Lago Agrio: Chevron Settles With Patton Boggs

Yesterday Chevron settled its claims against Patton Boggs. This was probably inevitable after the dismissal of Patton Boggs’s claims against Chevron. Patton Boggs is trying to consummate a merger with Squire Sanders, and it’s hard to imagine anyone agreeing to the merger while Chevron’s claim was unresolved.

Marcus Junius Brutus
Et tu, Calmbacher Reyes the Huaorani people Burford Capital Stratus Consulting Beltman Maest Bogart Patton Boggs?
So no one should be surprised by the settlement or by the fact that money is going to change hands, to the tune of $15 million. But everything else about the settlement is remarkable. Patton Boggs has done what all of the others who have settled have done: it has turned on Donziger and the LAPs. It has agreed to provide discovery to Chevron and agreed not to aid anyone in any effort to enforce the Lago Agrio judgment. And it has issued a highly unusual statement of regret:

Today’s resolution of our firm’s disputes with Chevron ends our involvement in the Lago Agrio matter. The recent opinion of the United States District Court for the Southern District of New York in the Chevron v. Donziger case includes a number of factual findings about matters which would have materially affected our firm’s decision to become involved and stay involved as counsel here. Based on the Court’s findings, Patton Boggs regrets its involvement in this matter.

I would love to see the file memo on the legal ethics aspects of all this! It’s one thing for an environmental consultant to turn on its client and quite another for a lawyer. I’m particularly interested in how much discovery Patton Boggs will ethically be able to give Chevron in light of the rule on disclosures of information regarding former clients. Donizger has said that he may seek an injunction to prevent Patton Boggs from turning over material to Chevron.

I have two basic reactions to this latest defection. The first is admiration for what Gibson Dunn has achieved. Wow! I never thought I would see a major law firm turn on its former clients in this way. I understand just how gobsmacked Donziger and the LAPs must feel by their former lawyers’ betrayal, and while as I note below I acknowledge the pressures on Patton Boggs, I think we need to take a hard look at the legal ethics of what the firm has agreed to do. The masterminds behind Chevron’s campaign to turn Donziger’s former allies against him have accomplished everything they set out to do, as far as I can tell.

My second reaction, though, points in another direction. Is there not something unseemly about forcing Patton Boggs, and maybe the other turncoats, to abase themselves in this way? I liken the situation to plea bargains in federal criminal cases. We all know that pressures prosecutors are able to bring to bear due to factors such as mandatory minimum sentences lead some number of people who are actually innocent to plead guilty to crimes, but when you plead guilty you have to admit the facts that constitute the crime and you have to assert that your plea is voluntary, even if you’re not guilty in fact and even if your plea isn’t voluntary except in the most formal sense of the word. The commercial and litigation pressures Chevron has been able to bring to bear have been immense, and they have borne fruit. If you complain about the injustice of this to a prosecutor, he or she will reject the premise of the complaint: “the defendant pleaded guilty voluntarily because he is guilty, period.” Chevron can do likewise. But still, it leaves a bad taste in my mouth. Alison Frankel expressed a similar thought in her reaction to the settlement: “Chevron,” she writes, “is a litigation bully. Its weapons are time, money and intimidation.” I would put it a little differently. Chevron’s victories are like the United States’s victory after dropping the atomic bombs. After the street parties and the champagne, we have to ask: is this way of waging war a good thing for the world? Because if there’s one thing I think we can say with confidence, it’s that many other firms and litigants are going to look to Gibson Dunn’s achievements as a model of how to turn lemons into lemonade.

Photo credit: Marie-Lan Nguyen

15 responses to “Lago Agrio: Chevron Settles With Patton Boggs”

  1. Doug Cassel

    Dear Ted,

    Thanks for your post, which alerted me to Patton Boggs’ capitulation (although in light of recent developments, as you note, the news was hardly surprising).

    Your post prompts me to comment on three aspects: first, the ethical issues; second, Alison Frankel’s characterization of Chevron as “bullying,” which you quote, but “would put a little differently;” and, third, your concern that Gibson Dunn’s aggressiveness may become a model for others.

    1. Ethics:

    I am not an expert on legal ethics. But like all members of the profession, I am bound to know and follow the rules as best I can. On first read, I do not see any ethical violations in the settlement, either in regard to Patton Boggs’ withdrawal from representing the Lago Agrio Plaintiffs or in regard to the firm’s agreement to provide discovery to Chevron.

    Patton Boggs’ lawyers are admitted in various jurisdictions, each with its own ethical rules, which I have not individually researched. As a first cut, I look to the American Bar Association Model Rules of Professional Conduct, which have been adopted in all or nearly all States (but often with modifications).

    a. Withdrawal from Representation

    ABA Rule 1.16 governs “Declining or Terminating Representation.” Rules 1.16 (b) (2) and (3) provide that “a lawyer may withdraw from representing a client” if:

    “(2) the client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is criminal or fraudulent;” [or]

    “(3) the client has used the lawyer’s services to perpetrate a crime or fraud …”

    Patton Boggs’ settlement and statement do not specify whether the firm relies on either or both of these propositions (or, more precisely, on their incorporation in the rules of relevant jurisdictions, since lawyers are not directly bound by the ABA Model Rules). But without expressly referring to these concepts, the settlement agreement does so by implication.

    In paragraph 2(a) of the settlement agreement, Patton Boggs and its lawyers agree not to assist the Lago Agrio Plaintiffs in enforcing their Judgment or in litigation against Chevron relating to the same subject matter. The paragraph makes explicit: “This undertaking is made in express reliance upon the factual findings of fraudulent and illegal conduct made in the RICO Judgment.”

    Paragraph 8 further commits Patton Boggs to make the public statement which, in fact, it has now made. The firm states that the RICO Judgment “contains a number of factual findings about matters which would have materially affected our firm’s decision to become involved and to stay involved as counsel here. Based on the Court’s findings, Patton Boggs regrets its involvement in this matter.”

    Taken together or even separately, paragraphs 2 (a) and 8, fairly read, are invocations by Patton Boggs of its ethical right to withdraw as counsel for the Lago Agrio plaintiffs. The firm does not specify whether it believes that its services were misused to perpetrate a fraud (ABA Rule 1.16 (b) (3)), or instead that its continued services would involve it in a course of action which the firm reasonably believes to be criminal or fraudulent (Rule 1.16 (b) (2)), or both. But the clear implication is that the firm believes that at least one of these provisions applies.

    The firm’s lack of specificity does not seem to be a valid objection to the withdrawal. ABA Comment (3) to Rule 1.16 explains:

    “Difficulty may be encountered if withdrawal is based on the client’s demand that the lawyer engage in unprofessional conduct. The court may request an explanation for the withdrawal, while the lawyer may be bound to keep confidential the facts that would constitute such an explanation. The lawyer’s statement that professional considerations require termination of the representation ordinarily should be accepted as sufficient. Lawyers should be mindful of their obligations to both clients and the court …”

    Prima facie, then, it appears that Patton Boggs had ethical grounds for withdrawal based on fraud in the litigation.

    Rule 1.16 (c) also requires notice to or permission of the court where required by law, and requires a lawyer to continue to represent a client if so ordered by the court, even when there are grounds for withdrawal. I have not checked the laws of the various jurisdictions in which Patton Boggs has assisted the Lago Agrio plaintiffs, but the firm has given notice to Judge Kaplan and the settlement is expressly made “subject to the approval of the Court.”

    The ABA also requires that withdrawal be done in a manner which does not needlessly prejudice the client. Rule 1.16 (d) requires: “Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client’s interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred.”

    Paragraph 2 (b) of the settlement agreement envisions compliance with this obligation. It authorizes Patton Boggs’ attorneys to “comply with their obligations to the LAPs [Lago Agrio Plaintiffs], as former clients, under applicable law and the Rules of Professional Conduct, with respect to transitional matters such as turning over its file … or a copy thereof to counsel designated by the LAPs or their representatives and communicating with the LAPs and their designated counsel concerning the transition to successor counsel …”

    b. Discovery

    The settlement agreement provisions on discovery are similarly made subject to ethical obligations. Paragraph 5 (c) provides that Patton Boggs shall cooperate in discovery “subject to all applicable Rules of Professional Conduct.” The firm commits to inform the LAPs of all depositions and document requests, and the LAPs “shall be afforded an opportunity to assert any privilege or work product protection.” Under paragraph 5 (b), Patton Boggs may likewise claim privilege (including attorney-client privilege) and work product. All unresolved disputes on privilege claims by the LAPs or by Patton Boggs are to be decided by the Court.

    (The findings of fraud in the RICO case may afford Patton Boggs some leeway to disclose what would otherwise be confidential attorney-client information. ABA Model Rule 1.6 (b) (3) authorizes a lawyer to reveal “information relating to the representation of a client” to the extent the lawyer reasonably believes necessary to “mitigate or rectify substantial injury to the financial interests … of another that is reasonably certain to result or has resulted from the client’s commission of … fraud in furtherance of which the client has used the lawyer’s services …”)

    Experts may spot something I missed. But the settlement agreement looks ethical to me.

    2. Chevron’s “Bullying”

    You quote, but do not embrace, Alison Frankel’s rhetoric that Chevron is a “litigation bully. Its weapons are time, money and intimidation.” She cites Chevron’s suing the lawyers who committed fraud against it, and the company’s suing and bringing discovery actions against others who collaborated with the fraudsters or had relevant knowledge.

    But what Frankel calls bullying is, in fact, self-defense. Was Chevron supposed to just sit back and let itself be extorted, without utilizing available legal remedies? Granted, the company has more resources than its opponents, but is a wealthy defendant required to defend itself with one hand tied behind its back?

    Frankel is right that Chevron was “relentless.” But so was Donziger. The difference is that Donziger relentlessly lied, both about the supposed evidence of pollution attributable to Chevron, and about his own fraudulent conduct. A less monied defendant might never have had the resources to unmask the charade. Chevron did.

    This is not to defend Chevron’s every tactic. Like many parties to heated litigation, at times the company overreached. For example, the subpoena of the email of Australian law professor and Opinio Juris blogger Kevin Jon Heller (with whom I have sparred), simply because he had some contact with the Lago Agrio plaintiffs, was ill-advised in the extreme (and quickly withdrawn when challenged). But Chevron can hardly be faulted for suing and bringing discovery actions against Donziger and others found in the RICO judgment to have engaged in fraud, bribery, extortion, money laundering, witness tampering and obstruction of justice.

    3. A New “Model”?

    You worry that other companies, presumably with less meritorious defenses than Chevron’s, may imitate Gibson Dunn’s aggressive tactics. That is a legitimate concern, to which judges must be alert. But courts have the tools to address any such misguided missiles. Courts can sanction lawyers for filing unsubstantiated lawsuits or oppressive discovery. Courts can deny discovery requests. They can grant summary judgment.

    The reality is that Gibson Dunn prevailed, not only by being smart and aggressive, but because the facts turned out to be on their side. As long as judges are attentive to fairness, the same aggressive tactics in a different case – where accusations of fraud turn up empty – could backfire.

    There is also another “model” about which to worry: Donziger’s boast that he has invented a new model of combining litigation, publicity and community organizing, in order to bring a powerful defendant to its knees. (Apparently he is not familiar with the widespread use of similar techniques during the civil rights movement in the US.) Unfortunately, Donziger’s version of the model includes a fourth element: fraud. He has brought dishonor on the good name of human rights. In the end (at least so far), his perversion of justice has served no one but his own ego. Human rights lawyers must appreciate that we cannot pursue justice for our clients by committing crimes in the courtroom.

    1. Doug, on the questions of professional responsibility raised, I will say that I, like you, am not an expert, though of course I am responsible for knowing and following the rules of professional conduct. I don’t think the permissibility of withdrawing from the representation is the real issue (even assuming that the representation hadn’t already ended or that Donziger and the LAPs would not simply consent to the withdrawal, which may or may not have been the case). There’s withdrawal, and then there’s what’s called noisy withdrawal. A noisy withdrawal is ordinarily intended to protect third parties by signaling them that something the lawyer has said or done was tainted by the client’s fraud and shouldn’t be relied on, or to correct misstatements that the lawyer made to a court in reliance on the client, or the like. Here, as you point out, Patton Boggs’s statement didn’t really specify anything in particular that its clients had done wrong or that it had done wrong in reliance on its clients. To put it plainly: sometimes you have to withdraw from a representation, and sometimes it’s permissible to throw your client under the bus when you do. But even when you have to withdraw, I think you should only consider throwing your client under the bus if it’s necessary to protect innocent third parties, or when required to correct a misstatement to a court that the lawyer unwittingly made (or when the law requires, of course, but I don’t think that was the case here). I wonder whether what Patton Boggs has said in its statement of regret accomplishes anything other than giving Chevron another scalp. So the lack of specificity seems like a problem to me. It seems like disloyalty for the sake of Patton Boggs’s interests in resolving the case with Chevron rather than disloyalty for the sake of the interests that usually justify such a public break with a client.

      Then there’s the question of discovery. In an ordinary case when we talk about discovery we are talking about the attorney-client privilege rather than the rule of confidentiality. I wonder whether Patton Boggs agreed to participate in discovery rather than simply to provide the information voluntarily without formal proceedings in order to be able to say that its ordinary obligations of confidentiality were trumped and that it could only withhold privileged information. I think we need to see how this plays out.

      In any case, I am sure there are wicked awesome memoranda in the Patton Boggs files on the issues of professional responsibility raised by the settlement, and I don’t want to say that the settlement is itself a violation of any ethical rule or that it contemplates the violation of any ethical rule. But to a lawyer, for whom client confidentiality and loyalty are among the highest professional values, it poses real questions.

      1. Doug Cassel

        Dear Ted,

        Thanks for the helpful clarifications of your views. As to discovery, I agree that we will have to see how things play out. What is clear at this point, however, is that the discovery is explicitly supposed to comply with all rules of professional conduct, and that both Patton Boggs and the LAPs will have every opportunity to oppose any discovery requests on any of the usual grounds, and the final ruling will rest with the judge. The settlement agreement, as I read it, waives nothing in regard to discovery (other than that discovery will take place).

        In regard to “noisy” withdrawal, I think you understate the case for Patton Boggs’ making the public statement that it did, for two reasons. First, even accepting your view that a public statement by withdrawing counsel is “ordinarily” designed to protect third parties, or to correct something said to the Court, both limiting conditions apply here.

        There is a whole world of third parties out there — I meet them all the time — who still believe the LAPs’ propaganda. Many remain unmoved even in the face of Judge Kaplan’s opinion. Patton Boggs serves the interests of third parties by alerting them that even the former LAPs’ counsel, and architect of their worldwide enforcement strategy, now acknowledges that something is amiss, and that Judge Kaplan’s factual findings of fraud are credible. Of course, some third parties are ideologues or otherwise adamant; they will simply write off Patton Boggs’ statement as one more Chevron coup not worthy of belief. But not all. Some may now take a second look.

        As for correcting misstatements made to a court, plenty of misstatements — lies, in fact — were made to Judge Kaplan at the RICO trial. His ruling is now on appeal. Even though, as far as I know, Patton Boggs was not involved in the RICO trial, its public acceptance of Judge Kaplan’s findings of fraud (in the form of a document filed in court and signed by its attorneys, which can be cited in briefs to other courts), by a law firm deeply enmeshed in the underlying facts, is also a public service to courts reviewing Judge Kaplan’s opinion, whether on appeal or in related proceedings.

        Second, this is no ordinary case. The thrust of Donziger’s and the LAPs’ propaganda campaign — which is actively ongoing, worldwide, with formal chapters in many countries — is to claim, not only that Chevron lies about Lago Agrio, but that everyone else who acknowledges that Chevron may be right — whether they be Chevron’s own experts, the company’s outside experts, the LAPs’ former experts, the LAPs’ funders, the LAPs’ former lawyers, the BIT arbitrators, Judge Kaplan, you name it — are patsies who merely bowed to Chevron’s pressure, and are also not to be believed.

        In this context, by serving as their lawyers, Patton Boggs gave Donziger and the LAPs not only deep and able legal assistance, but also — importantly — credibility. Many observers unfamiliar with the facts of the case were reassured by the participation of a prestigious, establishment law firm on the side of the plaintiffs. In making its public statement, Patton Boggs not only does a service to uninformed observers, it also undoes some of the damage that several years of its highly publicized participation in the case inflicted on Chevron.

        For all these reasons, Patton Boggs’ public statement strikes me as not only ethical, but also the right thing to do for all concerned. At some point, one hopes, even some residents of Lago Agrio may come to suspect that they have been ill-served by the lawyers — Donziger chief among them — who purported to defend their interests.

        1. I don’t think that “third parties out there … who still believe the LAPs’ propaganda” qualify for these purposes as people who have been harmed. Nor do I think that Patton Boggs’s credibility requires a different analysis than a less highly regarded firm would have to undertake.

          1. Doug Cassel

            So you think Patton Boggs should simply have pulled out and said nothing about why they were doing so?

            1. I think if you have to withdraw from a matter for ethical reasons and you’re not ethically required to say why you’re withdrawing, then you shouldn’t say anything, so as to minimize the harm to your client.

              1. Doug Cassel

                Dear Ted,

                Your view strikes me as responsible and eminently understandable. I think many lawyers would agree with you. However, the ABA Model Rules, as I read them (non-expert on ethics that I am), appear to take a different view. ABA Rule 1.6(b)(3) states as follows:

                “(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:”

                “(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud in furtherance of which the client has used the lawyer’s services; …”

                As I argued in my earlier comments, I think Patton Boggs’ statement was indeed necessary to mitigate substantial injury to the financial interests of Chevron caused by the LAPs’ fraud. That is a question of fact and judgment. You may agree or disagree; if so, we could discuss that issue.

                But what seems clear from the ABA Rule is that a lawyer in a litigation fraud situation is not ethically constrained to consider only the clients’ interests, but may also consider the harm done to the opposing party, and reveal information relating to the representation accordingly.

                Again, I have not researched individual State rules, but Patton Boggs appears to me have acted ethically in accordance with the ABA Model Rule, at least.

                1. I think you may have hit the nail on the head. I do not believe that the reputational harm that seems to be your concern is what Rule 1.6 has in mind. I think the rule is intended for cases in which, for example, a lawyer representing a seller makes a misrepresentation about the goods being sold to the buyer and has to correct it when he learns that his client is engaged in fraud, or a lawyer for a public company has to correct a misrepresentation in an offering document that misleads shareholders. And so on. I could be wrong, but that’s the kind of thing I think the rule is aimed at. Anyway, Patton Boggs’s statement doesn’t really do anything, nor does it seem calculated to do anything, to remedy the reputational harm Chevron has suffered.

                  1. Doug Cassel

                    Financial harm is financial harm, whether reputational or otherwise. I don’t see the rationale for your narrowing interpretation of the plain language of the rule. (And I am too much of a lay lawyer in this field to know whether there is case law or drafting history supporting your position. The official ABA comment adheres to the plain language of the rule, without narrowing it.)

                    I agree that Patton Boggs’ very limited statement hardly cures the harm done to Chevron (in the language of the rule, it does not “rectify” the harm). But it helps: in the language of the rule, it “mitigates” the reputational harm (for the reasons stated in my comments above).

                    1. walker

                      I think your reading reputational harm in general into the rule is a little tenuous. Under your reading, a law firm defending a client against defamation claims could properly withdraw from the representation at any point and say that it regretted representing the client as long as the client had asserted truth as a defense to the charges. Moreover, your reading would diminish the significance of model rule 1.2(b), which states that “[a] lawyer’s representation of a client does not constitute an endorsement of the client’s political, economic, social or moral views or activities.”

                      In any event, this is a fascinating topic, and it got me to break out my model rules even after I’d already completed by final exam in ethics.

                2. And in any case, as I’ve said, I’m not asserting that Patton Boggs acted unethically. I think it’s just a problematic issue worthy of a better analysis than we’re probably giving it here!

  2. Peter Lynn

    With reference to your original post, I find it very refreshing that a professional lawyer, with no apparent axe to grind for either party, has questioned the ethics of Chevrons tactics. This does not seem to happen often, unless I am looking in the wrong places. Yet it seems incredible to me that by the time the RICO case came to trial, so many of Donzigers colleagues, from consultants to backers, had decided that the case they had passionately supported for years was in fact fraudulant and that they had been duped. I agree that Chevrons lawyers played a remarkable game in achieving this, but feel that if America is to remain proud of its justice system, then it needs to be more than a game in which corporations the size of Chevron have huge advantages.
    I agree with your comments implying that this could become the new model for corporations to fight litigation, and this is one of the reasons I consider this case to be important, and have done my best to follow it. Gibson Dunn and Crutcher already boast success in digging Dole Foods out of a hole in Nicaragua using similar tactics, and right now the only barrier to developing the model further appears to be the 2nd circuit. Hopefully they will see things very differently to Kaplan, otherwise corporate accountability will likely become non existant as no lawyer will dare take them on.

    1. Thanks, Peter, for the comment. I hope I have no axe to grind, though readers may disagree. It’s only fair to point out that to the extent I’m talking about legal ethics and professional responsibility here (particularly in the comments), I’m talking about Patton Boggs, not Gibson Dunn. The interesting question of professional responsibility, I think, has to do with whether Patton Boggs ought to have settled on terms that included making discovery available to Chevron and issuing its statement of regret. As I noted in a prior comment, I don’t have a firm view on this. What Gibson Dunn has done raises system-wide questions, but I am not sure they are questions of legal ethics or professional responsibility.

      1. Peter Lynn

        Thank you for responding.
        Unquestionably Patton Boggs should not have abandoned their clients. Not only have they done so, they have stabbed them in the back for good measure.
        However, what you also appeared to question, was what pressures caused this. Patton Boggs, you point out, were desperate for a merger, which was unlikely to happen with the Chevron case unresolved. The LAP team say that Chevron has used its might to scare off the opposition, and that is a position which seems to have merit. Patton Boggs are the latest example of an LAP ally with an Achilles’ heel.

        1. You’re right, I did point to Chevron’s campaign as a cause of Patton Boggs’s capitulation.

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