In 2015, Christopher Garvey was a top in-house lawyer at Morgan Stanley in Hong Kong, overseeing the bank’s merchant banking and real estate investment in Asia. His eyes were set on the next level: managing director.
Garvey would never get that chance. He is now pursuing a retaliation case against the investment bank, claiming he was pushed out after raising his concerns about alleged foreign bribery and securities regulations.
Garvey’s retaliation complaint, filed in 2016, is pending before a U.S. Labor Department judge, and the New York-based bank is contesting his version of events. The dispute is months away from any resolution, as the lawyers spar over evidence and other preliminary matters.
The case, previously unreported, already is teeing up novel legal issues. The latest clash centered on how much information Garvey can share with litigation funders — third-party firms that financially support legal disputes in exchange for a cut of any settlement or monetary judgment.
Garvey said he wanted outside funding to keep his case going and that, as a former in-house lawyer, he had access to confidential documents, according to filings at the Labor Department. Lawyers for Morgan Stanley, represented by Morgan, Lewis & Bockius, argued successfully that Garvey should be blocked from sharing confidential and proprietary business information with any litigation funders.
“[Garvey] certainly has a common business interest with his prospective funders. But given the unsettled nature of the law, I am not persuaded that complainant shares a common legal interest, especially when it comes to disseminating another party’s privileged materials,” Larry Merck, the presiding Labor Department judge, wrote in his ruling. He added: “There is no reason to believe that [Garvey] will be unable to secure a funder merely because he cannot share respondent’s privileged materials.”
Litigation funding is a relatively new phenomenon whose growth has exploded in recent years. As litigation funders have become increasingly involved in complex corporate cases, their ventures have raised a host of new legal issues. Disputes involving outside funding have presented judges vexing questions about evidence and attorney-client privilege.
In Garvey’s action against Morgan Stanley, Merck said he could find no other case where one party sought to stop a plaintiff from disclosing sensitive information to an outside litigation funder. More commonly, one side in a dispute wants to force the other to disclose details about a relationship with an outside financier. A recent study found that state and federal judges had mostly rejected demands to pierce the secrecy of financing arrangements.
“Most discovery disputes in cases with third-party funders involve a defendant attempting to access documents or communications related to the plaintiff’s funding agreement with the third party,” Merck, based in Washington, wrote in his ruling. “Whether a plaintiff enjoys some form of privilege with its funder is a contested area of the law.”
Garvey’s interest in litigation funding doesn’t appear speculative. A year after leaving Morgan Stanley, Garvey in 2017 founded the Europe-based Sachenga & Co., which bills itself as an “advisor on litigation finance that operates on a global basis.” The firm, with a presence in London and Madrid, said it will focus on areas including corporate misconduct, corruption and consumer protection.
Garvey declined to comment, citing orders from the Labor Department judge and what he said was a “high risk of reprisals from Morgan Stanley.”
Morgan Lewis partner Sarah Bouchard, a Philadelphia-based lawyer and co-leader of the law firm’s whistleblower group, referred questions to Morgan Stanley. A spokesperson for the bank said in a statement: “Morgan Stanley strongly denies Mr. Garvey’s allegations and will continue to vigorously defend itself against his meritless claims.”
A hearing on Garvey’s claims is not expected until early next year. Merck said it was too soon to say which documents Garvey would be prohibited from sharing with any outside litigation funder. The judge rejected Morgan Stanley’s push to bar Garvey from using privileged information at all in pursuing his whistleblower claims.
It was not immediately known whether Garvey’s claims, or Morgan Stanley’s investigation, substantiated any violation of federal law. The U.S. Justice Department declined to comment for this story.
A former top in-house lawyer at Morgan Stanley, Raja Chatterjee, now head of compliance at the real estate company Tishman Speyer, spoke in 2012 about foreign-bribery compliance at the bank, where he had served as global head of the anti-corruption group in the legal and compliance division.