It’s all gone a bit quiet over at Herbert Smith. The collapse of Equitable Life’s massive £2.6bn professional negligence claim against Ernst & Young (E&Y) is an unaccustomed failure for the City’s premier litigation firm.
Mark Hapgood QC’s taunt, during E&Y’s victorious press conference, that the case represented the “biggest climbdown in legal history” is the most glorious soundbite to come out of a major piece of litigation. Mind you, the Equitable case was not short of a few soundbites: rarely have two sides been so outspoken.
Back in August, Barlow Lyde & Gilbert’s Clare Canning told The Lawyer: “This is one of the worst examples ever seen of the disreputable tactic of making a hugely inflated claim in the hope of forcing a settlement out of fear of litigation risk.”
When E&Y withdrew five partners from taking the stand before the summer break, Equitable chairman Vanni Treves said: “E&Y must now realise that their defence is bleak, fruitless and doomed to failure and we call on them to admit negligence.”
Bleak, fruitless and doomed to failure, eh? Everyone enjoys a spot of hindsight, but Equitable and its team of Herbert Smith and 20 Essex Street were always on a sticky wicket when it came to causation: how could it be proved that the Equitable board would have acted differently? That was not helped by the fact that it was suing the directors – a case which as The Lawyer went to press was ongoing, but the odds on that continuing are lengthening by the day.
The moment the directors trooped into the box and said none of them would have acted differently, Herbert Smith and 20 Essex Street would have known the game was up. The US system of pre-trial depositions would have come in useful there; instead, Equitable’s team was comprehensively wrongfooted.
Professional services firms will applaud E&Y’s steadfast refusal to cave in. “There was a serious bullying element here – they thought they’d make the figures really big and maybe we’d settle,” says a source close to E&Y.
Two other observations. First, a pointer for all those firms that claim part-time working is incompatible with front-line fee-earning. Canning, the Barlows partner who is surely now anointed as the finest litigator in the City, works four days a week.
Second, in a piece of ghastly timing, Herbert Smith is, er, holding a press party this week. For its litigation department.
I can’t imagine that they’re looking forward to it.