Covington Accused Of Switching Sides In Litigation To Make Millions

Prestigious law firm Covington & Burling has found itself in an embarrassing position of having its former corporate client, 3M, charge it with betraying its confidence and switching sides in environmental litigation. There is little affection left in the relationship after Covington decided to represent Minnesota in a claim that could bring millions to the law firm. For 3M, the worse moment came when Covington lawyers deposed the same 3M in-house counsel that the law firm once represented on the same subject matter. The company alleges that Covington orchestrated the move to drop it “like a hot potato” to cash in with Minnesota. The lawsuit could prove the most uncomfortably revealing moment since a Covington partner pulled down his pants before a shocked international audience.

3M filed a motion to remove Covington last week in U.S. District Court in Minneapolis claiming for breach of contract and breach of fiduciary duty — including a demand for injunction relief and disgorgement of all legal fees paid by 3M to the law firm since 1992.

The company quotes Covington on how important confidentiality and ethics rules are to the firm and stated in the complaint below: “The Covington law firm holds itself out as the type of firm on which clients can rely to preserve and protect their most sensitive confidences.1 That was the law firm 3M thought it had retained for parts of three decades.”

The company details how Covington could bring in a huge haul in the litigation with 25 percent of any recovery up to $75 million, 20 percent of the subsequent $75 million and 15 percent of any amount above $150 million. If the case goes to trial the percentage and yield increases. The company alleges a carefully executed plan by Covington to drop 3M:

Although Covington had been 3M’s counsel for more than a decade in connection with issues arising out of 3M’s fluorochemical (“FC”) business, Covington elected to drop its representation of 3M on an unrelated matter for the express purpose of suing 3M on behalf of the State in connection with that FC business. That lawsuit is currently pending in the Fourth Judicial District Court for the State of Minnesota, Hennepin County, and is styled, State of Minnesota, et al. v. 3M Company, Court File. No. 27-CV-10-28862 (“NRD Action”). Covington switched its position from arguing (truthfully) on 3M’s behalf that environmental exposure to FCs do not pose a risk to humans, to now arguing on behalf of the State that environmental exposure to those very same FCs are toxic. The breach of loyalty could not be more sharply drawn.
5. What makes matters worse is that Covington choreographed its scheme to breach its duties to 3M. Knowing that its fee agreement with the State required it to warrant that it had no outstanding matters for 3M—yet concerned about alerting 3M to its plan to represent the State against it, lest 3M object—Covington developed a plan to drop 3M as a client (like a hot potato) shortly before the NRD Action would be filed.

3M current counsel William A. Brewer III charged that “3M believes that Covington & Burling betrayed the most fundamental principles of the attorney-client relationship–the duties of loyalty and confidentiality.”

Covington issued this statement and says that the history in the case is grossly misrepresented:

“The state of Minnesota has been a client of the firm in environmental matters for more than 15 years. Covington agreed to represent the state in its litigation against 3M after confirming that the firm had no active matters for 3M and that there was no conflict based on any prior representation of 3M. The 3M complaint against our law firm has the situation completely backwards in suggesting that the firm dropped a long-time client to represent the state. To the contrary, the state, a long-time client, asked Covington to handle an important lawsuit on which it needed assistance. We reviewed the situation and appropriately decided to proceed with the representation.

“Covington takes its ethical responsibilities seriously, and has acted in accord with all applicable ethical rules in connection with its representation of the state of Minnesota in litigation against 3M. Covington intends to defend itself vigorously against 3M’s lawsuit, which is without merit.”

Being sued by a major company over an alleged conflict of interest and disloyalty is never good for any firm, even one the size of Covington. The discovery is likely to be a painful process with layers of claims of confidentiality and lawyers deposing lawyers. If you come to these things to watch the cars crash, you are unlikely to be disappointed.

Source: ABA Journal

17 thoughts on “Covington Accused Of Switching Sides In Litigation To Make Millions”

  1. Covington is clearly wrong in this instance. I am frankly surprised that they even considered undertaking the representation. I was once disqualified from a case because the opposing party had once been represented by a former partner of mine on a completely unrelated matter. I thought that was a stretch, but in this case Covington’s position virtually reeks of conflict of interest.

  2. Bill McW: Yeah, the corporations hire the big corporate law firms because they think that they are connected. And the big firms have guys and gals on all the committees at the local bar associations concerning this or that. But, “connected” is a word that has deeper meaning in the courthouse world. Afterall, they do not want to get hosed in a jury trial. So all that high fallutin gang of four on the bar committee crap does not get the trial lawyer the hustle he needs witht he chief clerk, the bailliff, the Chief Judge, the judge assigned to the case and by all means it does not make a yanker into a good trial lawyer. A large corporation could hire some ex judges, some great trial lawyers, and some savvy people to run their in house corporate law counsel office and do better than the likes of Covington. Some corporations have learned this. Other corporations stick with the fakers.

  3. “The company alleges that Covington orchestrated the move to drop it “like a hot potato” to cash in with Minnesota.”

    Maybe they thought it would absolve them of conflict of interest charges.

  4. “The company alleges that Covington orchestrated the move to drop it “like a hot potato” to cash in with Minnesota.”

    The true meaning of “OUCH”!!

  5. One of the main reasons why large companies retain big, white shoe law firms is because such law firms are well connected. A friend of mine who worked at Baker Botts told me that.

    As “Eddie The Lip” might say: I’m connected.

  6. I agree that the law firm should have backed out of the case entirely, but they saw the big bucks involved.

  7. We once had a case where our office manager accepted a retainer check and some documents on a case while I was out of the office. Later that same day, I was contacted by the opposite side and the lawyer showed up with a check and some documentation. My office manager had not yet told me about the new case, so I was blindsided.

    When we realized what had happened, the money and files were returned to both sides and told them I could not take the case. Neither was happy, but both understood the conflict, although the guy who had paid first insisted I go ahead and take the case. I refused, politely of course.

  8. AY, I’m with you. I don’t see how they could take either side due to conflicts, real or perceived.

  9. The Love of truth is the base of all honesty.

    The Love of strategy is the base of all Law firms.

    Mixing the two is the base of all Politics, and settlements. *

    * I’m just guessing here folks…. am I close?

  10. Mespo,

    I think I agree with you….. This to be is a case that they should have stepped out of on both sides citing a conflict….. Which cannot be overcome….. But isn’t Minnesota the state where the state bar treasure borrowed a few dollars from the fund….. Just saying…..

  11. mespo, I’ll take the under. Who sets the odds on these contests, I know it’s not Vegas. Chicago?

  12. “The discovery is likely to be a painful process with layers of claims confidentiality and lawyers deposing lawyers.”


    I hear the over/under on the sanctions bet is $50,000.00. Put me down for “over.”

  13. I suppose that big time corporations think that they need to hire big time corporate law firms. But they are mistaken. With all their resources they could boost their own corporate law offices and be rid of the scum. There are swings back and forth in the corporate world on this issue. Right now the corporate law firms are a bit in disfavor and corporations are expanding their inhouse corporate law offices. Spread the word on Covington & Burling.
    Two timing, flea ridden, mutts that could not join a dog pack anywhere in the lower 48.

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