Legal News

Brocade Takes on Plaintiffs Firms; If You Can?t Settle With ?Em, Hire ?Em

By Dan Slater

The backdating scandal at Brocade has heralded a few legal twists. In May, a shareholder derivative suit named Brocade’s law firm, Wilson Sonsini, accusing the firm of malpractice for blessing backdating at the company. Then, Wilson Sonsini agreed to pay Brocade $9.5 million to release itself and its chairman, Larry Sonsini, from possible civil claims filed by a Brocade special litigation committee stemming from the company’s backdating mess.

Now two San Diego-based plaintiffs firms — Johnson Bottini and Robbins Umeda & Fink — have agreed to drop their backdating suits and flip over to Brocade’s special litigation committee, a gig that guarantees them $8 million, plus a piece of anything that’s recovered from the 10 former Brocade execs who’ve been sued by the company. Here’s the story from the Recorder.

Dewey & LeBeouf, the lawyers on the special litigation committee, filed this engagement letter after Northern District of California Judge Charles Breyer said at a Thursday hearing that he wanted the agreement between Dewey and the plaintiffs lawyers out in the open. The engagement letter caps the company’s total obligation to Johnson Bottini and Robbins Umeda at $25 million, though it allows it to choose to pay them more.

The special litigation committee filed the suit for Brocade on Aug. 1 and sought to dismiss the pending state and federal derivative suits filed by Johnson Bottini and Robbins Umeda.

Neither Marc Umeda nor Frank Bottini returned the Recorder’s calls seeking comment.

Full post as published by Law Blog - WSJ.com on August 25, 2008 (boomark / email).