The attorney-client privilege issue at the heart of the dispute between Barclays and Lehman Brothers got a whole lot bigger Wednesday, when the Boies, Schiller & Flexner team representing Barclays filed papers requesting access to privileged documents from as many as three additional Am Law 100 firms.
The new request, if granted, could apply to documents with Quinn, Emanuel, Urquhart, Oliver & Hedges; Milbank, Tweed, Hadley & McCoy; and Hughes, Hubbard & Reed. Quinn Emanuel and Milbank represent the creditors committee in the Lehman bankruptcy, and Hughes Hubbard partner James Giddens is serving as the trustee on the case.
The background: Lehman's estate (backed by the creditors committee) has filed motions claiming Barclays received a secret "windfall" of as much as $8.2 billion when it purchased the bulk of Lehman's North American operations and various assets and liabilities in the days following Lehman's Sept. 15, 2008, bankruptcy filing. Lehman's special litigation team at Jones Day has asked a federal judge to revisit the terms of that sale. Lawyers from the firm allege that unnamed higher-ups at both Lehman and Barclays conspired to rig the deal in Barclays's favor, court records show. The question at the heart of that claim is what, exactly, the outside lawyers who signed off on the deal for Lehman knew about its terms.
And that's what Barclays and Boies Schiller focused on in their response. They have defended the terms of the sale and issued subpoenas seeking privileged documents from Weil relating to the sale that could help to determine whether Weil's powerful bankruptcy team really misunderstood the deal terms. According to a source familiar with the matter, Weil has complied with the subpoena, waiving attorney-client privilege and turning over various confidential documents.
Now Boies Schiller wants similar documents from Hughes Hubbard and counsel for the creditors committee, a category that could include both Quinn and Milbank, court records show. The Boies Schiller motion says the following about the Lehman side's attorney-client privilege claims: "They depend upon the unfounded assertion that their lawyers were confused or misadvised about the terms of the deal. By relying upon that assertion, they put at issue what their lawyers told them about the deal, and thereby waive the privilege."
Lawyers from the three firms did not immediately respond to requests seeking comment. Jonathan Schiller, name partner at Boies Schiller, declined to comment when we reached him Wednesday.
This is the latest -- and probably the biggest -- power play in the dispute over the ultrasensitive Barclays-Lehman deal. Last month, Quinn Emanuel sent a request for documents related to the deal to the U.K.'s Financial Services Authority. As we reported then, Quinn wanted to know the details of any talks Barclays might have held with the U.K.'s financial regulators about the profits Barclays might earn from a potential Lehman deal.
The FSA has rejected the request, according to an exhibit filed along with the Barclays motion Wednesday. In a letter to Quinn partner Sue Prevezer, the FSA says Quinn misinterpreted the Hague Convention in asking for an international body (the FSA) to turn over discovery to a litigant in a U.S. proceeding.
In any case, the potential for Barclays to get its hands on some pretty sensitive documents is there. All of these issues are likely to come up at a hearing in federal bankruptcy court in Manhattan this afternoon.
The exact size of the alleged Barclays windfall is unclear. Lehman has alleged that the dealmakers inflated the value of various liabilities (including employee bonuses) Barclays would take on in the deal.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.