The announcement earlier this week that onetime Dewey & LeBoeuf partner Stephen Best had moved from Brownstein Hyatt Farber & Schreck to Brown Rudnick has prompted a barbed email exchange between two lawyers representing clients with competing interests in now-defunct Dewey’s bankruptcy proceeding.
The testy dialogue came to light Wednesday in a letter filed in U.S. bankruptcy court in Manhattan [PDF] by Ned Bassen, a Hughes Hubbard & Reed partner who represents Dewey’s former executive director Stephen DiCarmine and former chief financial officer Joel Sanders. Bassen contends that Brown Rudnick should be immediately disqualified from representing Dewey liquidation trustee Alan Jacobs in a settlement that affects his clients because Best, before working at Brown Rudnick, consulted with DiCarmine and Sanders on the issues now in question.
Jacobs and Brown Rudnick are pushing for court approval of a settlement reached by former chair Steven Davis, XL Specialty Insurance, and the bankruptcy estate that would see XL chip in $19 million to resolve mismanagement claims. Davis also agreed to contribute more than $500,000 the estate says he improperly received from the firm in 2011 and 2012, though as The Am Law Daily reported last week, Davis may never have to pay the full amount.
The settlement would insulate DiCarmine and Sanders from mismanagement claims brought by the estate, but not from clawback claims seeking compensation they received.
As Bassen explains in his letter, which is addressed to U.S. Bankruptcy Judge Martin Glenn, DiCarmine and Sanders consulted with Best "for several hours" in 2012 during a daylong meeting and in several separate conversations "regarding their employment at Dewey and the facts and circumstances that led to the firm winding up in this Court." According to Bassen, the conversations included "their defenses to and strategies regarding potential claims, including mismanagement claims" as well as potential claims not covered by XL and other insurers.
Best left Dewey for Brownstein Hyatt in 2010 after spending eight years at the firm and its predecessor LeBoeuf, Lamb, Greene & MacRae, including a stint as cochair of Dewey’s white-collar defense and regulatory investigation group. The Washington, D.C.–based lawyer lateraled to Brown Rudnick May 1, and his new firm issued a press release on the move Monday. Best, who has agreed to give the Dewey estate more than $375,000 as part of a settlement with former partners, did not immediately return a call for comment Wednesday.
Brown Rudnick partner Edward Weisfelner explains in a three-page email that Bassen attached to his letter to Glenn why he believes there is "zero basis for disqualification here." Weisfelner says in the message that Best and Brown Rudnick created a complete ethical wall to prevent Best from seeing any Dewey-related documents and which prohibits lawyers working on the case from talking to him—and that the proposed settlement was filed with the court before Best even joined the firm.
Weisfelner also lashes out at Bassen in the email for what he says are a series of delay tactics the Hughes Hubbard lawyer has used to prevent the XL settlement from getting court approval.
"Since March 2013, you have at one time or another threatened to sue XL, the mediator, and others involved in efforts to reach a settlement, and you even threatened to seek disqualification of the Liquidating Trustee. . . . Your latest gambit . . . takes your tactics to a new level of desperation." (Bassen said in an email to The Am Law Daily that he doesn’t aim to "scuttle the settlement" and has only asserted a conflict as it pertains to DiCarmine and Sanders.)
Despite the opposition to Bassen’s claims, Brown Rudnick did agree to delay depositions of Bassen’s clients that were scheduled to take place Thursday, according to the court filing.
Weisfelner declined to comment when contacted Wednesday. The next Dewey hearing is scheduled for Monday afternoon.