## Facts

- Kirkland & Ellis LLP represented several Mylan entities under an engagement letter effective January 9, 2013, and performed work involving significant Mylan products and strategies.
- During engagement-letter negotiations, Mylan obtained changes narrowing Kirkland’s advance-consent language concerning representations “related” to Kirkland’s work for Mylan.
- In February 2015, Mylan reorganized so that the prior U.S. entities became subsidiaries of a newly formed Dutch holding company, Mylan N.V.
- In early April 2015, Teva asked Kirkland to lead a deal team advising Teva on a hostile acquisition of Mylan N.V.
- Kirkland’s conflicts check treated Mylan N.V. as not being a current or former Kirkland client, and Kirkland implemented an internal ethical screen between lawyers working for Teva and those working for Mylan entities.
- Teva publicly announced an unsolicited proposal to acquire Mylan N.V., and Mylan N.V.’s board rejected the offer.
- Mylan sued Kirkland in Pennsylvania state court seeking to enjoin Kirkland from representing Teva, and Kirkland removed the case to the U.S. District Court for the Western District of Pennsylvania.
- Mylan moved for a preliminary injunction seeking disqualification of Kirkland from the Teva takeover matter.
- The magistrate judge issued a report recommending disqualification; the district judge later entered an order addressing the requested injunctive relief.
- The parties later stipulated to dismissal with prejudice, expressly subject to the district court’s August 6, 2015 order.

## Issues

1. Whether Kirkland’s representation of Teva in a hostile bid for Mylan N.V. created a concurrent conflict with Kirkland’s ongoing representation of Mylan entities under Pennsylvania Rule of Professional Conduct 1.7.
2. Whether Kirkland could treat Mylan N.V. as distinct from the Mylan entities it represented so that the takeover engagement was not directly adverse to a current client.
3. Whether engagement-letter advance-consent language and an internal ethical wall could avoid or cure a concurrent conflict arising from a hostile takeover representation.
4. Whether Mylan satisfied the requirements for preliminary injunctive relief, including likelihood of success, irreparable harm, balance of harms, and public interest.

## Decision

- The court granted preliminary injunctive relief in substance by disqualifying Kirkland from representing Teva in the hostile acquisition effort at issue.
- The court concluded Mylan showed a likelihood of success that Kirkland undertook a concurrent conflict under Pa. R. Prof’l Conduct 1.7 by representing interests directly adverse to an ongoing client relationship.
- The court found screening within the firm did not cure a current-client conflict created by undertaking directly adverse representation.
- The court found irreparable harm based on risks to loyalty, confidentiality, and corporate control that were not adequately remediable by money damages.
- The case later ended by dismissal with prejudice pursuant to the parties’ stipulation, without further merits adjudication beyond the disqualification ruling reflected in the August 6, 2015 order.

## Legal Principles

- Under Pennsylvania Rule of Professional Conduct 1.7, a lawyer may not represent a client when the representation is directly adverse to another current client, absent valid informed consent.
- A hostile takeover representation is typically treated as directly adverse to the target and can trigger a concurrent conflict when the law firm has an ongoing relationship with entities within the target’s corporate family.
- Courts may construe engagement-letter conflict language narrowly, particularly where the client negotiated to limit the firm’s ability to take on representations connected to the client’s core business and confidential strategic information.
- Internal ethical screening generally does not permit a firm to proceed with representation that constitutes a direct-adversity current-client conflict.
- In conflict-based disqualification disputes, irreparable harm may be found where continued representation threatens confidentiality, loyalty, and public confidence in the integrity of legal proceedings.

## Conclusion

The court disqualified Kirkland from representing Teva in the hostile bid for Mylan N.V., holding that the engagement created a non-consented concurrent conflict with Kirkland’s ongoing representation of Mylan entities and that an ethical wall and engagement-letter provisions did not justify the directly adverse representation.


Mylan Inc. v. Kirkland & Ellis LLP, No. 2:15-cv-00581 (W.D. Pa. Aug. 6, 2015)