A very nasty fight between Wachtell, Lipton, Rosen & Katz and Carl Icahn will continue in both state and federal court in New York, at least for now.

Last week Manhattan U.S. District Judge Richard Sullivan denied a motion by Wachtell to dismiss the federal case, ruling that he won't relinquish jurisdiction and allow the litigation to be resolved in state court, where Wachtell is pursuing a related suit.

Wachtell and two of its partners are battling malpractice claims brought by CVR Energy Inc., an oil refining and fertilizer business and former Wachtell client that Icahn acquired in 2012. CVR claims that Wachtell failed to explain that the company would owe $36 million in investment banker fees if Icahn's takeover were successful. CVR had hired Wachtell to try to fend off a hostile acquisition by Icahn, paying the firm $6 million, but Icahn prevailed.