By David Thomas and Mike Scarcella

May 21 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com.)

AI startup OpenAI, most recently valued at $852 billion, has grown its constellation of outside counsel to include more than a dozen of the largest U.S. law firms as it contends with myriad lawsuits and a looming expected IPO.

The company, its CEO Sam Altman and their lawyers at Wachtell Lipton Rosen & Katz and Morrison & Foerster on Monday scored a major victory in defeating a lawsuit by Elon Musk, who alleged OpenAI strayed from its original nonprofit mission. The win cleared a potential hurdle to an OpenAI IPO that sources have told Reuters could come as soon as September.

Wachtell has represented OpenAI in a string of significant deals since the release of ChatGPT in 2022, including billions of dollars in fundraising from Microsoft, Nvidia and other investors. The Information reported in March that OpenAI had tapped New York-based Wachtell for its IPO, along with Cooley, a firm with Silicon Valley roots.

Spokespersons at Wachtell and Cooley did not immediately respond to requests for comment. OpenAI did not immediately respond to a request for comment about its work with outside law firms, including how much the company is spending on legal services.

Wachtell and its partner William Savitt are also defending OpenAI in a lawsuit Musk's xAI Corp filed last year alleging the ChatGPT maker and Apple monopolize markets for smartphones and generative AI chatbots.

Musk's xAI separately sued OpenAI last year for allegedly stealing trade secrets to gain an unfair advantage in developing AI technology. OpenAI tapped lawyers from Munger, Tolles & Olson to defend it in that dispute.

OpenAI has denied xAI's claims in both cases and accused Musk of harassing the company through litigation.

Wachtell is not the only major firm representing OpenAI in both deals and litigation. Latham & Watkins has handled several deals for the company, including securing a new $4 billion revolving credit line in 2024, and is one of several firms defending OpenAI in a series of high-stakes copyright infringement lawsuits filed by authors, comedians and news agencies alleging the company used their material without permission to train AI systems.

Morrison Foerster and Keker, Van Nest & Peters are also representing OpenAI, which argues its use of the material is protected by copyright fair use doctrine.

OpenAI turned to Wilson Sonsini Goodrich & Rosati in a case brought by Nippon Life Insurance Company, which alleges ChatGPT practiced law without a U.S. license in helping a former disability claimant ​flood a federal court docket with meritless filings. OpenAI this week asked a federal judge in Chicago to dismiss the lawsuit, arguing that ChatGPT is not a lawyer and does not practice law.

US COURT NOMINEE DISCLOSES SULLIVAN & CROMWELL PAY

Sullivan & Cromwell lawyer Matthew Schwartz, nominated by President Donald Trump to serve as a federal appeals court judge, disclosed on an ethics filing that he earned $7.36 million last year as a partner at the prominent Wall Street law firm.

Schwartz while at the firm served as a personal attorney to Trump. At a Senate judiciary hearing on Wednesday, Schwartz vowed to "rule without fear or favor" and to recuse himself ​from cases in which he represented the Republican leader.

Trump picked Schwartz to serve on the New York-based 2nd U.S. Circuit Court of Appeals. Schwartz told the Senate panel that his firm “has revenues of almost $2 billion ​a year.” The firm is widely known for its mergers and acquisition work, in addition to corporate governance and other matters.

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