Wined and dined
A City law firm partner was encouraged to consume alcohol over a lengthy lunch and dinner by private spies posing as prospective clients, in a covert sting the Court of Appeal has condemned as having “no place in litigation in the courts of England and Wales”.
The lengthy judgment published this week reveals the operation was run by Black Cube, a private intelligence outfit staffed by former Israeli intelligence officers. Its target was an unnamed partner at DWF who had conduct of the defence in a dispute over £300 million of shares.
The claimants in the proceedings, Mexican billionaire Ricardo Salinas Pliego and one of his companies, hired the firm to go after the partner in what the court called a “deliberate and sophisticated scheme.
“[It was] carried out with the knowledge and approval of the claimants, with a view to obtaining confidential and privileged information which would assist the claimants in the litigation”, the Court of Appeal said. “Whether or not as a result of the psychological profiling which was part of its services, Black Cube had picked its target well. The operation was successful.”
A Black Cube operative calling himself ‘Mr Ortelli’ posed as the representative of an Italian oil company wanting a lawyer for a real, publicly-known arbitration against the UAE government. After an opening Zoom meeting, the DWF partner was flown to Amsterdam, all expenses covered. There he was steered over lunch and then dinner (the rarely-drinking solicitor was persuaded to consume alcohol) into discussing the very case he was running, according to the published ruling.
Among ‘Ortelli’s’ questions was “what would be the main flaws and challenges that you have in your case?” and “what tactics… are you using to make the other party fade out.” The partner was “deceived and played for a fool by a skilful and well-prepared interrogator armed with insider knowledge,” the court found.
The price for insider info was eye-watering. The ruling reveals Black Cube was on a £1 million plus retainer, with a £220,000 bonus for a witness statement and a further £250,000 if its intelligence triggered a criminal investigation against the defendants anywhere. There was also a success fee of 4% of whatever the claimants ultimately recovered.
That gave Black Cube “a powerful incentive” to adopt “unethical methods”, as the claimants must have understood, the court noted. The claimants had tried to redact those terms as commercially sensitive, but the court ordered them unredacted, seeing “no justification” for hiding them.
“Some things are so obvious that they do not need much analysis,” the court said of the argument that this was not an abuse of process, holding that targeting of the other side’s solicitor by deception “is a form of corruption”. While reaching no final view on criminality, he flagged that the initial lie may well have been “fraud by false representation”, and that dangling “lucrative new business” to loosen the partner’s tongue may have constituted an offence under section 1 of the Bribery Act 2010.
He also warned solicitors tempted to use the fruits of “privilege hunting” that they risk “encouraging, or assisting their clients to benefit from, the commission of criminal offences.”
The ruling describes the covert operation’s consequences as “dramatic.” The partner now potentially faces SRA disciplinary proceedings and possible “professional ruin”. For the defendants, the fallout led to a change of legal representation, with DWF being replaced by another firm, “no doubt as a result of the breakdown in trust and confidence caused by X’s revelations.” The court expressed its shock that it was actually the claimants in the proceedings who made the complaint to the regulator, describing the move as “extraordinary.”
The Court of Appeal eventually ruled that, despite these events, the case should proceed to trial.
A DWF spokesman told Legal Cheek:
“We take this matter very seriously, but as these issues remain subject to ongoing court proceedings, it would not be appropriate to comment further.”
Black Cube, meanwhile, told The Telegraph that the “evidence was legally obtained and that fact was not contradicted by the court.”