Washington, D.C. offices of Morgan Lewis. June 10, 2015. Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL. (Diego M. Radzinschi)
SAN FRANCISCO — If defense lawyers get their way, files from a Morgan, Lewis & Bockius investigation of Hewlett-Packard Co.’s disastrous acquisition of British software firm Autonomy Inc. could become evidence in a criminal trial.
Lawyers at Keker, Van Nest & Peters want to force federal prosecutors to search the Morgan Lewis files for evidence that could help the firm’s client, former Autonomy CFO Sushovan Hussain, fend off wire fraud charges.
Their motion argues that HP and the law firm it hired in 2012 to clean up the Autonomy mess acted as a de facto extension of the Justice Department and the government therefore has a constitutional duty to review the files for exculpatory and impeachment evidence.
“It is clear that HP and Morgan Lewis have acted on the government’s behalf (and at its behest) in investigating Mr. Hussain and that there has been a ‘close working relationship’ between HP, Morgan Lewis and the government from 2012 through the present day,’ wrote the Keker lawyers, led by firm founder John Keker.
Federal prosecutors are objecting to the request, which they call “unprecedented and potentially hazardous” to their case. “HP and Morgan Lewis were private actors cooperating with a government investigation. They did not act on the government’s behalf.”
A federal grand jury indicted Hussain in November 2016 on charges that he participated in a scheme to artificially boost Autonomy’s revenues in the run-up to its $11 billion acquisition by HP in 2011. HP announced an $8.8 billion write-down of Autonomy’s value a year after the deal, and claimed that more than $5 billion of that amount was due to accounting irregularities and misrepresentations by Autonomy.
According to the defense lawyers, from November 2012 to March 2013 a Morgan Lewis team led by then-partner Leslie Caldwell conducted an internal investigation of Autonomy-related issues. (Caldwell, a veteran of the Northern District of California’s U.S. Attorney’s Office, led the Justice Department’s criminal division from 2014 to 2017.)
HP, according to the Keker lawyers, became an “unofficial member” of the prosecution team. The company and Morgan Lewis compiled binders of key documents for more than 40 witnesses that were used during the criminal investigation and Morgan Lewis attorneys made 10 detailed presentations about their findings to the government. Hussain’s lawyers also claim that federal prosecutors leaned on HP to settle potential civil claims against Autonomy’s independent auditors at Deloitte to secure their cooperation and testimony before the grand jury.
The relationship was cozy, according to emails submitted by the defense. In one exchange, an FBI agent addressed a request for information about HP employees to the “Morgan Lewis All-Stars.”
“Flattery will get you everywhere,” quipped Morgan Lewis partner Martha Stolley in reply before passing along the requested contact information. Stolley and a firm spokeswoman didn’t respond to messages Tuesday.
Federal prosecutors describe the defense request as “gamesmanship” and contend that Hussain already has authority to issue subpoenas to seek material from HP.
Lead prosecutors, assistant U.S. attorneys Adam Reeves and Robert Leach, also point out that the government has conducted nearly 200 of its own witness interviews and gathered 4.4 million pages of documents from sources other than HP as part of the investigation.
“HP appears to have been motivated to cooperate with the government’s investigation in the ways crime victims are often motivated to cooperate with a criminal investigation,” they wrote.
The prosecutors also pointed out that a federal judge in San Francisco rejected a similar request in a trade secret case against former Korn/Ferry International executive recruiter David Nosal. Nosal’s lawyers sought the same sort of material from the work files of Korn/Ferry’s lawyers at O’Melveny & Myers who conducted an internal investigation for the search firm prior to the federal criminal investigation.
Hussain’s request for a search of the Morgan Lewis files is among a group of defense motions scheduled for a hearing Wednesday afternoon before U.S. District Judge Charles Breyer, who is overseeing his case.
In an email Tuesday, John Keker declined to comment writing “we will say what we have to say in our papers and in court tomorrow.”
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Ross Todd is bureau chief of The Recorder in San Francisco. He writes about litigation in the Bay Area and around California. Contact Ross at firstname.lastname@example.org. On Twitter: @Ross_Todd.