Shortly after CEO and chief whipping boy Ken Lewis announced his departure from Bank of America (which the Wire covered here and here), the nation's largest retail bank has agreed to open up long-sought of legal advice. This decision, a surprising breach of attorney-client privilege, may allow the company to settle lawsuits revolving around the decision not to inform shareholders about a $5.8 billion bonus payout.

What will be revealed? Many legal analysts are focusing on what this means for Bank of America's law firm, which played a key role in guiding the company's conduct during the December merger.

• A Legal Nightmare, says financial analyst Douglas McIntyre at Daily Finance. "The risk of the bank's new plan is two-fold. The first is that the documents will show that the legal advice given to the board was not taken, and that the bank went ahead with a proxy that was misleading about the details of the Merrill transaction. The proxy almost certainly obscured certain information about Merrill bonuses and when they were approved. The second risk is that U.S. District Judge Jed Rakoff will not consider the document disclosure adequate as the grounds for a settlement with the SEC and will force a trial."

• An Embarrasment for the Lawyers, writes a structured finance lawyer who blogs at Economics of Contempt. He analyzes the difficult position this information imposes on Ed Herlihy, Bank of America's lead counsel during the negotiations. "I doubt Herlihy was personally involved in the bonus-disclosure decision, as broad negative covenants are standard in merger agreements, and disclosure schedules typically aren't prepared by senior M&A partners like Herlihy...But still, BofA's disclosures are likely to include lots of communications between Herlihy and BofA directors, and much of it undoubtedly occurred under incredible time-pressure, which increases the odds that something embarrassing will be revealed exponentially."

• A Tactic Designed to Shift the Blame, writes Steven M. Davidoff, a legal expert who writes at the New York Times and is a professor at the University of Connecticut. "The disclosure of attorney-client privileged material by Bank of America can only be seen as a calculated risk. The board would not voluntarily release these documents unless they provided a defense or otherwise if the board felt that they could pinpoint blame at a particular person, i.e., a non-director, one who is now likely to be departed. More likely, the documents Bank of America chooses to disclose will show that their lawyers gave legal advice to the bank, and that legal advice just turned out wrong. Is there liability for such a mistake? Even when it seems so coldly calculated as this one? That is a central question, and perhaps where more bodies lie, this time at the law firm level."

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