“Although we expect internal investigations to be thorough, we do not expect companies to aimlessly boil the ocean,” assistant attorney general Leslie Caldwell said in a speech in November 2014. A law firm’s challenge is to be so thorough as to please the regulator without alienating the client. Facing the same dilemma, Dechert and Sullivan & Cromwell made opposing choices. Now each is drawing scrutiny of its own.
Eurasian Natural Resources Corp. hired Dechert in 2011 to probe Kazakh corruption allegations, but the law firm broadened the focus of its investigation to Africa. Dechert billed ENRC $23.5 million. Whether because Dechert was too honest about what it found, or because, in ENRC’s words, the firm engaged in “systematic and gross overcharging,” ENRC fired Dechert in 2013, shortly before the Africa report was due. Challenging the fees in court, general counsel Beat Ehrensberger testified that “Dechert made decisions regarding the methods and scope of investigation for the principal purpose of expanding the work to generate higher fees.” More colorfully, the GC testified that Dechert’s Neil Gerrard reportedly referred to himself as being “in rape mode.”
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