High Court orders Berezovsky trustees to pay £12.6m legal fee to Addleshaws

The High Court has ordered the trustees of Boris Berezovsky’s estate to hand over more than £12m in unpaid legal fees to Addleshaw Goddard.

Details of the case emerged today (28 July 2014) in a judgment that detailed how the estate’s trustees, Grant Thornton partners Nick Wood and Kevin Hellard, challenged how the firm structured its billings for the now deceased oligarch.

High Court

Russian oligarch Boris Berezovsky, who was found dead at his home in March 2013, had instructed Addleshaws partners Mark Hastings and John Kelleher to act in two multi-billion pound pieces of litigation back in 2012. This latest ruling relates to the chancery proceedings, which were settled after Berezovsky lost his case to rival Roman Abramovich in August 2012 (31 August 2012)

The chancery proceedings pitched Berezovsky against three defendants, Russian metal magnate Vasily Anisimov, the estate of Arkady “Badri” Patarkatsishvili, formerly Georgia’s richest man, and investment company Salford Capital Partners.

The case revolved around allegations made by Berezovsky that a significant proportion of assets and funds worth between $2bn and $3bn (£1.3bn and £1.9bn) held on estate by Patarkatsishvili, as well as assets held by Anisimov, were in fact part-owned by Berezovsky.

The case settled without admission of liability, but after Berezovsky’s death questions remained over whether Addleshaws’ fees would be settled.

According to the judgment Grant Thornton’s barrister, 20 Essex Street’s Stephen Atherton QC, had sought to convince the court that the £12.6m Contentious Business Agreement (CBA) agreed between the firm and Berezovsky was in fact invalid.

In  August 2013, the then administrators wrote to Addleshaws warning that it would fight any attempt to recover the fee.

The letter stated: “Even assuming the totality of the £12,822,120.95 claimed by your firm is due from the Estate, your firm presently has no proprietary or secured claim to those fees. The terms of the Settlement Deed do not grant your firm a proprietary interest in the [Monies] and a preserving lien does not provide any such right either, but merely entitles a solicitor to ask the court for assistance to enforce the payment of their fees as against a client.”

Hastings, who was listed in The Lawyer Hot 100 in 2010, provided several witness statements to the court outlining how the fee was structured. The judgment reveals that while £9m had already been paid to the firm in relation to the chancery proceedings, a further £12.6m was now due in accordance with the CBA.

Atherton asked the court to consider several points. They included whether Berezovsky was properly advised to sign the CBA; whether it could now be enforced or if the fees could be considered excessive or unreasonable in anyway; and whether the 100 per cent success fee was “fair and reasonable”.

In his ruling costs judge Master Campbell, sitting in the senior costs office, ruled in favour of Addleshaws on all points. He held that Berezovsky was well aware of the agreement he had signed with the firm and had he lived would have handed over the fees.

The judge said: “This was not a case where an inexperienced individual had signed a document which he had negotiated himself without the benefit of legal advice. Here it was the reverse: this was an experienced businessman who took advice before signing it. The submission casting doubt about the validity of the CBA arising from the circumstances of its execution, accordingly fails.”

On the issue of the success fee, he ruled: “For AG, the firm took the risk that if the litigation failed, millions of pounds worth of work would have to be written off, but the quid pro quo for that was that if the actions succeeded, the firm would receive a bonus.

“I do not consider that the success fee is either unreasonable or unfair, having been commercially negotiated by both sides in the way I have described, so the point fails.”

Master Campbell ordered that the funds should be released to Addleshaws immediately.

He stated: “The fees were hard earned on AG’s part and without the firm’s exertions, the creditors could usefully reflect that there would have been no fund over which they can now lay claim. Given too, that but for his death, the money would long since have been paid to AG, I consider it is only just that the firm’s bills should be cleared without further delay.”

It is understood that the firm collected £45m in fees for the cases with a further £5m allocated to barrister disbursements.

Hastings and Kelleher were believed to be the top-billing partners within Addleshaws, drawing in revenues upwards of £15m each in 2012. Hastings became the firm’s youngest equity partner, having been voted in 2011.

A statement from Addleshaws said: “Addleshaw Goddard has not, and will not discuss the arrangements this firm entered into with the late Mr Berezovsky, save to say that the steps the firm has taken are to ensure that funds are paid in accordance with the arrangements agreed and the instructions given by the late Mr Berezovsky.  We will be making no further comment.”

Grant Thornton is planning to appeal the decision.

The legal line-up:

For the claimant, Addleshaw Goddard

4 New Square’s Nicholas Bacon QC, leading South Square’s John Briggs and Daniel Saoul also of 4 New Square, instructed by Addleshaw Goddard

For the defendants, Grant Thornton partners Nick Wood and Kevin Hellard

20 Essex Street’s Stephen Atherton QC leading 4 New Square’s Robert Marven, instructed by Holman Fenwick Willan partner Noel Campbell