Bank of America has retained Paul, Weiss, Rifkind, Wharton & Garrison to assist the troubled bank in civil and regulatory litigation related to its merger with Merrill Lynch. And the firm apparently got right down to work: On Monday, according to The New York Times, Paul Weiss lawyers, along with counterparts from Cleary, Gottlieb, Steen & Hamilton, advised the bank's board to make a shocking change in strategy and vote to waive privilege in the Securities and Exchange Commission's much-publicized disclosure case against Bank of America, which is now headed for a trial next year, after Manhattan federal district court Judge Jed Rakoff rejected a $33 million settlement between BofA and the government. (Here's The Am Law Daily's account of the stunning BofA board vote, and here's The Wall Street Journal's story.)
The Paul Weiss team will consist of its chair, Brad Karp, and partners Mark Pomerantz and Dan Kramer. Paul Weiss litigators are well-known for representing Citigroup and JPMorgan, but this is their first engagement for Bank of America. In addition to the SEC case, Paul Weiss will be advising on the big consolidated securities class action against the bank. That case had been handled to date for the bank by Wachtell, Lipton, Rosen & Katz -- the law firm at the center of the storm over the bank's alleged failure to tell shareholders about billions of dollars set aside for bonuses in advance of its merger with Merrill Lynch.
Although documents detailing Wachtell's disclosure advice to BofA will now be turned over to the government, Wachtell partner Peter Hein told the Litigation Daily on Monday that Wachtell has not been replaced by Paul Weiss as counsel in the class action. Cleary's Lewis Liman, who has been representing BofA in the SEC case, did not return our call for comment, but a spokesperson for Bank of America said that Liman would remain lead counsel on the SEC case. The New York Times is reporting that Cleary lawyers also advised the bank's board to waive attorney-client privilege.
"We are augmenting our legal team," Bank of America spokesperson Lawrence Di Rita told us.
Wachtell has come under intense scrutiny for the advice its lawyers gave BofA about disclosing Merrill bonus agreements only in a secret schedule that was not available to shareholders. An article in the April issue of The American Lawyer questioned the wisdom of Wachtell representing Bank of America in the class action, given that the firm worked on the disclosures at issue in the case. (Bank of America said at the time that it was "comfortable" with using Wachtell.) And just what Wachtell attorneys advised BofA executives about disclosing a $5.8 billion Merrill bonus pool before shareholders voted on the merger has also been at the center of the SEC case.
This is not the first time Paul Weiss has come in to represent a Wachtell client in litigation trouble. Last year, the private equity firm Apollo hired Paul Weiss after Wachtell lost a bench trial in Delaware for the Apollo portfolio company Hexion, which was found to have knowingly breached a merger agreement with Huntsman. With Apollo and Hexion exposed to potentially billions of dollars of liability, Paul Weiss helped broker a deal in which they agreed to pay Huntsman $425 million to settle the suit.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.