The business world's latest courtroom drama is a fight between Morgan Stanley and Ronald Perelman.

Don't mistake this for a John Grisham morality tale of a big corporation intimidating a wronged individual. Billionaire Perelman is suing over a deal that went bad, making this trial more like Dallas than The Firm.

The story begins in the late 1990s, when Perelman met with Morgan Stanley (NYSE:MWD). The pitch? Perelman should sell Coleman to Sunbeam.

At the time, Sunbeam's fearless leader was "Chainsaw" Al Dunlap, known as a slash-and-burn corporate turnaround artist. He even wrote a book about his prowess, titled "Mean Business." It didn't take him long to acquire nicknames like "The Shredder" and "Rambo in Pinstripes."

But Dunlap's stint at Sunbeam would be his last. With mismanagement and alleged accounting shenanigans, the company plunged into bankruptcy. Since Perleman received 14.1 million shares for his sale of Coleman, he took a big hit, too.

So Perelman filed suit in West Palm Beach (he once owned an estate there, which he sold for $70 million). Realizing that such cases are tough to win, he even offered to settle with Morgan for $20 million.

Morgan decided to fight instead -- perhaps a bit too hard. The trial judge believed that Morgan was withholding material information (especially email) and decreed a default judgment, indicating that Morgan "participated in a scheme to mislead."

The trial gave observers an inside look at corporate dealmaking. When considering an investment, Perelman has trusted advisors review public filings, then ask questions of the other side's banker. After all, one of an investment banker's key roles is to perform extensive due diligence on a client. It's very reasonable for Perelman to rely on the expertise of brokerages like Morgan.

Perelman's advisors did voice concerns, particularly with Sunbeam's use of "bill-and-hold" accounting. Under this scheme, Sunbeam inflated its sales numbers by booking sales before customers paid or goods were shipped. (By the way, Arthur Andersen was Sunbeam's auditor.) According to Perelman, Morgan bankers assured him that the practice was nothing to be concerned about.

There were other shenanigans. When Dunlap was hired, he took excessive restructuring charges that would allow him to lower expenses and boost profits in future quarters-- a practice known as "cookie jar" reserves. A subsequent Securities and Exchange Commission investigation branded Sunbeam a "case study" in financial fraud.

In the end, the jury sided with Perelman in a judgment for $604 million, believing that he relied on Morgan's bankers. Next, the jury will determine punitive damages, which could total more than $2.5 billion.

To avoid such a hefty fine, it is likely that both sides will come to a settlement-- but it certainly won't be $20 million. Morgan has already reserved $360 million.

Of course, there is also the damage from the proverbial "court of public opinion." In light of eight former Morgan executives' recent effort to unseat the current CEO, the Perelman verdict is another black eye for the firm.

Fool contributor Tom Taulli does not own shares of companies mentioned in this article.