Legal News

Quinn Emanuel Inadvertently Discloses Value of Facebook Settlement

By Dan Slater

ConnectU founders Tyler Winklevoss (left) Cameron Winklevoss (right) and Divya Narendra pose following a news conference in Boston, July 25, 2007. (Credit: Associated Press/Charles Krupa)

While we’re dredging up summer news, let’s return to the old spat between Facebook founder Mark Zuckerberg and his former Harvard classmates, the founders (pictured) of smaller rival ConnectU.

Here’s some background: In June, San Jose district judge James Ware tossed out an appeal by ConnectU to reopen an undisclosed settlement it struck with Facebook over allegations that Zuckerberg stole ConnectU’s idea. ConnectU argued that Facebook had cheapened the stock portion of the settlement by deliberately concealing Facebook’s true value. Behind the settlement spat, however, was an apparent dust-up between ConnectU and its Quinn Emanuel lawyers. In shooting down ConnectU’s arguments, Ware wrote that ConnectU had been represented by “reputable counsel” — referring to lawyers at Quinn Emanuel — and could’ve done more due diligence or asked for more assurances during negotiations.

All along, however, Facebook claimed that the dispute over the settlement wasn’t about fraud; it was about ConnectU and its lawyers at Quinn Emanuel. “We were disappointed that we had to litigate the settlement, as we believed we were caught in the middle of a fee dispute between ConnectU’s founders and its former counsel,” the company said in a statement. (Lawyers from Boies, Schiller & Flexner repped ConnectU on the appeal.)

Now, the Recorder is reporting that the value of the Facebook-ConnectU settlement was $65 million. How did it find out? Quinn Emanuel trumpeted the settlement amount in a firm advertisement. “WON $65 million settlement against Facebook” appears, along with dozens of other Quinn outcomes from last year, in the firm’s January business litigation newsletter, which you can read by clicking through to the Recorder story.

The disclosure was apparently inadvertent. Quinn, the firm’s chairman, reportedly asked the Recorder not to print the amount, citing the confidentiality provision, and declined to comment further.

ConnectU fired Quinn Emanuel last year, and they are now locked in a fee fight, with Quinn seeking $13 million pursuant to a contingency fee agreement. Although ConnectU threatened to sue the firm for malpractice, the two sides are now in arbitration in New York.

Full post as published by Law Blog - WSJ.com on February 10, 2009 (boomark / email).