Biglaw, Law Firm Mergers, Partner Issues, Patton Boggs

Patton Boggs Raises The White Flag In The Chevron Battle

On Monday, we heard rumors of momentous events at Patton Boggs, the troubled law and lobbying firm. One of the rumors was that the partnership was holding a meeting to vote on something major — although what exactly was not revealed.

We reached out to Patton Boggs, which shot down the rumors of a meeting, so we ended up not doing a story. But there may have been some truth to reports of exciting goings-on at the firm — developments that could help the firm in its struggle for survival.

The firm just removed the albatross of litigation with oil giant Chevron from around its neck. As you may recall, Chevron sued Patton Boggs for PB’s representation of plaintiffs in an Ecuadorian environmental case that Chevron alleged was nothing more than a shakedown — a view that Judge Lewis Kaplan (S.D.N.Y.) vindicated in March.

But escaping from the Chevron quagmire did not come cheap for Patton Boggs. How much did the firm have to cough up to make this case go away?

Here’s a report from the Washington Post:

Chevron and Patton Boggs have settled disputes linked to long-running litigation over toxic drilling waste pits in Ecuador, with Patton Boggs agreeing to pay Chevron $15 million, issue a statement of regret, and withdraw from the Ecuador case. Chevron agreed to release all claims against Patton Boggs and its partners.

The settlement is a stunning and highly unusual setback for any law firm, let alone the nation’s leading lobbying firm, long a bedrock of the Washington establishment.

“Stunning and highly unusual” is putting it mildly. Not only is Patton Boggs dropping its clients and withdrawing from the case, but it’s also paying millions to the opposing party. Ouch. As Paul Barrett just wrote over at BloombergBusinessweek, “In nearly three decades of writing about the law business, I can’t think of a comparable retreat.”

Patton Boggs sent us the following statement about the news:

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.

You bet they do. The case has cost Patton Boggs far more than the $15 million it will pay to Chevron. Many observers blame the Chevron entanglement for contributing to Patton Boggs’s current troubled state and for complicating the firm’s efforts to find a suitor.

Now that it has put the Chevron mess behind it, perhaps Patton Boggs can connect with Squire Sanders or Dentons, two of the firms said to be interested in a possible tie-up. Good luck to Patton Boggs as it tries to right its ship — and preserve the jobs of the lawyers and staff who work there.

UPDATE (1:15 p.m.): The Ecuadorian villagers who are going up against Chevron are not pleased — especially because the settlement calls for Patton Boggs to cooperate to some extent with Chevron’s efforts to shut down the litigation (e.g., by making PB lawyers available for depositions about their work on the case). See the villagers’ press release, Rainforest Villagers Exploring Legal Action to Nullify Settlement Between Patton Boggs and Chevron.

UPDATE (5/8/2014, 11:30 a.m.): It looks like Dentons is out of the picture (for now). According to the National Law Journal, Dentons “had approached the firm with a draft merger proposal in late March, but Patton Boggs didn’t engage because it had promised Squire Sanders exclusivity in the talks.”

(Flip to the next page for the full settlement agreement. Feel free to share your observations about it in the comments.)

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