Since last May, when 3M and its lawyers at Bickel & Brewer first
accused Covington & Burling of betraying its client relationship
with 3M in favor of a potentially more lucrative assignment from
the Minnesota attorney general in an environmental suit against
the company, Covington management committee chairman Timothy
Hester has let the firm's filings and court appearances in the
Minnesota case speak for themselves. But on Thursday, as
Covington's counsel at Williams & Connolly filed a motion to dismiss 3M's breach-of-fiduciary-duty complaint against the
firm, Hester broke his silence. In a phone interview, he spoke
about what he called the "false premises" of 3M's accusations,
the "silliness" of Bickel & Brewer's assertions that Covington
dropped 3M because it is struggling financially and the
hurtfulness of having to explain all of that to clients.
"We think these are false statements, false allegations,"
Hester told me. "People here are not happy seeing false
statements made about the firm."
The basics of the dispute between 3M and its former lawyers
at Covington, in case you've forgotten, are that Covington had
an ongoing relationship with 3M in the 1990s and early 2000s,
representing the company in regulatory proceedings over food
packaging at the Food and Drug Administration. The firm also
handled an employee benefits matter for 3M that ended in Sept.
2010. Soon after the benefits assignment concluded, Covington
surfaced as counsel to the Minnesota attorney general in an
environmental waste case against 3M. More than a year later, 3M
moved to disqualify Covington, asserting that the AG's case
involved the same chemicals that had been at issue in
Covington's prior representation of 3M. Last month, with
proceedings on the disqualification motion underway in Minnesota
state court, 3M filed its breach-of-fiduciary-duty suit in
federal court in Minneapolis.
Covington's new dismissal motion is mostly procedural,
arguing that the federal court does not have subject matter
jurisdiction on diversity grounds. It does not address the
merits of the firm's defense with much more specificity than the
firm has already offered in the disqualification proceeding. But
Hester supplied some of those details in our interview.
The most compelling new information he offered is that 3M
signed an agreement in 2010 stating that Covington could sue 3M
without consulting the company. That's a blockbuster assertion,
but the circumstances of that agreement are also significant.
According to Hester, Covington's ongoing representation of 3M in
regulatory proceedings before the FDA had dried up by the
mid-2000s. (I should note that Hester said Covington's work for
3M was strictly limited to the FDA and, contrary to 3M's
assertions, involved no proceedings before the Environmental
Protection Agency.) In 2010, 3M contacted Covington about an
employee benefits assignment. By then, Hester said, Covington
was involved in two other matters in which its clients were
adverse to 3M: a patent case and an environmental case for a
According to Hester, Covington informed 3M that it would not
accept the assignment without a written agreement that it could
pursue litigation against the company in unrelated matters.
Hester said that after 3M resisted and Covington said it
wouldn't take the project, the company ultimately agreed to sign
the agreement. I asked Hester whether the agreement covered
future suits against 3M, in addition to the matters Covington
was already engaged in. Hester said yes.
Covington declined to show me the 2010 agreement with 3M
because it has not yet been submitted in the breach-of-duty
case. But I obtained the three-page document from 3M's counsel
at Bickel & Brewer. Here is its key provision: "You also
consent to our representing clients in business transactions,
counseling, litigation, legislation, or other matters in which
they are adverse to 3M, provided that any such matter has no
substantial relationship to any matter in which we represent or
have represented 3M."
Hester also told me that 3M disavowed any intention of
accusing Covington of a conflict on two occasions long before
the disqualification motion was filed. In April 2011, a few
months after the AG's suit against 3M was filed, a senior 3M
lawyer asked Covington about its representation of the AG.
Covington replied in an email that its relationship with 3M had
been dormant, in contrast to its longtime and ongoing
relationship with the Minnesota attorney general. In an email
response, Hester said, the 3M lawyer wrote that he understood
the firm's decision. (Covington declined to make the emails
public because they haven't been disclosed in court.)
Then, in November 2011, Covington sent a description of its
insurance practice to 3M's general counsel, as part of a wide
distribution of the materials. The GC, Hester said, wrote an
"unhappy letter" back to Covington, complaining about the firm's
role in the AG case and noting that 3M had considered raising
the conflicts issue but had decided against it. (Again,
Covington declined to disclose the GC's letter because it's not
in the court record.)
All of these communications, Hester said, belie 3M's claims
that Covington dropped one client for another. He said they also
support Covington's argument that 3M filed the disqualification
motion for tactical purposes, to stall the AG's environmental
suit. "I have never seen anyone delay a motion like this," he
said. "It's a pretty stunning and unattractive set of tactics."
Particularly disturbing, Hester said, is 3M's assertion in
its breach-of-duty suit that Covington took on the contingency
fee case for the Minnesota AG because it "has experienced
declining revenues, profits, and prestige" and "has been forced
to make significant changes in order to stay relevant." Hester
said 3M's lawyers at Bickel & Brewer had absolutely no basis for
that claim: Covington, he said, has been one of the few firms in
The Am Law 100 to expand headcount, revenue and profits since
2008. Unlike most of its peer firms, Hester said, Covington
didn't engage in any layoffs in the last few years and didn't
defer a single associate. "That was hurtful, gratuitous
and completely unfounded," Hester said. He called 3M's language
"silly," and when I prodded, escalated to "outrageous," adding
"I'm trying to be measured."
"It was really an effort to hurt us," he said. "We thought
most people reading it would see it for what it was -- an
overblown rhetorical effort."
I asked if the conflict case has hurt the firm. Hester
acknowledged that he's had to answer questions from some clients
who were concerned about the allegations. He said that when he
explained that Covington didn't have an ongoing client
relationship with 3M when it agreed to represent the Minnesota
AG, clients were reassured. "Once they understood the facts,
they've been fine with it."
3M counsel William Brewer of Bickel & Brewer said the record
contradicts Covington's claims about its relationship with the
company. He said that when 3M signed the 2010 agreement, it also
sent Covington its outside counsel guidelines, which include a
requirement that firms disclose any adverse representation to
the company before accepting it. He also said that in an
affidavit (unfortunately under seal), 3M's general counsel said
the Covington conflicts question was never discussed by anyone
who knew the firm had previously represented the company on
matters involving the same chemicals at issue in the AG suit.
I also asked Brewer about the complaint's allegations about
Covington's declining finances. He declined to tell me the basis
of his assertions, saying he was "not prepared to reveal work
product." He said he included the allegations because they are
relevant to Covington's intent, and said he will be prepared to
show evidence of the firm's financial motive.
(This post has been corrected. A previous version
incorrectly reported when Covington's employee benefits
engagement for 3M ended.)
(Reporting by Alison Frankel)
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