Monday, May 25, 2015

"Preposterous" Conflicts (Potentially Important Precedents)

Significant ink spilled in recent days on a conflict accusation facing Kirkland and Ellis. First, Kirkland responds to Mylan's disqualification attempt: "Kirkland Blasts 'Preposterous' Mylan Conflicts Claims Ahead of Hearing" --
  • "Kirkland & Ellis came out swinging this week against a lawsuit alleging that it ignored a conflict of interest by advising Teva Pharmaceutical Industries Ltd. in Teva's ongoing $42 billion bid for rival drugmaker Mylan N.V."
  • "Mylan's May 7 preliminary injunction motion, the firm says, is 'an unwarranted attack on the integrity and reputation of real people at Kirkland.'"
  • "In a statement earlier this month, Kirkland insisted that Mylan signed a conflicts waiver that covers the firm's representation of Teva. Monday's brief fills in the details, describing several cases in which Kirkland represented Teva and other companies that were adverse to Mylan without triggering any suggestion of a conflict."
But what's most interesting is the commentary on the pages of the Wall Street Journal: "Dealpolitik: Why Lawyers Need to Care About the Mylan-Kirkland Battle" --
  • "But sometimes it gets complicated, particularly in the corporate world where lawyers have many clients which in turn have many interests.  Big firms try to manage the issue by asking sophisticated clients to give their consent to some conflicts."
  • "Kirkland represents subsidiaries of Mylan, apparently in connection with some intellectual property litigation.  (Much of the court filings are filed under seal or redacted so the details of some of the dispute remain confidential.)  How can it then represent Teva in an attempted takeover of Mylan?  This where a law firm’s conflict management comes in.  Adverse representations can be permitted if the client has given informed consent."
  • "Mylan acknowledged in a court filing it gave consent to Kirkland in its engagement letter for certain adverse representations.  The consent is limited to matters which “are not related to the legal services that” Kirkland provides to Mylan.  In my own experience, this kind of generic waiver is commonplace at large firms, particularly those that have a significant takeover practice."
  • "Mylan’s position has far-reaching implications for takeover law firms.  Almost any representation of a corporate client involves its commercial and other strategies.  If the federal court throws Kirkland out of the deal, the decision could create doubt as to whether any law firm could work on a takeover fight where a client, or even a former client, is on the other side.  That outcome could be jarring to a number of large firms that have hundreds of clients but also have a thriving M&A practice."

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