Wachtell to pursue Deloitte in HP Autonomy row

Wachtell Lipton Rosen & Katz is to pursue Deloitte on behalf of Hewlett-Packard (HP) in an escalation of the company’s row with software firm Autonomy over its doomed 2011 acquisition.

Wachtell partner Marc Wolinsky told a San Francisco court on Monday that the company would sue Deloitte over its auditing of Autonomy’s accounts prior to its $11.1bn takeover by HP, which led to an $8.8bn write-down (14 December 2012). The threat emerged this week when a US judge rejected the company’s $18m fee-deal with two US firms originally acting against HP on behalf of its former shareholders (7 August 2014).

Robbins Geller Rudman & Dowd and Cotchett Pitre & McCarthy were to receive $18m (£10.8m) in fees over 32 months to sue Autonomy’s founder and finance director instead of HP, with a $30m success payout.

However US District Judge Charles Breyer rejected the settlement, saying he needed more time to assess whether dismissing claims against HP officers was fair. HP has now pledged to go after the UK arm of Deloitte for its role in auditing Autonomy before the sale.

An HP spokesperson said: “We will continue to work to have the derivative actions settled or dismissed and to hold the former executives of Autonomy as well as Autonomy’s auditor, Deloitte UK, responsible for the wrongdoing that occurred.”

Deloitte has previously turned to Freshfields Bruckhaus Deringer partner Andrew Hart (7 January 2013). It is not known if Hart has been instructed for the potential court claim brought against the company.

A spokesperson for Deloitte UK said: “HP has apparently indicated that it intends to pursue a claim against Deloitte UK. Any possible claim would be utterly without merit and we will defend ourselves strongly against it. 

“Deloitte was not engaged by HP, or by Autonomy, to provide any due diligence in relation to the acquisition of Autonomy. Deloitte UK was auditor to Autonomy at the time of its acquisition by HP. Deloitte UK conducted its audit work in full compliance with regulation and professional standards.”

HP was sued by shareholders following the doomed acquisition, which saw it write down $8.8bn, but persuaded them to join HP in pursuing Autonomy founder Mike Lynch and his finance director Sushovan Hussain. HP accuses Lynch and Sushovan of accounting irregularities including fraud and inflated figures by Autonomy executives prior to the purchase linked to a $5bn write-off after the sale.

Clifford Chance partners Jeremy Sandelson and Iain Roxborough have been advising Lynch since 2012 with partner Chris Morvillo advising from New York. 

The legal line-up:

Former Autonomy founder Mike Lynch

Clifford Chance partners Jeremy Sandelson and Iain Roxborough in London and Chris Morvillo in New York

Former CFO Sushovan Hussain

Keker & Van Nest partner John Keker

Hewlett Packard

Wachtell Lipton Rosen & Katz partners Marc Wolinsky, George Conway and Farella Braun & Martel partner Neil Goteiner 

HP shareholders 

Robbins Geller Rudman & Dowd and Cotchett Pitre & McCarthy