Cravath, which is representing Air Products in its $5.1 billion takeover bid, has been slapped with a conflict-of-interest suit by Air Gas because of work the firm has previously done with the company. However, Reuter is reporting Thursday that Cravath could be in the clear because its relationship with Air Products goes back at least 40 years.
As the story notes, courts “tend to frown on law firms that drop one client for a higher-paying one.” But Cravath’s long-established relationship with Air Products could alleviate the court’s concerns.
“The fact that Air Products is a long-standing client is one that weights in Cravath’s favor,” Georgetown University Law Center professor Milton Regan told Reuters. “It’s not as though they dropped Airgas to represent a new, lucrative client that just appeared on the scene.”
Cravath began working with Airgas in May 2001 and left in October 2009 when it got wind of Air Products’ pending offer. At issue now is to what was the extent of Cravath’s work for Airgas. Sources close to Air Products tells Reuters Cravath only provided minor financial work to Airgas and didn’t have access to proprietary information.
Airgas disagrees. In its lawsuit, the company claims Cravath had access to “intimate knowledge of Airgas’ operations, finances, executive personnel and their agenda, and corporate expansion and differentiation strategies.” Airgas also says Cravath provided counsel when Airgas’ president and chief operating officer left in 2005.
It is not yet known where the conflict-of-interest case will be heard. It was filed in Pennsylvania state court and transferred to federal court in Philadelphia. Air Products wants it heard in Delaware while Airgas prefers the matter be heard in Philadelphia first.