To call this a litigation about litigation about litigation is too simple. The case of Donziger v. Chevron has morphed into Chevron v. Donziger, which has morphed into Chevron v. Patton Boggs, which has morphed into Donziger v. Squire Patton Boggs.
It’s not even clear what to call the motion filed Wednesday night by Steven Donziger, the embattled U.S. counsel to the plaintiffs who won a $9.5 billion Amazon judgment against Chevron only to be labeled a fraud in a New York federal court judgment that is now on appeal. Is Donziger moving to unravel the settlement between Chevron and Donziger’s former co-counsel Patton Boggs? Or is he moving to scuttle the potential merger between Patton Boggs and Squire Sanders? A legal analysis suggests that the latter aim is more realistic.
On May 7, a New York federal judge entered the settlers’ Stipulation and Order of Dismissal by stamping “So ordered.” Donziger is now asking the court to reconsider this “approval” and “to reject the agreement until it conforms to the ethical rules.” With the help of three independent ethicists—Nora Freeman Engstrom of Stanford Law School, Morris Ratner of UC Hastings College of Law, and Catherine Rogers of Penn State Law School—let’s examine the four ethical arguments he makes, from weakest to strongest.
First, Donziger argues that Patton Boggs lacked grounds to withdraw under New York Rule of Professional Conduct 1.16. Our panel of experts agrees that this is a weak argument. The judgment is good law notwithstanding the appeal. Judge Lewis Kaplan may recall the 485 pages of reasons he gave Patton Boggs to think it might be advancing crimes or frauds if it remained in the case.
Second, Donziger says that with its public expression of regret Patton, violated its duty under Rule 1.16 not to prejudice its clients’ rights. Ratner says the problem here is that it is not clear how the court could unring that bell if it allowed Donziger’s motion to proceed. Rogers says this is too minor an objection to scuttle a deal, but one that might be addressed if there are greater ethical concerns.
Third, Donziger complains that by sandbagging its clients with news of the settlement, Patton offended its Rule 1.4 duty to keep its client informed. Rogers says this, too, is generally a minor concern, except in cases of systematic client neglect. At any rate, even the plaintiffs have suggested they were on notice. An appendix to this very motion says Patton Boggs told Ecuadorian counsel Pablo Fajardo in March that it wouldn’t undertake new work. After the May settlement, Fajardo stated: “In December 2013, the attorneys working on this case asked us to authorize them to get off the case because they were in the process of merging with another law firm. [This presumably referred to Patton Boggs' previous flirtation with Locke Lord.] In order for the merger to happen they needed out of this case. We authorized it, but we couldn’t stop it either.” More succinctly, Fajardo told a TV station: “That law firm hasn’t worked on the case for the past five months…. Tell me, how does that [settlement] affect our case?”
Ratner notes that Kaplan could easily make all these arguments go away on procedural grounds. He might, for instance, rule that the motion was untimely; or that a Rule 41 dismissal doesn’t require court approval. Rogers, on the other hand, suggests that judges have an obligation to ensure that a settlement comports with professional ethics.
In all likelihood, Donziger’s motion comes down to the last arrow in his quiver: that Patton’s cooperation with Chevron in discovery will violate its Rule 1.6 duty to keep client confidences, and its Rule 1.9 duty not to act in conflict with the interests of its former clients.
Rogers believes that the Rule 1.6 ethical objection is a serious one. Chevron seeks to learn about the financial structures set up to receive judgment funds to facilitate the court’s order that any funds collected by the plaintiffs in non-U.S. courts be placed in beneficial trust for Chevron. To do so, Chevron may need to fit this scenario into the Rule 1.6(b) exceptions for crime or fraud. Rogers cautions that the ethical inquiry is concerned with fraud or crime by the client itself, and that the acts of lawyers can’t simply be imputed to their clients as in a civil RICO setting.
But in a letter filed in court this afternoon, Patton Boggs counsel Elkan Abramowitz of Morvillo Abramowitz Grand Iason & Anello notes that the deal expressly contemplates that Patton’s discovery will be limited by ethical rules. So the Ecuadorian plaintiffs can simply voice their objections within the discovery proceeding. Ratner thinks this argument will play well.
In sum, Donziger’s motion is highly unlikely to scuttle Patton Boggs’ settlement with Chevron, That ought to secure Patton Boggs’ merger. There is, however, a distinct chance that Donziger already succeeded in scuttling the merger by disrupting its momentum. And if that destabilizes the firm, it would be a tragedy.
The only thing Chevron and Donziger agree on is that Patton Boggs behaved unethically. This is not flattering. But it certainly does not justify placing in limbo a proud institution on which many hundreds of innocent, hard-working professionals depend for their living.
Michael D. Goldhaber serves as the senior international correspondent and “Global Lawyer” columnist for The American Lawyer and the ALM media group. He writes widely on international law, with special interests in arbitration and human rights. Contact him at email@example.com.