[ The National Law Journal ] A pair of recent court rulings are giving unions new and potentially potent ammunition against furloughs of public employees.

On Aug. 18, a federal judge struck down a furlough plan in Prince George’s County, Md., holding that the plan violated the U.S. Constitution by unilaterally cutting wages guaranteed through collective bargaining. On July 29, a state judge in Hawaii issued a similar ruling, saying a furlough violated the state constitution and criticizing officials for ordering unpaid leave without first negotiating with public employee unions.

Furloughs are the strategy du jour in states and municipalities hard hit by the recession. To date, more than 728,500 public employees in at least 21 states have taken or will soon be forced to take furloughs, according to the National Conference of State Legislatures. If other courts agree, the argument that furloughs illegally ignore union contracts could have wide implications: More than 3 million public employees nationwide are covered by collective-bargaining agreements, according to U.S. Department of Labor statistics.

Already, in furlough battles across the country, word of the Hawaii and Maryland rulings is spreading quickly. Bruce Lerner of Washington, D.C.’s Bredhoff & Kaiser, who represented the Fraternal Order of Police in the Maryland case, said he has received a handful of phone calls from unions that want to see his complaints and arguments. And unions in Ohio and Florida have called the Fraternal Order of Police, expressing interest in resurrecting failed furlough challenges, said a police union official.

In California, where state employees are suing in state court over furloughs ordered by Gov. Arnold Schwarzenegger, Paul E. Harris III, chief counsel of the Service Employees International Union Local 1000 in Sacramento, said he plans to cite the Maryland ruling in upcoming oral and written arguments. “We hope to achieve similar results here,” he said.

THEY HAD A CONTRACT

As in the Maryland case, California employees are targeting the furloughs as contract violations. SEIU Local 1000 alleges that state employee furloughs announced in December and July are illegal pay cuts, and that Schwarzenegger used false pretenses to declare a state of emergency so that he could order unnecessary furloughs without prior negotiation. Harris described the Maryland ruling as “persuasive authority” for the California court.

Persuasive maybe, although the ruling must survive on appeal first, said Peter Conrad of New York’s Proskauer Rose, who handles labor disputes on behalf of employers. That said, he’s not counting on a reversal, and he predicted that unions will use this “to the maximum extent possible.”

Unions will have a lot of fodder to use, Lerner said. During oral arguments before the U.S. District Court for the District of Maryland, he compared Prince George’s County to a lawyer who loses his job and calls the mortgage company claiming he can’t pay his loan, only to get caught later with a huge savings account. Or, in this case, $97 million in reserve funds that the county could have tapped, said Lerner.

It was a detail that didn’t go unnoticed. “[A]lthough the County suggests to the Court that it faced dire circumstances and had no other reasonable alternatives, the record suggests otherwise,” Judge Alexander Williams Jr. ruled on Aug. 18. He concluded that county furloughs ran “roughshod” over the unions “who in good faith negotiated a binding contract.”

[ The Associated Press ] Former Greenwood, Miss., attorney and judge Bobby Fisher’s cooperation with federal authorities has allowed him to remain free more than three years after pleading guilty to a mortgage scam.

Fisher says he continues to help U.S. attorneys on mortgage fraud cases and will be sentenced once those wrap up.

In January 2006, Fisher and former real estate agent Jim Pruett pleaded guilty to a scheme of falsifying mortgage application documents. Pruett was sentenced and died in prison in 2007.

Fisher said the current matters do not relate to his original case and do not concern local situations. He said he would like to speak further about what happened but cannot because of the ongoing investigations.

Fisher previously served as a Greenwood Municipal Court judge.

[ New Jersey Law Journal ] Aggressive lawyering at two of New Jersey’s high-profile litigation firms — Sills Cummis & Gross and Nagel Rice — is under attack in cases the state Supreme Court has added to its agenda for the term that begins Sept. 14.

A case in which Sills Cummis of Newark, N.J., is facing sanctions and disqualification gives the Court an opportunity to make significant refinements in the law governing companies’ control over employees’ electronic communications.

And the issue in a case against Bruce Nagel of Nagel Rice of Roseland, N.J., is whether he or his client should pay a frivolous pleading fee award to an opponent.

The two appeals were among 23 the Court added to its docket on Aug. 24 along with the usual smattering of criminal matters, two eminent domain disputes and a product-liability case being followed closely by construction lawyers.

The central issue in Stengart v. Loving Care Agency, Inc., A-16-09, is whether a company defended by Sills Cummis in a discrimination suit owns the e-mails the plaintiff sent to her lawyer on a company computer before the suit, or whether the communications are privileged.

Either way, should Sills Cummis have looked at them before notifying the plaintiff’s lawyers at Short Hills, N.J.-based Budd Larner?

Lower courts split on the issue. A trial judge ruled that because the e-mails were sent from a computer owned by the company they were the company’s property, more so because there were policies warning employees that the company had a right of access to information generated by the computers.

But an appeals court reversed in June, ruling that the attorney-client privilege trumped the company’s rights to the material. The panel remanded the case for a determination of whether Sills Cummis should be disqualified and sanctioned for looking at the material once it saw a law firm was the recipient of the messages.

What makes the case particularly worthy of the attention of lawyers who deal with electronic-age legal issues is the finding by appeals judges that employees using company computers for e-mails have an expectation of privacy for matters unless the employer’s interests are affected.

“The past willingness of our courts to enforce regulations unilaterally imposed upon employees is not limitless; the moral force of a company regulation loses impetus when based on no good reason other than the employer’s desire to rummage among information having no bearing upon its legitimate business interests,” Judge Clarkson Fisher wrote in an opinion joined by Judges Linda Baxter and Christine Miniman.

WHO FOOTS FEE FOR FRIVOLOUS CASE?

In Rabinowitz v. Wahrenberger, A-1-09, the Court is reviewing a finding that Nagel, on behalf of his plaintiff in a medical malpractice suit, pursued frivolous pleadings against the defense lawyer in the case, Judith Wahrenberger of Wahrenberger, Pietro & Sherman in Springfield, N.J.

The suit claimed that Wahrenberger’s questioning of the plaintiff at a deposition about the circumstances of the alleged malpractice was unnecessarily callous and inflicted emotional distress. But trial courts and an appellate panel ruled that Wahrenberger’s questions were privileged, that she was just doing her job and that the suit against her was frivolous.

[ Legal Week ] Shearman & Sterling is set to lose its only two Brussels-based partners to U.S. rival Arnold & Porter.

Shearman’s local office head Annette Schild is joining Arnold & Porter in the Belgian capital, along with fellow partner Silvio Cappellari and counsel Stephanie Birmanns. All three lawyers focus on competition and antitrust and have advised high-profile clients including Arriva, BASF, Siemens and Novartis.

The departures will leave Shearman without a single full-time partner in Brussels. However, the firm said it intends to maintain its competition law practice in the city, and has moved to appoint German co-head Hans Juergen Meyer-Lindemann as the office’s new managing partner.

Meyer-Lindemann will now split his time between Shearman’s Düsseldorf and Brussels bases, while London-based competition law partner Matthew Readings will also support the Brussels operation.

Shearman senior partner Rohan Weerasinghe said: “We are fully committed to providing our clients with comprehensive European competition law coverage through a strong team of competition law practitioners in our London, Düsseldorf and Paris offices, as well as in Brussels.”

Arnold & Porter’s Brussels managing partner and European competition practice head Marleen Van Kerckhove — who joined the U.S. firm from Clifford Chance in 2003 to launch the office — said the hires came in response to a need for a larger Brussels-based competition practice.

She told Legal Week: “The decision to combine our practices was based on a common desire between me and Annette Schild to be part of a larger competition practice in order to better handle our client base. The team will strengthen our office by headcount as well as through added experience and it also gives us access to clients and sectors where we have not previously advised.”

Arnold & Porter’s Brussels office currently has eight lawyers, including two partners and two counsel. The European competition practice also includes London-based partners Tim Frazer and Susan Hinchliffe.

[ The American Lawyer ] The vitriol continues to grow over a Scottish justice minister’s controversial decision to grant early release to convicted Libyan terrorist Abdelbaset al-Megrahi for his role in the bombing of Pan Am Flight 103. Libyan leader Muammar el-Qaddafi’s plan to pitch his Sahara-sized tent in New Jersey — the home state of several Lockerbie victims — after he addresses the U.N. General Assembly in September is adding to the tension.

One lawyer who’s tangled with the Libyan government in a U.S. courtroom says he understands why the tumult won’t die down.

“Lockerbie families have been frustrated for years,” says Crowell & Moring international dispute resolution practice co-chair Stuart Newberger. “This is the culmination.”

Last year Newberger represented the families of victims of the bombing of UTA Flight 772 over Africa in 1989 in a case stemming from that incident. (The UTA bombing occurred just nine months after the Lockerbie massacre.) Newberger won a $6 billion judgment against Libya, payable to the relatives of the seven U.S. victims of the downing of the DC-10 jetliner over Niger.

“Everyone has heard about Lockerbie, which is certainly a tragedy, but very few know about the UTA case,” Newberger says. In 1989 a French criminal court convicted six Libyan officials in absentia for their role in the UTA bombing. The six remain in Libya, which has refused to extradite them to France. (Libya is believed to have bombed UTA 772 as revenge for its defeat by French-backed Chadian forces in the 1987 Toyota War.)

Libya eventually came to an agreement with France in 2003 to compensate victims of the airline attack in return for economic considerations. But families of the seven U.S. victims represented by Newberger refused to take part in the out-of-court settlement.

Newberger says the opportunity his clients had to confront Libya in a U.S. court and to hold Qaddafi’s government accountable for liability and damages was essential to achieving closure and putting the matter behind them.

“Families need to have a process,” the lawyer says. “Having not gone through that, the [release of Abdelbaset al-Megrahi] is like poking a stick in their eye. I feel for them.” Still, Newberger says, reflecting on the $6 billion judgment awarded to his clients, “No amount of money can bring back their loved ones.”

But the seven families of U.S. victims on UTA 772, including that of Bonnie Pugh, the wife of the former U.S. ambassador to Chad, will never receive the full $6 billion given a settlement the U.S. reached with Libya last year.

In October, Libya agreed to pay $1.5 billion into a settlement fund to compensate the American victims of UTA 772, as well as the 1986 bombing of a Berlin discotheque that killed two American servicemen. The fund also includes the remaining 20 percent due from a $2.7 billion Lockerbie settlement in 2002. (Another $300 million from the fund will go to compensate the Libyan victims of the U.S. bombings of Tripoli and Benghazi in 1986.)

Newberger says the bulk of the payments have already been made to his clients through the U.S. Department of State. The U.S. Department of Justice’s Foreign Claims Settlement Commission still has some determinations to make over final disbursements.

The Justice Department confirmed this week that a criminal indictment remains open against Lockerbie bomber Abdelbaset al-Megrahi and other unnamed Libyan conspirators.

[ The American Lawyer ] Freshfields Bruckhaus Deringer and four leading firms from India and South Africa have landed roles in negotiations that could bring about India’s largest-ever M&A deal. Bharti Airtel and MTN Group are getting closer to announcing a long-awaited transaction creating the world’s largest international telecom provider.

The Am Law Daily began tracking the proposed deal back in May when talks between New Delhi-based Bharti and Johannesburg-based MTN started heating up over a shareholder swap that would precede a merger worth an estimated $23 billion.

On Thursday The Wall Street Journal reported that the two sides were close to an agreement that would see Bharti offer shareholders $13.1 billion for a 49 percent stake in MTN. At the moment, the lawyers involved in the ongoing negotiations aren’t talking. (E-mails to several lawyers named in this story — sent after business hours, due to the difference in time zones — weren’t returned by press time.)

MTN, which provides cell phone services to more than 80 million subscribers in the Middle East and Africa, has turned to a team of lawyers from Freshfields, Indian firm Platinum Partners and South African firm Webber Wentzel.

As previously reported by The Am Law Daily, Freshfields London-based corporate partners Simon Weller and Bruce Embley and Indian corporate head Pratap Amin — who was recruited by Freshfields from Denton Wilde Sapte in 1998 — are advising MTN in the matter. A team from 280-lawyer Webber Wentzel, which has offices in Johannesburg, Cape Town and London, is serving as MTN’s local counsel.

Both firms advised MTN on the company’s $5.5 billion acquisition of Dubai-based Investcom in 2006.

Legally India reports that Karam Daulet-Singh, co-founding partner of India’s Platinum Partners, is leading MTN’s legal team from Delhi. Legally India notes that Freshfields and Platinum do not have a “best friends” relationship, but have worked with one another on large deals in the past.

Across the table advising Bharti are New Delhi-based corporate partners Ajay Bahl and Gautam Saha from India’s AZB & Partners, reports Legally India. Last month AZB acquired the Bangalore firm of Anup S. Shah, which brought the firm’s head count to 19 partners and 240 legal professionals in Bangalore, New Delhi and Mumbai.

Earlier this year AZB completed a best friends agreement with Clifford Chance in India. A Clifford Chance spokesman tells The Am Law Daily that so far the Magic Circle firm has not yet been brought in to advise on the merger talks between Bharti and MTN.

South African counsel to MTN is being provided by Ezra Davids, head of the corporate department at 300-lawyer Bowman Gilfillan in Johannesburg.

According to Indian deal data, if a transaction between Bharti and MTN is completed, it would be the largest Indian M&A deal since Tata Steel bought British steelmaker Corus for $12 billion in 2007.

That deal saw Herbert Smith, Stibbe and Arnold & Porter advise Tata Steel, with Corus turning to Slaughter and May and Shearman & Sterling.

[ The National Law Journal ] The Supreme Court on Wednesday issued a pair of statements on the death of Sen. Ted Kennedy, D-Mass. — one from Chief Justice John Roberts Jr., and the other from Justice Stephen Breyer, who worked for Kennedy 30 years ago as chief counsel to the Senate Judiciary Committee. Kennedy pushed for Breyer’s nomination to the high court in the early 1990s, and opposed Roberts’ nomination in 2005.

Said Roberts: “I am very saddened by Senator Kennedy’s passing. He was — all his life — a sincere, dedicated, and tireless public servant.”

Breyer’s statement: “The country has lost a great senator. We who worked for him remember and will always cherish his practical wisdom, his sense of humor, his determination, and his love of his country and its history. He was dedicated to helping others. Our hearts go out to Vicki and to his family. Senator Kennedy was a great American.”

KENNEDY’S NOTE TO REHNQUIST

Many of the appraisals of Kennedy, who died Tuesday night, make the point that Kennedy was adept at making alliances and extending courtesies across the aisle and with adversaries. One example can be found in the papers of the late Chief Justice William Rehnquist, recently opened at the Hoover Institution Archives at Stanford University.

Kennedy was a leader of the opposition to Rehnquist’s confirmation as chief justice in 1986, but that did not stop him from wishing Rehnquist well in his battle with thyroid cancer in 2004 and 2005. Soon after Rehnquist’s diagnosis was announced, Kennedy sent him a handwritten note: “Dear Mr. Chief Justice — I was saddened to hear about your illness — I wish you a speedy recovery — Best Wishes, Ted Kennedy.”

[ Law.com ] Deduplication has become a mainstay of electronic data discovery processing where documents, such as word-processing files and e-mail messages, are assigned an algorithmically calculated alphanumeric value (typically an MD5 hash) and compared to all other electronic files in a data set. Documents with the same MD5 hash values are considered duplicates. As simple as this process seems, there are two different bases for deduplication: by custodian and by case. Both have their advantages and pitfalls.

Deduplicating documents by custodian results only in the removal of duplicates within one person’s data set. A custodian is the owner of the electronic data harvested from one person’s hard drive, company network or e-mail account. If the data is collected only once, typically only a small number of duplicates exist. But if the custodian’s data is harvested on a rolling basis over time, the percentage of deduplicated items will increment with successive collections. For example, a file containing one week of e-mail messages will contain a relatively small amount of new data compared to the previous week’s messages. Examples of duplicate documents per custodian may be, for example, copies of e-mail messages created automatically by an “AutoArchive” rule established by the custodian.

Deduplication by custodian is the basis preferred by vendors for several reasons. One obvious reason: deduplicating data sets by custodian results in fewer duplicates than deduplication by case and thus more documents can be generated for review — vendors that offer to print data sets on demand can possibly earn the most income by deduplicating by custodian. For a more subtle reason, custodian deduplication provides the fewest headaches and worries to the EDD processing vendor and makes it easier to communicate to the law firm how data sets were deduped using the hash comparison explained above. But it is not as easy to conduct and explain deduplication by case, or global deduplication.

DEDUPLICATION BY CASE

Deduplication of documents on a case basis will result in the removal of duplicate documents within the data set for the entire case. In this manner, duplicate documents are removed not only by comparing documents within each custodian’s data set, but also by a custodian-to-custodian comparison of documents. The advantage to this basis, often called global deduplication, is that it removes the greatest number of duplicates from the review database. As a result, the attorneys have the smallest number of documents to review. Here are some examples of global duplicates: Members of the same company department might have comparably imaged computers, often storing comparable documents; spam and e-mail sent to a group, to which all or some of the case custodians belong.

Global deduplication complicates matters, especially when processing e-mail. The deduping process cannot distinguish which duplicate document is the original and which is the copy. Duplicates are designated by the order the document was processed. Therefore, a processor may remove the original e-mail sent to a group by one of the case custodians, and only one of the duplicates is kept.

For example, e-mails from three custodians, A, B and C, may be processed in that order. The EDD processing application considers custodian A’s e-mails the originals and global duplicates will come mostly from B’s and C’s e-mails. The problem in this example is that the attorney may want an original message from B’s e-mail account. But that message was designated as a duplicate and removed from the review database. Custodian B was the original sender, but the attorney has in the database only A’s e-mail received from B.

It may look awkward to the court that the attorney produced a message that was delivered to a recipient and not the message from the original sender. The need to produce original documents from the custodian under investigation is particularly important for cases that require proof that the investigated custodian actively sent a certain message and did not passively receive it.

Another pitfall of global deduplication comes from a court order to produce all documents from one custodian and only some documents from other custodians. To comply with such an order, it is recommended (if not necessary) that you include all duplicate documents from the one custodian’s data set in the document set produced. Otherwise, as explained above, a processor could remove identified duplicate documents from the custodian described in the order, while keeping original documents stored in another custodian’s data set.

It is imperative for the litigation support analyst and attorney to understand the deduplication process when electronic data is organized into a review database. Different EDD processing applications have different deduplication processing rules. Compariing e-mails is relatively easy, as explained above, but what about attachments?

DETECTING DUPLICATE E-MAIL ATTACHMENTS

Some EDD processing applications create a hash value for an attached file separate from its parent e-mail message. Using this method, duplicate attachments and loosely stored electronic files can be found. This may be advantageous because a greater number of duplicates can be removed from the review database. Nonetheless, the recommended process for attachments is to apply no hash value or use the same hash value as the parent e-mail message. That way, an e-mail and its attachment are considered a set. Then, the deduplication process can compare and remove duplicate e-mail sets: the messages and their attachments, together.

Creating separate hash values for e-mail messages and their attachments can cause a pitfall for reviewers. For example, a litigation support analyst receives an e-mail account file that contains e-mails and attachments as well as a DVD of electronic documents harvested from the client’s document management system and the custodian’s hard drive. The DVD contains a document that is also an attachment to an e-mail the custodian sent. These two documents may be considered duplicates by their calculated hash values. Let us say the deduping application assigns the original status to the document from the DVD and duplicate status to the attachment. It may be imperative to the case to prove that the custodian disseminated that document via e-mail to recipients who allege that they never saw it. But in the review database, the attorney sees only the original document, the one from the DVD. The attorney may not know that the custodian e-mailed the document to several recipients.

Finally, it is imperative for the attorney to understand how their client’s or opponent’s document management system stores e-mail and related attachments. A DMS may allow users to store an attachment separately from its e-mail message. But this separation can cause problems when it comes time to harvesting data relevant to litigation or investigation. In many cases litigation hinges on document content – knowledge of who sent what and when is not crucial. But for those cases where knowledge of document content is important, the separation of attachments from their parent e-mail messages can prove disastrous. For this reason alone, some DMS vendors remove the ability to save attachments separate from e-mail messages.

CONCLUSION

With the pros and cons of deduplicating by custodian or by case, attorneys can decide which deduplication process best fits the case in hand. Attorneys may prefer casewide (global) deduplication because the data set to review is reduced the most. This choice is optimal for cases premised on document content, as opposed to document context, such as the knowledge of who had what, when and where. Alternatively, for cases revolving around document context, custodian-based deduplication or no deduplication becomes the safest choice.

[ The American Lawyer ] In February, when the Securities and Exchange Commission took over the global empire of Texas businessman R. Allen Stanford, investors in certificates of deposit sold by Antigua-based Stanford International Bank learned that their money had likely vanished. The supposedly ultra-safe investment, prosecutors and the SEC allege, was actually an $8 billion Ponzi scheme.

Now those same investors may be facing a second hit, as the receiver charged with recovering any money that might be left over from Stanford’s scheme is accused of bungling the job. And the fact that the lawyers and accountants working for the receiver are trying to collect millions in fees isn’t likely to make the investors feel better.

In February the SEC appointed Dallas attorney Ralph Janvey, 58, of six-lawyer Krage & Janvey as receiver. The choice triggered some surprise in legal circles; Janvey had worked on only a handful of other receiverships, none close to the scope of Stanford.

But he billed like an old pro. For the first eight weeks of work, Janvey requested nearly $6 million for Baker Botts, his main outside firm, for the services of 101 attorneys, representing an eighth of the firm’s lawyers. He asked for nearly $2 million for Thompson & Knight, another firm he tapped, for some 66 timekeepers. Millions more were designated for firms in Canada, Switzerland, Britain, Antigua and the U.S. Virgin Islands, and for other professional services.

In August, Janvey requested another $7.6 million in fees for seven more weeks of work by 14 professional services firms. He has recovered about $81 million, meaning that the fees requested are equal to 34 percent of the recovery.

In June both the SEC and the court-appointed examiner — tasked with representing the investors’ interests — asked the judge overseeing the receivership to reject Janvey’s initial $20 million request. Much of the work, the SEC told the judge — including title searches, letters to tenants, and the like — warranted “a particularly steep discount from the normal rates a firm such as Baker Botts might otherwise charge.” Less detail was provided in the invoices, added the SEC, “than is provided in the billing practice commonly referred to as ‘lumping,’ which itself has been widely disapproved.”

In late July the SEC went further, attempting to strip Janvey of his authority to file suits of any kind. In an emergency motion, the SEC told the judge that Janvey was pursuing litigation it considered both costly and counterproductive: clawback suits against 13 individual investors seeking the return of not just their profits, but also their principal. The judge agreed in part, ruling in early August that Janvey could sue, but that innocent investors in the class were only liable for profits, not principal.

Observers have not been shy about criticizing Janvey. The Stanford examiner, John Little of Dallas’ Little Pedersen Fankhauser, wrote that Janvey is willing “to expend $2 in attorneys’ and accountants’ fees chasing a recovery of only $1.” K&L Gates partner Michael Missal, who has no involvement in the case, but who has been an SEC receiver, says, “I’m very surprised that there would be a public feud between the SEC and its own receiver.” Neither Janvey nor Baker Botts responded to calls. But in court responses, Janvey claimed that he gave the SEC some 1,100 pages in documentation to back up the fee request. Moreover, he wrote, the SEC never told him that his fees were contingent on his actual recovery. Once it became clear that the recovery would be smaller than expected, he added, the SEC demanded substantial discounts.

Most of Stanford’s still-liquid assets are in other countries, so at the same time Janvey is fighting the SEC in Dallas, he has to deal with a number of international jurisdictions. So far, Janvey is employing a take-no-prisoners strategy that is also backfiring abroad. In July he lost a jurisdictional dispute with the Antiguan receiver when a U.K. court ruled that the Antiguan receiver was the only legitimate authority over some $150 million in estimated Stanford assets in the United Kingdom. The outcome of that battle — which Janvey has appealed — and others in Switzerland, Canada and elsewhere will ultimately determine whether Janvey is ever able to recover money for investors.

As for Stanford’s personal legal team, the picture is no more settled. The judge declined Stanford’s requests to unfreeze any of the money Janvey has recovered to pay them. In August his high-powered attorney, Houston’s Dick DeGuerin, asked to quit the case because he had no guarantee of getting paid. Stanford’s choice of replacement, Robert Luskin of Patton Boggs, also wanted some assurance of being paid before signing on. As of press time the judge had not made a decision.

[ New York Law Journal ] A rare joint letter to the U.S. Securities and Exchange Commission from a group of defense law firms over shareholder proxy access is receiving an even rarer response from nine of the country’s largest plaintiffs law firms.

The firms, more typically seen in shareholder litigation than in regulatory squabbles, include Labaton Sucharow; Bernstein Litowitz Berger & Grossman; and Cohen Milstein Sellers & Toll. The letter, dated Tuesday, supports the SEC’s proposal to allow shareholders to nominate directors, exactly what the defense firms argued against last week.

The defense firms that sent the joint letter were Wachtell, Lipton, Rosen & Katz; Simpson Thacher & Bartlett; Cravath, Swaine & Moore; Sullivan & Cromwell; Davis Polk & Wardwell; Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom.

“These are the same firms that brought us the poison pill,” said Lawrence A. Sucharow, a name partner at New York’s Labaton Sucharow, which took the lead on the letter. “Not exactly exemplars of shareholder rights.”

At the center of the dispute is a proposal before the SEC that would allow shareholders to nominate and elect individual directors to corporate boards. If approved in its current form, public companies would be required to include in their proxy materials shareholder nominees for directors that could comprise up to a quarter of the board. Shareholders also could put forward proposals for broader access to the ballot than the commission’s regulations would require.

In an Aug. 17 letter, the seven corporate law firms urged the SEC not to adopt the proposal and, if it did, to be “to be cautious in implementing what all participants in this debate acknowledge will be one of the most significant rule changes in SEC history”

The defense firms said they did not support requiring companies to allow shareholder nominations. But they said they were open to allowing shareholders to submit proposals for governance changes that would allow them to nominate directors.

The bulk of the defense firms’ 40-page letter focused on the functionality of the proposal and how the rules should be implemented.

Sucharow argued that the defense firms’ suggestions would strip the proposal of most of its weight.

“In the guise of modification they actually sought to strip the proposed amendment of any hope of viability,” he said. “It’s just kind of interesting the approach that they took.”

In particular, the plaintiffs firms urge the SEC not to adopt any provision that would allow corporations to “opt out” of the requirements.

“Shareholders, as the owners of the companies, should have a simple and straightforward method for nominating director candidates, and the SEC’s proxy disclosure rules should not impede the shareholders’ rights in this regard,” the plaintiffs lawyers’ letter says.

The plaintiffs firms’ letter acknowledges it is coming after the SEC’s comment period ended Aug. 17. But the firms claimed the need to “address certain of the arguments set forth” by “seven law firms representing various corporate interests.”

The other plaintiffs firms who signed the letter were Milberg; Kaplan Fox & Kilsheimer; Barroway Topaz Kessler Meltzer Check; Berman DeValerio; Grant & Eisenhofer; and Pomerantz Haudek Grossman & Gross.

Sucharow acknowledged that it is uncommon for such highly competitive plaintiffs firms to work together.

“The defense bar has consistently been more organized than the plaintiffs bar,” Sucharow said. “[Corporate firms] meet and discuss these things more than we do. They communicate more openly with each other. … Maybe this is a step in the right direction for our bar as well.”

Sucharow said the plaintiffs firms “reached out to several different additional firms that were either going to take an independent view or decided not to participate at this time.”