Ardonagh attacks "bully" Gallagher as rivals return to court for closing statements

Insurance giant Gallagher was today accused in court of behaving like “the bully in the playground” in its recruitment war with the Ardonagh Group. 

And Gallagher chief executive Simon Matson faced claims that he was determined to “go to war” with rival chief executive, David Ross, and “wipe out” Ardonagh subsidiary Bishopsgate.

Gallagher has countered with claims that Ross was engaged in a “vendetta” against the company for which he worked for 25 years.

Ardonagh faces claims that it “conspired to injure” its rival’s business when it recruited four key personnel from Gallagher subsidiary Alesco Risk Management.

The case hinges on the departure from Gallagher of specialist energy brokers Peter Burton, James Brewin, Nawaf Hasan and Gerard Maginn.

They all joined either Bishopsgate or fellow Ardonagh subsidiary Price Forbes in the summer of 2017.

Gallagher claims it was an example of unlawful “team” recruitment, motivated by Ross’s desire for “revenge” against his former employers.

But, in his closing submissions to the court today, Ardonagh counsel David Craig QC insisted it was nothing of the sort.

Aggression

He criticised the massive “scale and aggression” of Gallagher’s response to recruitment practices that are “commonplace” in the industry.

And he claimed that Gallagher is motivated by its wish to “disrupt” Ardonagh’s business and to discourage other employees from leaving.

He told Mr Justice Freedman that the law “positively encourages” free competition and that successful brokers are in high demand.

He added: “Employees are entitled to move from one employer to another. There is nothing surprising, or sinister, in an employee moving to a competitor.

“There is nothing unlawful in a competitor recruiting a number of employees from the same employer at the same time.”

The barrister added that the four brokers in any event did not work together, or even in the same field, and were “not a team”.

They were all recruited individually because they were “unhappy and looking to leave” Gallagher, he told the court.

Ardonagh had heard that others in the industry were looking to take them on and mounted an “opportunistic”, but lawful, recruitment exercise.

“Mr Burton and Mr Hasan did not get along”, said Craig, and that was why they were given the code names Eddison and Tesla.

Electrical engineering pioneers, Nikola Tesla and Thomas Edison, “famously disliked each other”, he added.

Intent on building its business, “Bishopsgate wanted to recruit each of those four individuals, even if none of the others had been recruited”.

“That is unsurprising. They were, and are, on any view, attractive recruits,” said Craig.

“Recruitmernt between broking firms is commonplace and litigation such as this is exceptional.

“The court has clear contemporaneous evidence of the fact that Bishopsgate intended to recruit each individual separately, and lawfully.”

Disruption

The barrister claimed Gallagher would probably not have pursued the case had the four been recruited by a bigger player in the market, such as Aon.

He added: “There are multiple reasons why this litigation has been brought and pursued – at all, let alone on the scale and with the agression it has.

“Gallagher believed, rightly, that they would disrupt Ardonagh by pursuing this litigation.

“Mr Matson said in an unguarded exchange: ‘I want to wipe Bishopsgate out entirely’.

“That would not have been the case with an entity as large as Aon, and the bully in the playground does not pick a fight against a stronger adversary.”

And Craig told the judge: “Gallagher sees litigation as the cost of doing business where they can disrupt, and potentially destroy, a competitor’s business.

“On any view, Gallagher’s approach to Mr Ross is particularly ‘emotive’, to use Mr Matson’s word.

“Mr Matson told the court that the Gallaghers, Pat and Tom, are still extremely angry with Mr Ross because he chose to leave in 2015.

“This emotive litigation is being pursued in large part because of a highly personal animus towards Mr Ross.

“The irony will not be lost on the court. Gallagher alleges that Mr Ross was pursuing some sort of vendetta…by recruiting these four employees.

“But the reality is that it is Gallagher who have the hostility. The court will doubtless be familiar with the Freudian concept of transference.”

The barrister said: “Mr Matson made plain from the outset that he was ‘going to war’ with Mr Ross and that he wanted to ‘crush’ him.”

Gallagher, he added, has “a deserved reputation for using litigation to disrupt their competitors and to encourage employees not to leave.”

Strong message

Craig accused Gallagher of making “collateral use of this litigation” by publicising its aggressive stance to “send a strong message” to its staff.

He added: “The court should be in no doubt that part of Gallagher’s agenda in this case is to try to have the court make criticisms of Mr Burton, Mr Hasan and Mr Ross in order that they can try to persuade the Financial Conduct Authority to take some regulatory action against them, that could potentially end, or at least seriously inhibit, their careers. The court must be alive to this.”

Attacking Gallagher’s claim for millions of pounds in damages as “grossly exaggerated”, Craig said Matson’s immediate response to the four resignations was that Gallagher would “lose cost and retain revenue”.

Gallagher’s argument that it had to spend more than £10m on staff “retention awards” to ensure their loyalty after the spate of departures was simply “untenable”, he added.

“Retentions awards are commonplace within Gallagher’s business, as a form of bonus to ‘lock in’ employees who might be vulnerable to recruitment.

“The claims are based on a false premise, namely that each of the four would have stayed with Gallagher for years.

“That claim is simply unreal.  Each would have left Gallagher’s employ come what may in 2017, whether that was to Bishopsgate or to one of the many other firms pursuing them.

“They each wanted to leave Alesco. It is precisely because they wanted to move that Bishopsgate was able to recruit them.

“Each of the departing employees would have left Gallagher in any event, for the reasons they have described so vividly in their evidence.”

Toxic

Gallagher, the barrister claimed, were “well aware” that the four were “vulnerable to recruitment” and that competitors might be able to offer them equity or other packages which Gallagher could not match.

Craig added: “By early 2017, each of the four was looking to leave Alesco. 

“Gallagher may not think their reasons justified, or their criticisms of Alesco fair. But that is immaterial.

“Justified or not, these were real concerns, genuinely felt, and the employees wanted out.”

Gallagher’s witnesses were “at pains to underscore their respect and admiration” for the four, but Craig said there was evidence that senior management viewed them as “toxic”.

He added: “The language used by Gallagher’s most senior managers in relation to individuals who where then serving Alesco employees is remarkable.

“These were not passing remarks by jealous colleagues. They are the consistent observations of Gallagher’s most senior managers.”

And he told the judge: “The four’s concerns that they were not valued, or not respected, were not merely right, but understated.

“The proof of Gallagher’s position is in the eating. They were unwilling, or unable, to make offers that would persuade the four to stay.”

Craig said Ardonagh had sensibly agreed to pre-trial restrictions on its employment of the four.

As a result, he said, neither Ardonagh nor its subisidiaries had so far made any profit from having taken them on.

“Far less profits which outweigh the millions of pounds spent in their recruitment and in the costs of this litigation,” he added.

Gallagher view

Lawyers for Gallagher and Alesco are due to make their closing submissions to the court tomorrow.

A Gallagher spokesperson said: “This case is about unethical business practices within the insurance industry.

“Throughout the trial, the court has heard compelling evidence about a carefully planned conspiracy to damage on our business through poaching of staff, breach of employment contracts, the theft of confidential company information and client data as well as the payment of a significant interest-free loan to one of our employees, creating a clear conflict of interest.

“We have suffered substantial damage and incurred considerable costs as a result of the defendants’ unlawful actions.

“We stand by our position and trust that the High Court will rule on this fairly in accordance with the evidence we have presented that demonstrates the financial loss we have suffered as a result of the actions of the defendants.”

The hearing, expected to last three days, continues.