Manhattan Supreme Court at 60 Centre St. Photo by Rick Kopstein/NYLJ

Weil, Gotshal & Manges has brought in Williams & Connolly partner John Villa to defend it from allegations of unethical conduct related to advice it gave financial services firm Perella Weinberg Partners over the tax treatment of two executives' deferred compensation.

Ex-Perella investment bankers Michael Kramer and Derron Slonecker, who are represented by Lisa Solbakken of Arkin Solbakken, accused Weil earlier this month of failing to disclose that the deferred-compensation forms at the center of their dispute with Perella didn't comply with tax laws. Perella's withholding of more than $10 million in deferred comp from the departed bankers was therefore invalid, they argued.

Weil has been representing Perella in litigation against the two bankers in Manhattan Supreme Court. Perella accused Kramer and Slonecker nearly four years ago of hatching a plan to split off with most of the other members of Perella's financial restructuring group and start a competing entity called Ducera, in violation of their partnership and nonsolicitation agreements. The two men filed a countersuit that accused Perella of wrongfully withholding their deferred compensation, and they have been litigating ever since.

Weil sought to withdraw as counsel for Perella in the litigation this month after a report in the New York Post on Aug. 22 said Weil partners had concluded they risked being sued for malpractice over the advice they gave Perella.

The Post reported that Weil may have given Perella bad advice by having Kramer and Slonecker sign their deferred-comp agreement amendments too late to avoid penalties under federal tax laws. The Post report cited what it said were internal notes of meetings among partners Michael Nissan, Nicholas Pappas and Jeffrey Klein in which they acknowledged a "significant malpractice issue" and expressed mixed views on whether to disclose it.

About a week later, the paper reported, Perella staff were informed that Weil had "revoked" their ability to use a shared cafeteria as the relationship between the firm and its longtime client degraded.

In a letter filed Tuesday, Villa said Kramer and Slonecker's assertion that Weil had unethically withheld its thoughts on the tax issue was irrelevant and wrong. He said the two had all the information they needed to reach legal conclusions and said the suit with Perella was about whether the financial services firm had the right to seize their deferred compensation on their departure, not about whether the IRS might claim they owe taxes on the money. He urged the court to reject any request for sanctions or discovery on the issue.

"The at-best marginal relevance of Weil's protected, purported, mental impressions of possible tax treatment suggests that defendants are attempting to capitalize on a press story to divert attention from the issues in this case into an unjustified attack on trial counsel," Villa wrote.

Solbakken said in a reply filed Thursday that "the crime-fraud exception applies" to any attempt Perella might make to invoke privilege to prevent discovery. She said Villa misstated the history of the case and "ignores" the question of whether Weil and Perella misled the court.

The exchange of letters could mark the opening of a broader dispute between any number of parties, although Weil certainly doesn't want that to happen. The Ducera execs have asked for "further discovery or for some manner of sanction," saying the Post report revealed that Weil's arguments to them, to Justice O. Peter Sherwood and to the Appellate Division, First Department, were knowingly false. They said the firm violated Rule 3.3(a)(1) of the New York Rules of Professional Conduct.

Weil, through lawyer Villa, argued that it's actually Kramer and Slonecker's counsel at Arkin Solbakken who are being unethical. The firm said Rule 1.6 requires attorneys to keep private matters, such as the privileged discussions and work product alluded to in the Post articles, confidential, and said its publication shouldn't lay the foundations for Kramer and Slonecker to go digging around for even more material they never should have laid eyes on in the first place.

Solbakken has requested a conference before Sherwood. The court has yet to act on that request.

A Perella representative said the company would respond "in due course consistent with the court's schedule."

Solbakken, a Weil representative and Villa all declined to comment.