Irell Returned to Disk Drive Case

A state appellate court on Friday reinstated a major Los Angeles law firm that had been disqualified last year from defending Western Digital Corp. in a $186-million lawsuit.

A three-judge panel of the state Court of Appeal found that Irell & Manella had not committed any ethical transgressions to warrant its dismissal from a case it had worked on for more than five years.

“We’re very happy to be back,” said Irell partner Andra B. Greene. “This is something that never should have happened in the first instance. There was no reason for us to be disqualified.”

The firm stood to lose as much as $2.5 million in legal fees had it been forced to remain off the case.

The lower court’s conflict-of-interest ruling had been an embarrassment for the firm, which has built a large tax-law practice, with celebrity clients such as Lucille Ball, Frank Sinatra and Elizabeth Taylor.

U.S. Atty. Nora Manella is the daughter of one of the founders.

The firm and an expert witness for Western Digital were only three months away from trial when they were disqualified last March.

The appellate court also reinstated the expert, Daniel Carter of the Hankin & Co. consulting firm in Santa Monica.

A British consumer electronics company, Amstrad, had sued Western Digital, alleging that the Irvine company had sold it defective disk drives for the personal computers Amstrad builds.

Western Digital, a leading maker of disk drives, asserted that any problems were with Amstrad’s overall computer designs.

Amstrad had talked with the Hankin consultants, but didn’t hire the firm as its expert witness.

Later, Irell hired Carter, who had joined the Hankin firm after Amstrad’s meetings with Hankin had ended.

Hankin was supposed to ensure that Carter received no confidential information on Amstrad.

But Orange County Superior Court Judge Robert Thomas ruled that the protections were inadequate.

The appeals court, however, found “no evidence” that the protections didn’t work.