Addleshaws to share risk in oligarch showdown
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Firm commits to multimillion-pound ’no win, no fee’ arrangement for billionaire Berezovsky
Mark Hastings
Addleshaw Goddard is to throw its financial weight behind the biggest litigation of 2011 after agreeing a conditional fee arrangement (CFA) with self-exiled Russian oligarch Boris Berezovsky.
The move marks a step change in how City firms approach alternative funding strategies in landmark trials and puts the firm at the forefront of developments in the area.
The CFA, or ’no win, no fee’ deal, agreed with Berezovsky means that if Addleshaws wins his $4bn (£2.5bn) claim against Roman Abramovich it will be in line to be awarded a success fee running into tens of millions of pounds. It is believed the firm has taken out legal expenses insurance to cover the risk of losing, in which case its fees would be left unpaid.
Addleshaws’ youngest-ever equity partner Mark Hastings is leading Berezovsky’s claim against Abramovich, while partner John Kelleher is leading his battle with the estate of his former business partner Arkady Patarkatsishvili.
Hastings said the firm was responding to client demand.
“The litigation landscape has changed dramatically in the UK,” he added. ”Increasingly, our clients expect us to back our judgement and share in their risk. In doing so we’re actively demonstrating our commitment to them.”
Both trials have been scheduled to run in tandem for 10 weeks at the Commercial Court in October next year.
This comes after Mr Justice Coleman rejected Abramovich’s application to have the case thrown out (The Lawyer, 31 March). That three-week strike-out hearing, in which Skadden Arps Slate Meagher & Flom partner Paul Mitchard QC represented Abramovich, is thought to have earned Addleshaws £8m in fees, and with an appeal set to be heard in January costs are expected to escalate significantly.
Addleshaws has made no secret of its determination to push forward alternative funding methods, but until now the firm has appeared to be quite conservative.
However, the appetite from wealthier litigants for alternative funding arrangements is rising, providing more opportunities for investment.
One senior litigation partner commented: “The real significance is that Berezovsky isn’t a man who can’t afford to pay his legal bills. He doesn’t need a CFA; they were designed to help people who couldn’t afford access to justice. Addleshaws is moving into new territory here and taking a big risk.”
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Readers' comments (12)
Pioneers | 8-Nov-2010 2:01 pm
He who dares wins, no? AG stand to gain a huge amount in the success fee (which I should imagine stands at 100%) if the case is successful and are covered for all their out of pocket expenses if they lose. They clearly think the case has decent prospects of success otherwise they wouldn't have dreamed of taking it on under a CFA. The publicity and future work attracted by this move is an added bonus.
Why are many lawyers so bloody conservative? In an age of austerity, it's not those who sit on their hands who will come out of it smelling of roses.
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AA | 8-Nov-2010 3:21 pm
Defeating the summary judgment application alone will have netted a pretty penny or two. Shoot for the pot and the yacht.
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Colllings | 8-Nov-2010 3:35 pm
I wonder how the solicitors acting for the other side would feel, if they were asked to act on the same basis?
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City Gent | 8-Nov-2010 5:41 pm
This is quite wrong. A success fee of this amount cannot fail to influence how the solicitors conduct the case and the advice they give.
They have far too much of a vested interest in the outcome, and there must be a serious risk that they would be tempted to agree an inadequate settlement simply to ensure they got paid. No way could they afford to gamble a few mill on getting a better outcome at trial.
CFA's are an iniquity at the best of times, but it doesn't matter too much when all that's at stake is a couple of thousand quid for some bottom-feeding ambulance chaser. When the `success fee' runs into millions it's an affront to any concept of justice and professionalism.
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Anonymous | 8-Nov-2010 8:24 pm
Mark Hastings the next Senior Partner at AG you heard it hear first?
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Insider | 8-Nov-2010 8:26 pm
I agree here here. Time to get rid of the old guard
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Anonymous | 9-Nov-2010 11:46 am
But I wonder how much the insurance policy cost to protect themselves? They will take the hit on that expense if they do lose and I am guessing it is not a nominal sum.
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Anonymous | 9-Nov-2010 3:46 pm
Whilst I fully advocate the use of CFA's and alternative funding methods generally the knock on effect of this arrangement may not be so positive - particuarly given the findings of LJ Jackson in his report.
As pointed out the CFA regime was established to provide Access to Justice. Clearly the above is going way beyond that and when this matter finally concludes and we see the massive figures that AG are seeking to recover by way of success fee and LEI premium then it will only add fuel to the arguments of those who seek to criticise the current system due to its cost on the public purse and ability to restrict freedom of speech. - Whilst clearly Mr Abramovich does have deep pockets not every defendant on the other side of a funding notice does have.
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Pusillanimous Pedant | 9-Nov-2010 4:55 pm
Can't anyone spell here? Or hear? Oh dear.
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Kim Philby | 11-Nov-2010 11:22 am
Battle of Hastings?
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