Wilson Sonsini Accused of Conflict of Interest in Client Case

The Times‘ DealBook is reporting on a juicy one: Wilson Sonsini Goodrich & Rosati, the storied Silicon Valley law firm, may be kept from defending a client owing to alleged conflicts of interest, including an ownership position in that client.

At the heart of the clash is Yehoshua Segal, a former executive at the New York-based, venture-backed data management startup Varonis Systems, which Segal began suing for $10 million late last year. Segal says he was wrongly terminated after he blew the whistle on a number of compliance issues at Varonis, including securities violations — a claim Varonis denies.

Segal has since turned up the heat, however, asking that Wilson Sonsini be recused from defending Varonis because of the professional relationship Segal has enjoyed with a senior partner at the firm for more than a decade. Segal says the partner, Arthur Schneiderman, gave him free legal advice in exchange for steering new startup clients his way. He further says Wilson Sonsini itself owns shares of Varonis through an affiliated investment arm.

Varonis, founded in late 2004, has raised roughly $40 million so far, including from Accel Partners, Evergreen Venture Partners, and Pitango Venture Capital.

Here’s a copy of the complaint: