Clifford Chance to Settle Brobeck Lawsuit

Clifford Chance to Settle Brobeck Lawsuit

The world's largest law firm agrees to $3.75 million settlement with small California firm.

By Joyzelle Davis

Bloomberg News Service

Clifford Chance, which last month announced it would close three of its four California law offices, agreed to pay $3.75 million to settle a lawsuit filed by a group of retired lawyers at a defunct San Francisco law firm.

The former Brobeck, Phleger & Harrison partners in their suit accused ex-Brobeck Chairman Tower Snow and Clifford Chance of causing the bankruptcy and dissolution of Brobeck when in May 2002 he left the firm to open Clifford Chance's San Francisco office.

Clifford Chance "believes it has no liability with respect to the claims made against it in the Brobeck bankruptcy, but it has agreed to this settlement in order to move toward closure of this dispute and because it recognizes it would incur significant costs in defeating the claims," the London-based firm said in an e-mailed statement to Bloomberg News.

The settlement comes a month after Clifford Chance, the world's largest law firm, said it would close its offices in Los Angeles, San Francisco and San Diego because Snow and a group of 38 former Brobeck lawyers announced they would leave the firm.

A trustee for Brobeck's bankruptcy estate on July 2 took over the lawsuit filed in October by the former partners, saying the claims of the ex-employees are actually claims of the law firm's estate.

The bankruptcy trustee determined that while "meritorious claims" against Clifford Chance and Snow "may likely exist and might be pursued successfully," the basic causes of Brobeck's collapse likely predated the defections, according to court papers.

The proceeds from the settlement will go to Brobeck's creditors, not the individual lawyers who filed the suit.

For the settlement to be approved, Brobeck's trustee is challenging a decision by Brobeck's liquidation committee to assign the firm's claims against Clifford Chance to benefit former partners and employees at the expense of creditors, said Bennett Murphy, a lawyer who represents bankruptcy trustee Ron Greenspan.

U.S. Bankruptcy Judge Dennis Montali in San Francisco must also approve the settlement. A hearing is scheduled for Aug. 6.

The ex-partners case is:

Hanger v. Clifford Chance, RG3120659, Alameda Superior Court. The bankruptcy case is In re: Brobeck, Phleger & Harrison Claim Liquidation Trust, 03-32715, U.S. Bankruptcy Court Northern District.