Internal emails hacked from Sony Pictures Entertainment (SPE) late last year have been
released in database form
by WikiLeaks. The document dump reveals frank discussions between the
company’s in-house lawyers and outside counsel on everything from legal
fees and conflict waivers to pitches for business.
The documents were
stolen late last year by hackers
that the U.S. government has linked to North Korea, but were not
readily searchable online at the time. WikiLeaks—the hacktivist
collective that made its name with the
disclosure of 92,000 classified U.S. military documents in 2010—has now consolidated those files into a central and searchable database.
“This archive shows the inner workings of an influential multinational corporation,”
said a statement by WikiLeaks editor-in-chief Julian Assange, who for the past three years has been
confined to the Ecuadorean embassy in London.
“It is newsworthy and at the center of a geopolitical conflict. It
belongs in the public domain. WikiLeaks will ensure it stays there.”
Not surprisingly, Sony, which in December
hired Boies, Schiller & Flexner to push back against media companies across the country and around the world that published details extracted from the
massive cybersecurity breach, has a different take.
“The
cyberattack on Sony Pictures was a malicious criminal act, and we
strongly condemn the indexing of stolen employee and other private and
privileged information on WikiLeaks,” said a statement by a Sony
spokesman. “The attackers used the dissemination of stolen information
to try to harm SPE and its employees, and now WikiLeaks regrettably is
assisting them in that effort. We vehemently disagree with WikiLeaks’
assertion that this material belongs in the public domain and will
continue to fight for the safety, security and privacy of our company
and its more than 6,000 employees.”
In a letter sent to multiple news outlets,
including The American Lawyer, Boies Schiller wrote, "Despite its
purported committment to free speech, WikiLeak's conduct rewards a
totalitarian regime seeking to silence dissident speech, and imposes
disincentives on entities such as SPE who depend on trade secrets,
confidential information and protection of intellectual property to
exercise their First Amendment rights every day.” (The alleged North
Korea connection,
as noted earlier this year by sibling publication Corporate Counsel, remains in dispute.)
Sony
has also retained Wilmer Cutler Pickering Hale and Dorr to handle
shareholder class actions filed against the company in the wake of last
year’s cyberattack, which some security firms skeptical of the North
Korea narrative have publicly pinned on corporate insiders or nationals
from other countries.
The Am Law Daily combed through thousands of
emails released by WikiLeaks covering the period between late 2013 and
late 2014 to glean Sony’s interactions with its outside lawyers and find
out which Am Law 100 and Global 100 firms have been getting work from
one of the world’s largest media companies. The emails show which firms
were considered for certain assignments, who they beat out for the work
and how outside lawyers go about seeking work from their in-house
counterparts.
Those questions are a central focus of The American
Lawyer’s mission: the business of law. Details about Sony’s internal
legal machinations have already been made public.
Corporate Counsel reported in December on SPE general counsel Leah Weil’s thoughts about the company’s email retention policy,
and The New York Post reported Friday on a $1 million contract by a Sony subsidiary to a high-profile Hollywood lawyer from a non-Am Law 100 firm.
The Am Law Daily reached out to
SPE’s Weil, Sony general counsel Mark Khalil and his predecessor Nicole Seligman—she was the company’s top in-house lawyer until
her promotion to president last year—for
additional comment on their cybersecurity efforts and decisions to
retain certain outside law firms and set aside the entreaties of others.
“The information you are asking about was stolen from Sony and we decline comment,” a Sony spokesman wrote in response.
Below
is a snapshot of some of the 30,000 Sony emails released by WikiLeaks
covering 15 different firms, which are listed alphabetically. All of the
firms mentioned either declined to comment or did not respond to
requests for comment.
Boies, Schiller & Flexner
Boies
Schiller invited Sony lawyers to a lunch last year during which
cybersecurity expert Richard Clarke discussed threats facing U.S.
businesses. An email exchange indicates that the Sony lawyers did not
attend the event, but a Boies Schiller partner suggested in several
emails that the firm set up a separate meeting with company executives.
Bryan Cave
In
November 2013, a lawyer in Bryan Cave’s Santa Monica office sent an
email to its top in-house lawyers offering up his firm’s services. “We
would love to represent you,” wrote the Bryan Cave lawyer, a former
member of SPE's in-house legal staff, who was quickly told that Sony
already had legal counsel in the employment issue at hand.
The
Bryan Cave lawyer touted the expertise of a relatively new labor and
employment partner hired by the firm in Los Angeles, one whose
personality quirks were discussed in emails between Sony’s top in-house
lawyers a few months later in trying to determine whether to hire the
firm to advise the company as one of its executives prepared to depart
for a competitor.
Cleary Gottlieb Steen & Hamilton
A corporate partner in the firm’s New York office helped SPE’s top executive invest in ephemeral messaging service Snapchat—
as noted in recent media reports looking at how
Silicon Valley technology deals get done—and the London property market, as well as evaluate rental properties in Martha’s Vineyard, Massachusetts.
Cleary Gottlieb,
which advised Sony on its $1.5 billion acquisition of a European joint venture in 2011, also had a role counseling the company last year on its
purchase of the U.K.’s CSC Media Group.
The firm was one of four chosen to make presentations at Sony’s global
legal meeting and also handled broker-dealer issues for the company.
Nonetheless,
Sony nixed Cleary Gottlieb's effort to obtain a conflict waiver to
advise the Raine Group on a litigation matter. The firm also saw its
efforts to advise Sony on some European antitrust issues fall short.
Davis Wright Tremaine
Long
known for its First Amendment and media work, Davis Wright’s
entertainment transactions chair brought up the rather delicate issue of
the firm’s new 2014 billing rates in January 2014, after grabbing
dinner with SPE’s legal chief.
The rates put forth by Davis Wright
were a 10 percent reduction on up to $750,000 in fees, a 12 percent
reduction on fees over that amount and a 15 percent discount on fees in
excess of $1.5 million. The fees were to be aggregated across
entertainment, employment and litigation for all SPE units, but didn’t
include fees subject to alternative billing arrangements. Davis Wright
also secured a conflict waiver from Sony last summer to advise Fortress
Investment Group.
Dentons
Despite being the world’s largest firm by attorney head count after a
spate of recent mergers,
Dentons still has to compete for work like everyone else. When Sony
mulled acquiring a London-based broadcaster a year ago, the firm was one
of several to potentially compete for the legal work.
Dentons’
ability to offer lower rates was cited in an email exchange as
separating the firm from higher-priced competitors such as DLA Piper and
British firms Clifford Chance, Freshfields and Olswang. Dentons also
demonstrated a willingness to “come up with flexible arrangements, e.g.,
busted deal discount and potentially some sort of soft cap” on fees,
says one Sony legal department email.
Nonetheless, when Dentons
solicited a conflict waiver last summer to do some work for another
client in Canada, one in-house lawyer noted the request was surprising
given “how much work the firm has done/is doing for us lately.”
Another
Dentons partner who left the firm to set up her own shop also asked
SPE’s general counsel to transfer company files to the new firm, as
“even if we are not doing any work for you … no one who is still at
Dentons may be familiar with these matters to be of much help.”
Freshfields Bruckhaus Deringer
Sony
reached out to the Magic Circle firm in November 2013 to determine
whether Freshfields would be in a position to be adverse to Apple,
Google, Microsoft and Nokia. Discretion was requested on the conflict
check, since Sony would be the client, and Freshfields’ global managing
partner promptly responded to the inquiry and informed Sony that the
firm did no work for Google.
Freshfields had “limited
relationships” with Microsoft and Nokia, and thus would need to get more
specifics on the matter at hand, but completely ruled out taking any
action against Apple, a firm client. The Freshfields leader did run
afoul of SPE’s general counsel when he didn’t make her the point person
for a stateside visit with Sony staffers. The London-based legal giant
did incur roughly $26,000 in fees in early 2013 to handle a French “pay
TV deal” for Sony, according to invoices submitted through the company's
legal department.
Gibson, Dunn & Crutcher
It’s
not exactly a state secret that outside lawyers often entertain their
clients. In one overture, a Gibson Dunn practice leader invited SPE’s
general counsel to sit at his table at an Association of Corporate
Counsel dinner where Hillary Clinton was to give a talk. The general
counsel had to decline, however.
Gibson Dunn did grab a role advising Sony on a
$185 million deal with International Game Technology
to license the company’s “Wheel of Fortune” and "Jeopardy!” brands for
its cross-platform games. The firm and Sheppard, Mullin, Richter &
Hampton were also considered to represent the company in a home video
class action.
Jenner & Block
The firm’s
correspondence with Sony’s legal team goes back to November 2013, when
the co-chair of Jenner & Block’s content, media and entertainment
practice was chosen as the new general counsel of the Motion Picture
Association of America, the trade organization representing most of
Hollywood’s major studios.
The New York Times reported
earlier this year that fissures have emerged in the relationship
between the MPAA and Sony since the cyberattack against the company last
year. Some of those tensions were already apparent a year prior when
the MPAA’s new general counsel sought a lunch meeting with Sony’s
in-house team to discuss improving his organization’s “legal function,”
aggravating SPE’s general counsel, who preferred a more private
gathering.
“I think it was odd and a bit presumptuous on his part
to believe that it was ‘business as usual’ and for him to send a note to
‘the Sony team’ without reaching out to me or you about who might be
included in that,” the SPE legal chief wrote to the company’s head of
litigation. “He needs to understand that his previous role and his
current one are very different.”
Jenner & Block and a
litigator who rejoined the firm in 2012 took the lead for the MPAA in
January 2014 when the Sherman Oaks, California-based nonprofit worked
with Mississippi’s attorney general in arranging a meeting with a
battery of top Google executives and their counsel from now-defunct
Bingham McCutchen. (The purpose of the meeting,
as widely reported elsewhere, was to push anti-piracy policies contained in the
scuttled Stop Online Piracy Act of 2012.)
In
an email to the MPAA that was then forwarded to in-house lawyers at
Sony and other major studios, the lead Jenner & Block partner
handling the matter wrote that one of the two Bingham McCutchen lawyers
advising Google—a former attorney general of New Hampshire—“sells
himself as a fixer with the AGs.”
Jenner & Block’s lead
partner working on the matter was deleted from another email thread
between the MPAA and in-house lawyers for the big studios detailing the
firm’s fees. Jenner & Block incurred about $60,000 in fees in 2013
for its work engaging with state attorneys general, followed by another
$30,000 through the first quarter of 2014.
The MPAA’s legal chief,
himself a former partner at the firm, said his former colleague
representing the trade association had been a “good sport” about trying
to keep fees down, but anticipated them rising to up to $40,000 per
month as his workload increased.
Federal tax filings show that the MPAA paid more than $4.5 million to Jenner & Block in 2013.
Manatt, Phelps & Phillips
In
numerous email exchanges, in-house counsel at various Sony subsidiaries
consulted each other for their opinion of various outside lawyers and
their firms.
In one exchange, a Sony Music in-house lawyer asked
his counterparts at SPE about a Manatt litigator recommended by the
firm’s entertainment and media litigation co-chair to represent Sony
Music when suits were filed by pop star Kesha and music producer Dr.
Luke against each other.
The Sony Music lawyer said he was looking
for a firm with a blend of litigation and employment expertise. When he
suggested Gibson Dunn, his counterpart at SPE agreed, saying one of the
Gibson Dunn partners under discussion—the same lawyer who made the
Hillary Clinton event invite—was very “hands on” and had handled
high-profile cases before.
But Manatt still got its fair share of
Sony work. The firm’s entertainment and media practice co-chair took the
lead for the company last year on a
$200 million film finance deal with Lone Star Funds and Citigroup, one that saw him honored as a
leading Hollywood dealmaker by trade publication Variety. (A May 2014 invoice from Manatt for that deal show fees of at least $103,507.)
Emails show that the Manatt partner also invited SPE’s legal chief to the firm’s annual retreat at the
La Costa Resort
in Carlsbad, California—the invitation was declined—and bought gifts
for in-house lawyers at the company. Another Manatt partner, a relative
of California’s governor, befriended SPE’s top executive. The Los
Angeles-based firm, which has a robust entertainment practice, was
successful in obtaining numerous conflict waivers from SPE to advise
other companies doing business with it in the movie industry.
Orrick, Herrington & Sutcliffe
When
an antitrust complaint was filed against Sony affiliates in the
Northern District of California, an Orrick partner sent an email to
SPE’s in-house staff offering his services, as well as those of some
colleagues at the firm. In response, SPE in-house lawyers discussed the
strong relationship between Sony and Orrick, one that had become “quite
good” after a rough patch.
SPE’s head of litigation notes that the
company “should be able to secure a pretty good discount on fees” from
Orrick. The firm was one of many vying for the work. Emails show that
Arnold & Porter; Boies Schiller; Manatt; Mayer Brown; Munger, Tolles
& Olson; O’Melveny & Myers; Paul Hastings; and Sheppard Mullin
were all considered by SPE.
Orrick’s lawyers were called “smart,
careful, creative, experienced,” but SPE’s in-house counsel also noted
that the firm was sometimes “overly thorough,” which could mean higher
fees. In the end, Orrick got the work and succeeded in scuttling an
anti-poaching antitrust suit this month,
as noted by sibling publication The Recorder.
Paul, Weiss, Rifkind, Wharton & Garrison
The
Sony email hack last year revealed that the U.S. Securities and
Exchange Commission was investigating the distribution of company films
in China. In a January story based on the leaked emails,
The Wall Street Journal reported
that the SEC was looking into whether bribery laws had been violated
when the film “Resident Evil: Afterlife” was distributed in China.
Paul
Weiss was hired by Sony to conduct an internal investigation. An
emailed invoice, which was sent to Sony’s in-house counsel for approval,
shows that the firm charged the company just over $1.6 million for work
accrued from November 2013 through January 2014.
Another email
exchange made it clear that Sony wasn’t happy with the bill, which was
broken into three installments that arrived on the same day, making moot
any monthly staffing adjustments. One SPE lawyer wrote that more time
was spent on the matter than the company expected.
Pillsbury Winthrop Shaw Pittman
An
advance conflict waiver in order to take on an unspecified project was
not something that endeared Pillsbury to SPE’s legal chief, who noted in
an email that lawyers from the firm “aren’t folks we typically use.”
Still, Pillsbury advised Sony on whether or not to do business with
certain Russian banks in the aftermath of EU sanctions levied following
the crisis in Ukraine.
Reed Smith
When David Cassidy, a former star of “The Partridge Family,”
sued Sony in late 2011 seeking profits from reruns
of the 1970s sitcom, the company turned to Reed Smith to handle the
litigation. In a string of emails with a top Sony executive, a legal
department vice president estimated that fees incurred by Reed Smith
would hit $400,000 by February 2014.
The Sony official responded
that it’s “crazy” for the company to have spent that much on lawyers
when it could have just cut Cassidy a check for one-fourth of that
amount. The in-house lawyer noted that Cassidy had previously refused to
settle for anything less than $1 million. This past January, after
arbitration,
Cassidy ended up with nearly $158,000.
Sidley Austin
In February 2014, the lead Sidley partner advising Fortress in
ongoing litigation with
bankrupt hedge fund and film financier Aramid Entertainment
over a busted film finance agreement with SPE sought a limited conflict
waiver from Sony to serve SPE with a subpoena for certain documents and
depositions.
SPE’s head of litigation noted that Fortress and
Sidley were expected to conduct “a friendly cross-examination” of a top
Sony studio executive and nothing more.
“If there is any chance
that Sidley lawyers will need to get hostile against SPE or an SPE
employee, then I would ask them if they really would want to run that
risk, considering the possible implications on the Sony relationship,”
wrote Sony’s legal chief. “Good luck with it!”
Skadden, Arps, Slate, Meagher & Flom
Want tickets to the see the Los Angeles Lakers? Skadden, a firm that
advised Sony on the $1.1 billion sale
of its former New York headquarters in 2013, offered its friends on the
in-house side at Sony their choice from a handful of box seats to
Lakers games late last year and earlier this year.
In a different
email exchange, the firm suggested rates for handling a real estate deal
for SPE’s studios in Culver City, California. A ground lease would cost
between $400,000 and $500,000; a sublease $300,000 to $400,000; and
construction contracts ranged from $50,000 to $100,000. Total tab:
$750,000 to $1 million in fees for its client. (The firm was ultimately
tapped for the project.)
Skadden’s real estate lawyers in New
York, who handled the 2013 skyscraper sale for Sony, were praised for
their previous work for the company, even though they “didn’t have the
time to even negotiate a rate or caps.” SPE’s legal chief felt that if
“$ is less of an issue,” hiring Skadden over another Los Angeles-area
firm, Cox, Castle & Nicholson, made sense in order to get a deal
done quickly.
Read more:
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