Towers Watson Delaware is suing Morgan, Lewis & Bockius for more than $30 million, based on its claims that the firm knowingly helped another client, Meriter Health Services, sue Towers.
The complaint, filed last week, claims Morgan Lewis’ alleged conflict of interest in representing Towers was “just the tip of the iceberg.” Towers said Morgan Lewis used its representation of Towers to assist another law firm, referred to in the complaint as “Law Firm 2,” in developing Meriter’s lawsuit.
That case ended in a settlement in June, according to a Towers filing with the U.S. Securities and Exchange Commission. The terms were confidential, but Towers has alleged that by assisting Law Firm 2, Morgan Lewis caused Towers to lose more than $25 million, in addition to legal fees already paid. “Morgan Lewis’ actions in developing and assisting in the development of claims against the interests of its client Towers, in concert with Law Firm 2, are as shocking as they are abundant,” the complaint said.
“Although Morgan Lewis paid lip service to its inability to ‘be involved in any discussions involving Towers,’ it regularly participated in those discussions.”
While “Law Firm 2″ isn’t identified in the lawsuit, court records show that Nixon Peabody and Gass Weber Mullins LLC represented Meriter.
According to the complaint, Morgan Lewis represented Towers from 2009 to 2016, and partner Jeremy Blumenfeld was the lead defense counsel in one Towers matter. In 2010, Morgan Lewis, led by Blumenfeld and partner Charles Jackson, began defending Meriter in a class action over a retirement plan, the complaint said.
After the class action settled in 2014, Meriter sued Towers, the complaint said, alleging that Towers was responsible for Meriter’s liability in the class action. Towers Perrin, a predecessor of Towers, designed the retirement plan at issue in the class action lawsuit. (Towers Watson is now part of consulting company Willis Towers Watson.)
Morgan Lewis acknowledged long before the settlement that the two clients would have conflicting interests, the complaint said, bringing in another firm in 2010 to work on the tolling agreement between Meriter and Towers. Meriter also retained a second firm to handle third-party provider participation in the class action, including Towers’ involvement.
But Towers alleged that Morgan Lewis still never informed them of the conflict or sought Towers’ consent to the conflict. Instead, they alleged, the firm caused Towers to implicate itself in the underlying class action.
“Throughout the class action, Morgan Lewis knowingly allowed, and at times induced, its current client, Towers, to take positions as a nonparty in the class action that Morgan Lewis knew would harm Towers in subsequent litigation with Meriter,” the complaint said.
Additionally, Towers alleged that Morgan Lewis worked with Law Firm 2 to create a strategy for the class action that would shift blame from Meriter to Towers. This allegedly involved Morgan Lewis eliciting testimony from a Towers witness that would later support Meriter’s claims. It also included changes to the settlement notice to avoid statute of limitations issues on Meriter’s lawsuit, the complaint alleged.
In December 2014, after Towers learned of Meriter’s intent to sue, Towers’ in-house counsel contacted Morgan Lewis to confirm that the firm would not play a role in Meriter’s litigation, the complaint said, “unaware of the role Morgan Lewis had already played in developing Meriter’s case against Towers.” Towers’ complaint alleges breach of contract and breach of fiduciary duty by Morgan Lewis and Blumenfeld.
A spokeswoman for Morgan Lewis declined to comment on the complaint. Richard Sprague, who is representing Towers Watson, did not respond to a call seeking comment. Neither did Nixon Peabody and Gass Weber Mullins.