Thursday was a good day for Wilson Sonsini Goodrich & Rosati.
Sources revealed that the firm and its chairman, Larry Sonsini, likely will not be targeted in a backdating derivative suit scheduled to be filed Aug. 1 by a special litigation committee at Brocade.
Meanwhile, Genentech Inc. announced that it had hired the firm in connection with a bid by majority shareholder Roche Holdings to buy the rest of the San Francisco Bay Area biotech icon for $44 billion.
In the Brocade situation, the special litigation committee has been weighing whether to sue former Brocade execs, directors and advisers to recover some of the losses sustained by the company in the backdating scandal. The committee, headed by Dewey & LeBeouf's Ralph Ferrara, announced in early June that it planned to target 11 people but wouldn't name them.
Sonsini served on the board and Wilson Sonsini served as outside counsel during the time that Brocade granted backdated stock options. Both were named in a derivative lawsuit filed by San Diego plaintiffs firm Johnson Bottini.
But on Thursday, sources familiar with the case said it's not likely that Sonsini or his firm will be sued by the committee. The news was first reported Thursday in the Daily Journal.
Lawyers for Sonsini and the firm from Cravath, Swaine & Moore and Taylor & Co. did not return phone calls or declined to comment, and a Wilson Sonsini spokeswoman did not return an e-mail and phone call seeking comment. Ferrara also did not return a call.
In the past, Ferrara has said the suit his special committee ends up filing should supplant derivative litigation against the company.
Johnson Bottini's Frank Bottini, who filed his derivative lawsuit in April, said he'll press on with his claims against the firm and Sonsini even if the special litigation committee doesn't.
"Regardless of what they do on Aug. 1, I still have a complaint on file, and I sued Wilson Sonsini and Larry Sonsini, and I think the case should proceed against them," Bottini said.
In Roche's unsolicited bid Monday for the rest of Genentech, the company announced that Wilson would represent Genentech, while Latham & Watkins will represent a special committee of three independent directors assessing the bid, the company said.
The deal bucks the recent trend of hostile deals in Silicon Valley going mainly to New York firms. It's somewhat different than a normal unsolicited bid, since Swiss drug company Roche already owns 55 percent of the company.
The special committee was set up to evaluate the deal to avoid the conflict of interest that would arise by having a Roche-controlled board make a recommendation on the deal, explained Eric Talley, a professor at UC-Berkeley School of Law. Without the independent committee, a deal could be difficult to defend in court, he said.
"This is the belt-and-suspenders approach," Talley said. "What you want is the special committee to say it's a good deal, and you want the non-Roche shareholders voting it up too."
Talley said that both law firms will play important but different roles in the deal.
"They're both pretty big roles, but Latham representing the special committee, they're in a real pivotal role," Talley said.
Talley doesn't think the deal will spark an all-out war. "I think they are probably going to be looking for a higher price."
Davis Polk & Wardwell is representing Roche in the transaction.