Law firm Gibson Dunn squares off with crypto client over work for Tether
By David Thomas
Nov 25 (Reuters) -Gibson, Dunn & Crutcher is caught up in a court battle with its own client Swan Bitcoin, after the law firm hired a lawyer who represents rival cryptocurrency company Tether.
Swan sued Gibson Dunn for legal malpractice on Friday in Los Angeles Superior Court. It said the firm was improperly trying to drop Swan as a client in a federal trade secrets lawsuit against former Swan employees who formed their own company with Tether's financial backing.
Gibson Dunn formally asked to withdraw from the trade secrets case in a Sunday court filing. There has been "a complete breakdown" in its relationship with Swan, the firm said, citing the legal malpractice lawsuit and alleging that Swan refused to pay its legal fees.
The filing said Swan had demanded $18 million not to oppose Gibson Dunn's bid to withdraw. "Gibson Dunn cannot continue to represent Swan under these conditions," the firm told U.S. District Judge Michelle Williams Court in Los Angeles.
In the state court malpractice case, Swan on Monday asked a judge to enter a temporary restraining order that would prohibit Gibson Dunn from dropping it as a client.
"As stated in our complaint, we believe Swan's treatment here has been highly inappropriate," Dave Wollmuth, a lawyer for Swan, said in a statement.
Spokespeople for Gibson Dunn and Tether did not immediately respond to a request for comment.
Swan is a bitcoin-focused financial services firm. Tether issues a dollar-pegged cryptocurrency that has grown rapidly in recent years.
Gibson Dunn, on Swan's behalf, sued Tether-backed Proton Management and several of its employees in September, alleging they misappropriated thousands of documents containing Swan's proprietary information and sought to push Swan out of the joint venture with Tether. The lawsuit did not name Tether as a defendant.
Attorneys representing Proton and the employees did not immediately respond to a request for comment. They have not formally replied to Swan's lawsuit.
As Gibson Dunn was representing Swan, it was also in the process of hiring prominent trial lawyer Barry Berke and four other white-collar defense lawyers from Kramer Levin Naftalis & Frankel. Berke is "one of Tether's regular outside litigation attorneys," Swan said. Federal court records show Berke was representing Tether in at least one lawsuit.
Swan said one of its Gibson Dunn lawyers called its CEO days before the firm announced Berke's hire in October. The lawyer warned Swan it would need to find new counsel because it was about to hire an attorney whose current clients conflicted with Swan.
Berke did not immediately respond to a request for comment.
In a Nov. 6 letter to Gibson Dunn, Swan said it would oppose Gibson Dunn's exit from the lawsuit and demand that it either drop Tether as a client or "disassociate itself from Mr. Berke and other laterals representing Tether."
Reporting by David Thomas
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