Legal Pad

Brocade Suit Takes Hit; Did Sonsini Settle too Soon?

Everyone was a little stunned by the way Dewey & LeBeouf’s Ralph Ferrara tried to sue the pants off of Brocade execs and directors earlier this year. Representing Brocade, Ferrara sued 10 former top brass, including pokey-bound CEO Greg Reyes, to recover the millions the company lost in the backdating scandal.

Now it’s Ferrara’s turn to be a little stunned. In an order (.pdf ) filed late Friday afternoon, Judge Charles Breyer dismissed all claims against four of those execs, former CFO Mike Byrd, director Mark Leslie, founder Paul Bonderson, and Jack Cuthbert. Breyer also dismissed a number of claims against other defendants like Reyes and former HR Chief Stephanie Jensen.

Ferrara, a well-known East Coast securities defense lawyer, advised the Brocade special litigation committee earlier this year as it deliberated whether to take up claims made in derivative suits filed by plaintiff lawyers Frank Bottini and Marc Umeda. Brocade chose to take up the claims and Ferrara took control of the derivative suit, exacting an $9.5 million settlement from Larry Sonsini and Wilson Sonsini, who’d both been named.

Legal Pad wonders how Larry Sonsini and his firm are feeling now. Might they also have won a motion to dismiss and saved $9.5 million?

— Zusha Elinson

Former GC Leaves Troubled Tech Company

There’s a big ol’ mess going on over at Cadence Design Systems in San Jose — and the company’s longtime former GC has resigned.

Cadence, which makes tools used to produce integrated circuits and the like, announced last week that it had a revenue recognition problem and would have to make a restatement. Apparently, $24 million that the company counted as revenue from sales contracts in the first quarter of 2008 should’ve been recorded over the life of the contracts.

Resignations and class actions, after the jump:

Sonsini Ain't The Only Guy Talkin' to VLG

Sept. 25 Update: Heller to dissolve.

As big limbs of the Heller Ehrman tree get ready to break off, everyone is wondering where the firm’s Venture Law Group and their beloved acorn logo will end up.

Legal Pad hears that VLG lawyers have talked to — OK take a deep breath — Cooley, MoFo, Fenwick, Wilson Sonsini, Morgan Lewis and Reed Smith, to name a few.

The second-best VLG rumor heavily making the rounds (first-best comes later) was that Larry Sonsini had personally dined with VLG leaders.

Plaintiff Team: No Reason to Chase Wilson

Plaintiff lawyers are defending their decision not to go after Wilson Sonsini in a backdating case against Sigma Designs.

San Jose U.S. District Judge Ronald Whyte had asked for an explanation of why claims weren’t asserted against Sigma’s outside counsel in an order last month regarding a settlement of a derivative suit. The judge’s concern came after Wilson Sonsini Goodrich & Rosati paid $9.5 million to release itself from claims in Brocade’s backdating cases, where the firm also served as outside corporate counsel during the backdating era.

In court documents (.pdf) filed Friday, plaintiff lawyers from Schiffrin Barroway wrote they were “not aware of any specific documents or information that would support the assertion of claims against WSGR.”

William Almon, chairman of the Sigma audit committee, said in a declaration that he’d gotten documents from the company's former outside counsel, Wilson Sonsini, and interviewed lawyers there, but concluded the firm wasn’t at fault.

“The committee found that documentation on particular stock option grants was largely prepared internally at Sigma, and in reaching its conclusions as to the deficiencies in Sigma’s stock option grants, the committee did not find evidence of activity by its former corporate counsel that was designed to promote any alleged misconduct with respect to establishing such option grant dates at Sigma or that such former corporate counsel took action to encourage such alleged wrongdoing to occur.”

So that’s the really long way of saying, “They didn’t do it.”

—  Zusha Elinson