'Sad day for justice'

We're not talking Madoff or Stanford but the locally based law firm of Irell & Manella, which was slammed by a federal judge in Santa Ana for "ethical failures." It turns out that during their work for Broadcom concerning allegations of stock options manipulation, the firm disclosed privileged information without client consent. Gabe Friedman has been covering the case for the Daily Journal (no link):

Over the years, Irell took on multiple assignments with Broadcom that put its lawyers in the delicate position of representing conflicting interests and clients within the technology company. [CFO William] Ruehle and [founder Henry] Nicholas have been indicted on federal criminal charges for the alleged backdating of stock options, and prosecutors could call Irell attorneys to testify as witnesses against their former clients. Meanwhile, in related civil litigation, a federally appointed lawyer has disparaged Irell for releasing privileged attorney-client information to outside auditors, which has become ammunition in a shareholder lawsuit against former Broadcom executives. Irell & Manella is not facing sanctions, disciplinary referrals or formal malpractice accusations, and the evidence involving the law firm is expected to play a minor role in the federal prosecution against the Broadcom executives. Still, the web of relations and possible conflicts of interest is fraught with complications.

At a hearing, U.S. District Judge Cormac J. Carney ruled that Irell failed to obtain informed written consent to represent multiple clients with adverse interests and to disclose privileged information. More from the Daily Journal:

The ruling dealt a blow to prosecutors who had hoped to use the conversations to pin down what Ruehle said early on about stock options backdating. They tried to persuade Carney that Ruehle knew Irell would disclose all "factual information" to the auditors, so his conversation with them could not have been privileged. But the judge said his task was to protect Ruehle's Fifth Amendment right. "In a perfect world we wouldn't be here," Carney said. "But because of Irell's mistakes... you're not going to be able to use this as evidence."