One of the many reasons attorneys love the attorney-client privilege is it means only their final product is out in the world.
Everything else is kept in the family.
When Bank of America agreed to partially waive its attorney-client privilege and provide investigators and the SEC with documents evidencing the advice it received from its attorneys, including Wachtell, Lipton, Rosen & Katz, it was clear that the attorneys’ advice would come under scrutiny.
Bank of America was scheduled to turn documents over yesterday. But even before the docs changed hands, details began to emerge. Scattered throughout a New York Times article are details, as provided by anonymous sources, of Wachtell’s advice to BofA:
- Wachtell initially advised BofA to withhold information about Merrill’s distressed state, but later suggested they contact federal officials and alert them of the growing losses
- Wachtell initially told the bank that it could not back out of the Merrill deal, but when Ken Lewis went to Washington in mid-December, he brought with him talking points from Wachtell. Item number 1 was that Lewis should tell the government that BofA was considering backing out.
- Wachtell “kept Merrill’s bonuses hidden from investors, without consulting the bank’s management,” the article said. It also noted that this “is often standard practice in preparing merger agreements.”
- Before the shareholder vote on the merger, Wachtell told bank executives that shareholders needed to be informed about Merrill’s losses only if the fourth-quarter results would be worse than peer banks.
The armchair lawyering is already beginning. (“I’m taken aback by the advice,” Donald C. Langevoort, a professor at Georgetown Law, told the NYT. “When shareholders are asked to vote, they deserve a fine-tuned picture and are not to be expected to piece together pieces of public knowledge, public awareness and economic awareness in order to make the right decision.”) And it will no doubt continue as information continues to become exposed.
But while the documents provided to the SEC and the New York attorney general will show the final advice given and the reasoning behind it, it will most likely not give the whole picture of how Wachtell arrived at that advice. That information lives in the internal memorandums and notes attorneys at Wachtell made for themselves – their work product. And while Bank of America can waive the privileges they own, the right to withhold their own product belongs to Wachtell. And so far, they are holding on.
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