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Novartis GC to Step Down After Admitting $1.2M Contract With Cohen Was an Error

[caption id="attachment_3281" align="alignnone" width="620"] Michael Cohen (Photo by David Handschuh)[/caption] Novartis group general counsel Felix Ehrat will step down from the company after taking personal responsibility for a $1.2 million contract with President Donald Trump’s personal lawyer Michael Cohen, an agreement he admits was an "error." Ehrat, who has has been group GC of the pharmaceutical giant since 2011, will retire in June, the company said Wednesday. He will be replaced by chief ethics, risk and compliance officer Shannon Thyme Klinger. The Swiss company said last week that it had paid Cohen's company Essential Consultants $1.2 million for health care policy consulting work that he had proved "unable" to do. Novartis said that Ehrat, who is also a member of the company's executive committee, was retiring "in the context of discussions" over the agreement. "Although the contract was legally in order, it was an error," Ehrat said in a statement. "As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end." Under the one-year contract with Essential Consultants, signed in February 2017 shortly after Trump became president, Novartis agreed to pay Cohen $100,000 per month. The company said it had expected that Cohen could advise it on the administration’s approach to health care policies such as the Affordable Care Act, better known as Obamacare. However, following its initial meeting with Cohen in March 2017, the company realized that he would be “unable to provide the services that Novartis had anticipated." But it was unable to break the contract. Both Ehrat and former chief executive Joe Jimenez signed the contract last year. Jimenez left the company last September. Cohen has faced intense scrutiny in recent months following the FBI raid on his offices in New York amid the Mueller probe into Russian interference in the 2016 election. He shared office space with Squire Patton Boggs, with which he had formed a strategic alliance in April 2017, a deal that ended last month. Ehrat, the former senior partner and executive chairman of Slaughter and May’s Swiss best friend Baer & Karrer, joined Novartis in October 2011. He had been at the Swiss law firm since 1987 and made partner in 1992, the same year he opened the firm’s Lugano branch, its first outside Zurich. He was appointed managing partner in 2000 and senior partner in 2003. He has led Novartis' legal team on a number of landmark deals, including the $13 billion sale of a 36.5 percent stake in its consumer health joint venture with pharma giant GlaxoSmithKline last year. Freshfields Bruckhaus Deringer acted for Novartis on that deal, while Slaughter and May represented GSK. Less than a year after Ehrat joined Novartis, a lineup of firms, including Allen & Overy, Freshfields, Linklaters, Morrison & Foerster, Cravath, Swaine & Moore, White & Case, Hogan Lovells and Simpson Thacher & Bartlett, were appointed to the company's legal panel, known as the Novartis Legal Preferred Firm Program. Click here for a 2012 interview with Ehrat.