How 83 law firms united against the SEC's subpoena for Covington client information
- Law Firms
(Reuters) - How do you get 83 big law firms to agree on anything?
That seems like it should be the opening line of a lawyer joke, but it’s actually a testament to the gravity of a subpoena fight between Covington & Burling and the U.S. Securities Exchange Commission – and to the organizing efforts of Morrison & Foerster, which spearheaded the effort to marshal law firm support for Covington.
On Tuesday, as my Reuters colleague Andrew Goudsward has reported, 83 law firms filed an amicus brief in federal court in Washington, D.C., echoing Covington’s arguments that the SEC’s demand for the names of about 300 Covington clients affected by a cyber-espionage attack on the firm’s network is an unprecedented intrusion on client confidentiality.
The 83 firms that signed the brief, including 23 of the 50 highest-grossing firms in the country, told U.S. District Judge Amit Mehta that they collectively comprise more than 50,000 lawyers in nearly every state.
The SEC, as I’m sure you recall, subpoenaed Covington long after the firm disclosed to the FBI in 2020 that its computer system had been hacked. The firm eventually determined that its attackers were part of the Hafnium cyber-espionage group, which is allegedly tied to the Chinese government, and that the hack was apparently an attempt to gain information about the incoming Biden administration’s China-related policies.
The SEC said it needed to know which Covington clients had been affected to determine whether anyone traded on insider information related to the hack and to assure that the companies’ disclosures were adequate. In January, the agency sued to compel Covington to comply with its subpoena for client names.
Covington has said, first during months of negotiations with the SEC and then, after those failed to resolve the dispute, in a brief last week opposing the SEC's motion to compel, that it is ethically precluded from complying with the SEC’s subpoena. Providing the agency with its clients' names, Covington said, would effectively turn the law firm into an informer against its own clients. The firm described the agency’s demand as “an assault on the sanctity and confidentiality of the attorney-client relationship.”
Morrison & Foerster and other law firms quickly realized that the SEC subpoena fight could implicate their own client relationships, said MoFo appellate partner Brian Matsui, who signed the 83-firm brief filed on Tuesday. After the SEC filed its suit last month, Matsui — a former clerk for U.S. Supreme Court Justice Anthony Kennedy and a former chair of the American Bar Association’s committee on amicus briefs — agreed to take the lead on drafting a brief backing Covington and recruiting other firms to sign on. Cravath, Swaine & Moore; Debevoise & Plimpton; Latham & Watkins; and Kirkland & Ellis also pitched in.
Matsui told me that recruiting additional firms was an informal, ad hoc process. “People had different lists,” he said. “It wasn’t just one firm trying to reach others.”
An SEC spokesperson declined to comment on the 83-firm brief. Covington counsel Kevin Rosen of Gibson, Dunn & Crutcher also declined to comment on the brief. The U.S. Chamber of Commerce and the Association of Corporate Counsel also filed briefs backing Covington.
Mehta entered a scheduling order in the case on Jan. 24, giving Matsui and the other lawyers helping on the amicus brief nearly a month to write the brief and persuade additional firms to sign it. That’s longer than the three days the SPAC bar needed in 2021 to recruit nearly 50 firms to issue a joint statement refuting a suite of high-profile lawsuits challenging SPACs' structure – but it didn’t feel like much time to Matsui, who noted that the complexity of drafting an amicus brief always deepens as you try to add more supporters.
“You have to not allow 80 law firms to do editing,” he said.
Matsui said that to the best of his knowledge, none of the firms that were asked to sign the brief explicitly refused to do so. But he said that the relatively quick deadline may have limited the final number of signers.
I did my own checking with the 25 firms in the Am Law 50 that did not sign the brief. (Twenty-three firms signed. Gibson Dunn did not, but it is counsel to Covington. Sidley Austin, another non-signer from the Am Law 50, filed the Association of Corporate Counsel’s amicus brief.) Among the non-signers are several large firms with big corporate client bases, including Morgan, Lewis & Bockius; Simpson Thacher & Bartlett; Davis Polk & Wardwell; Greenberg Traurig; Wilmer Cutler Pickering Hale and Dorr; and Weil, Gotshal & Manges.
None of those particular firms responded to my query. In all, 18 of the 25 firms I contacted did not respond. Those that did get back to me asked not be identified.
One firm said that it backs Covington, actually agreed to sign the brief and was surprised that it was not listed in Tuesday's filing. Another firm said it planned to sign on but had technical problems, and a third said it simply ran out of time before its lawyers had a chance to review the amicus brief thoroughly.
Lead partners at two other firms that didn’t sign the amicus brief told me they didn’t know about it. One of those partners said he probably would have joined the brief if he’d been aware of it.
No firm told me that it objected to the brief’s arguments or that it declined to sign because of client concerns, although it could be that a firm with qualms about the brief chose not to respond to me rather than publicly dispute the 83 firms backing Covington.
Matsui said that he’s gratified by the experience of organizing the amicus brief campaign. “It’s an interesting and important issue,” he said. “It was good to work for the legal industry on such an important issue.”
83 law firms back Covington in SEC subpoena fight
SEC demand for client names is an 'assault,' law firm Covington says
The SEC’s subpoena fight with Covington — a 'perilous new course'?
Our Standards: The Thomson Reuters Trust Principles.