Carl Icahn. (Photo: Victor J. Blue/Bloomberg)

Lawyers for Wachtell, Lipton, Rosen & Katz aired previously private details from their dispute with CVR Energy in court on Monday, arguing the evidence was clear that CVR attorney Herbert Beigel shared confidential firm documents with their adversary Carl Icahn in violation of a protective order.

Wachtell has been defending against a legal malpractice suit filed by CVR in New York federal court. Meanwhile, the law firm has been going on the offensive against the company and Icahn, its principal investor, in New York state court for allegedly misusing Wachtell emails they obtained in another lawsuit to juice up their legal malpractice complaint.

On Monday, lawyers for Wachtell outlined for Manhattan Supreme Court Justice O. Peter Sherwood how Beigel, an Arizona lawyer who is outside counsel for CVR, sought Wachtell's emails to defend CVR against litigation brought by two investment banks and shared them with Icahn's organization to use in concocting a legal malpractice suit against Wachtell. (Beigel was in court on Monday, arguing for the company and Icahn.)

"Mr. Beigel admitted in his deposition … that one of the reasons he forwarded the documents on to lawyers at the Icahn organization was for purposes of developing [a] malpractice claim," said Michael Shuster, a partner at Holwell Shuster & Goldberg who represented Wachtell. "Now, that is violating this court's protective order, and it's violating the parties' confidentiality agreement."

Wachtell was originally retained by CVR alongside Deutsche Bank and Goldman Sachs to help the company in connection with a tender offer Icahn made to its shareholders, with squaring off against Icahn being something of a Wachtell specialty. After Icahn succeeded in taking control of the company, however, CVR refused to pay the banks the $36 million in fees they claimed to be owed.

The banks sued CVR for the fees, and CVR sued Wachtell in federal court for malpractice, saying it obscured the "Kafkaesque" nature of how its compensation was tied to that of investment banks and how it stood to gain if Icahn's takeover bid was successful. Wachtell later sued CVR and Icahn in state court, saying they breached a confidentiality deal and a protective order and engaged in abuse of process.

Shuster, who appeared before Sherwood on Monday to argue against CVR's bid for summary judgment, described evidence—most of which hadn't been made public before—that he said showed Beigel had been scheming for months to get evidence from Wachtell.

Schuster said that, in July 2012, emails showed that Beigel encouraged Icahn and his senior advisers to have CVR continue to fight the banks' fees litigation "so that we can obtain discovery materials for use in developing a malpractice case against Wachtell Lipton."

Wachtell produced discovery materials in the banks' lawsuits in December 2012, Shuster said, and Beigel was supposed to screen those records, some of which were CVR property but others that were internal to Wachtell, for privilege. Instead, Shuster said, Beigel forwarded them all to Icahn's lawyers, Keith Schaitkin and Jesse Lynn, despite the "PRIVILEGED AND CONFIDENTIAL" a Wachtell lawyer wrote in the subject line.

In an October 2013 email to Schaitkin, Shuster said, Beigel "recit[ed] the purpose of the malpractice litigation against Wachtell … Mr. Beigel said, 'bottom line: all this litigation is going to take four years … depositions of Wachtell partners. Press. Embarrassment for Wachtell."

Beigel pushed back, both inside and outside the courtroom in statements to a reporter. He said there were no damages to Wachtell, meaning it had no claim for abuse of process. And he said Wachtell did not, in fact, designate its December production as confidential, an argument by CVR of which Sherwood seemed skeptical.

"Suppose I were to decide … that you were mistaken about that and indeed you were subject to a confidentiality restriction," the judge said to Beigel. "You lose [on this motion], right?"

Beigel disagreed, citing state laws and cases that he said supported his point. Summing up, he described Wachtell's brief as "a lot of facts thrown at the wall" that don't change the reality that the law supported his motion.

The judge didn't issue a ruling. The parties are also waiting for a decision on a major motion in CVR's federal malpractice action against Wachtell. That motion has been pending for several months before Judge Richard Sullivan, who has hung on to the case even after being confirmed to the U.S. Court of Appeals for the Second Circuit. Sullivan dismissed the federal case last fall but gave CVR permission to amend its suit.

After Monday's argument, asked about Wachtell's attack on his conduct and motives, Beigel said in an interview, "I've been a lawyer for 50 years. … I don't respond to attacks on my integrity. They go over my shoulder" and described them with an obscenity.

If Sherwood doesn't accept his arguments for summary judgment, Beigel said, "I can't wait to try this case before a jury, and I can't wait to hear Wachtell testify."

Shuster and a Wachtell partner at the argument declined to comment.