(Adds comment by Patton Boggs, statement by Ecuadorean
villagers and additional settlement detail)
By Casey Sullivan
NEW YORK May 7 In a deal that could pave the
way for a major law firm merger, Washington law and lobbying
firm Patton Boggs has agreed to pay $15 million to settle claims
by Chevron Corp that it tried to enforce an $18 billion
pollution judgment in Ecuador against the oil company it knew
was obtained through fraud and corruption.
Chevron said on Wednesday that Patton Boggs had also
expressed regret for its involvement in the Ecuadorean case,
from which it would remove itself. In exchange, Chevron said it
would drop claims of fraud, deceit and malicious prosecution
against the 300-lawyer firm.
"We are pleased that Patton Boggs is ending its association
with the fraudulent and extortionate Ecuador litigation scheme."
Hewitt Pate, Chevron general counsel, said in a statement.
Ecuadorean villagers who had sued Chevron for polluting its
rainforest released a statement condemning Patton Boggs'
"betrayal" and said they were exploring their legal options
against the law firm.
The settlement on Wednesday marks Chevron's latest victory
in the battle it has waged to make sure the judgment in Ecuador
was deemed fraudulent and not enforceable.
It also comes at a crucial time for the beleaguered Patton
Boggs, which has been in merger talks with the larger
1,300-lawyer firm Squire Sanders since February after seeing
revenue wane and partners defect.
"Everyone is breathing a sigh of relief because (the
settlement) paves the way for the merger to go forward," said
one former Patton Boggs lawyer.
Squire Sanders Chairman James Maiwurm did not respond to a
request for comment.
Patton Boggs managing partner Edward Newberry did not
respond to a request for comment. A firm spokeswoman said in a
statement there had recently been "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."
The $15 million payment is considered surprisingly high for
Patton Boggs, especially given its delicate financial state,
according to three former Patton Boggs lawyers.
Besides the payment to Chevron, the settlement requires
Patton Boggs to give the oil company any future legal fees it
receives in the case and proceeds from enforcing the Ecuadorean
judgment, as well as to cooperate with Chevron's discovery
efforts in the case going forward.
The settlement comes on the heels of two developments in the
case. In March, a New York federal judge found plaintiffs lawyer
Steven Donziger and his legal team used fraud and corruption to
secure the 2011 judgment in Ecuador on behalf of the villagers.
Donziger is appealing.
Shortly afterward, on April 3, Chevron sued Patton Boggs,
accusing it of trying to enforce the $18 billion pollution
judgment that the law firm knew had been obtained through
fraudulent tactics by plaintiffs lawyers led by Donziger.
Chevron claimed that Patton Boggs partner James Tyrrell took
the case despite having ethical concerns about its merits but
did so because of "enormous financial pressure at Patton Boggs,"
according to court papers.
Tyrrell did not respond to a request for comment.
(Reporting by Casey Sullivan; Editing by Ted Botha, Jeffrey
Benkoe and Sofina Mirza-Reid)