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Lehman Brothers and Weil: Another Privilege Opening?
The American Lawyer
November 09, 2009
We've spent a lot of time dissecting Bank of America's decision to partially waive attorney-client privilege under pressure from federal authorities investigating the bank's frenzied merger with Merrill Lynch. But might there be another privilege issue brewing in the Lehman Brothers bankruptcy case?
It appears there may be: Weil, Gotshal & Manges, Lehman's lead bankruptcy counsel, is in the process of turning over documents related to the controversial sale of some of Lehman's prime assets to Barclays in the days after Lehman's Sept. 15, 2008, bankruptcy filing. Many of those documents were formerly protected by attorney-client privilege, though it is unclear whether any of them will ever make it to the public eye, according to a source familiar with the matter.
This all began in September of this year -- on the one-year anniversary of Lehman's Chapter 11 filing, in fact -- when Lehman asked a bankruptcy judge to modify the terms of the Barclays deal, accusing top executives of Barclays and Lehman of arranging a too-favorable deal for Lehman's best brokerage assets. Lehman's attorneys accused Barclays of netting an $8.2 billion "windfall" in the deal. In its filing, Lehman's litigation counsel at Jones Day made a bold claim: Lehman's attorneys knew nothing about the alleged discount at the time the deal was struck. This would seem to implicate the performance of the Weil team who worked on the deal, led by bankruptcy legend Harvey Miller.
The lawyers for Barclays responded by serving subpoenas on Weil lawyers last month, demanding they turn over all documents related to the motion to modify the terms of the Barclays sale, according to court records. (Boies, Schiller & Flexner is representing Barclays, which has denied any wrongdoing in the transaction at issue.) And Weil has apparently complied, according to a protective order filed Thursday in Lehman's bankruptcy case. The protective order allows Weil to designate certain documents as "confidential" and directs the court to keep those documents under seal. But the order says that Weil "shall not designate as confidential material that relates to subject matters" addressed in Lehman's request that the Barclays deal be modified. The order also specifies that any material Weil turns over in this matter cannot be used "for any other purpose."
Harvey Miller declined to comment and suggested we contact Jonathan Polkes, the Weil partner handling the matter. Polkes did not return a message seeking comment. Robert Gaffey, the Jones Day partner representing Lehman in the litigation over the Barclays sale, did not return messages seeking comment. Jonathan Schiller, counsel to Barclays, declined to comment.
