject to legal action. Legal Information
This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from Petroleumworld or the copyright owner of the material.