Risky business

Addleshaw Goddard’s decision to bankroll the multi-billion dollar cases being pursued through the High Court by client Boris Berezovsky demonstrates the firm’s confidence in its litigation practice, despite the exit of practice chief Simon Twigden.

Mark Hastings
Mark Hastings

The firm has agreed a conditional fee agreement (CFA) with the self-exiled oligarch, paving the way for it to cash in if the case is successful in the High Court.

Berezovsky became a client of the firm in October 2008 after he parted company with Cadwalader Wickersham & Taft.

Partner Mark Hastings – Addleshaws’ youngest equity partner – is leading Berezovsky’s $4bn claim against Chelsea Football Club owner Roman Abramovich, while partner John Kelleher is leading the oligarch’s battle with the estate of his former business partner Arkady Patarkatsishvili.

The decision to back the cases on a CFA basis marks a step change in how firms are responding to client demands for alternative fee structure in litigation.

Plenty has been said about the importance of value-added services during the recession and there have been many calls for alternative fees structures from clients, but until now litigators appear to have shown a muted response.

Addleshaws’ decision to throw its financial weight behind the case – a decision that went through the higher echelons of the firm’s management – may be a risk, but City litigators believe it is a shrewd move on many tactical fronts.

One Freshfields litigator comments: “Of course it’s a risk on something of this magnitude, but for Addleshaw Goddard this is about its positioning in the market. If it can say it’s doing this massive litigation on no-win no-fee, it’ll raise its profile massively – it also means they get to keep the case.”

It has been a tough year for Addleshaws’ litigation practice, but one in which it has not been distracted from the firm’s core focus of encouraging the use of alternative fee arrangements.

In January, following the publications of Lord Justice Jackson’s civil litigation costs, the firm’s then head of litigation Simon Twigden pledged to embrace the contingency fee model if it were to be enacted in England and Wales (18 January 2010 https://www.thelawyer.com/addleshaws-to-adapt-contingency-fees-post-jackson/1003147.article).

Then, after losing out on the race to be voted in as Addleshaws’ chairman in April,  Twigden unexpectedly quit the firm after announcing his intention to set up a boutique (23 April 2010 https://www.thelawyer.com/addleshaws-litigation-chief-quits-to-set-up-boutique/1004190.article). This sparked rumours that he was about to walk off with the firm’s biggest client, Berzovsky, giving him a strong base from which to launch his new firm, Enyo Law.

Hastings and Kelleher kept the client, but the firm lost two more partners – Pietro  Marino and Michael Green – to Enyo Law as well as eight associates.

This means the firm urgently needs to bulk up and the Berezovsky case is perceived by the firm to be one that will win it new recruits.

A source close to the case said: “Young lawyers see our guys doing this exciting and controversial case while they’re doing boring disclosure exercises for months on end, of course they want to be on the big cases.”

Alternative funding on this level may be risky business, but under the circumstances it has just as many benefits for Addleshaws as it does for Berezovsky.