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Morgan Lewis & Bockius could be hit by millions of dollars in severance pay and lost fees after taking on the bulk of lawyers from collapsed firm Brobeck Phleger & Harrison
A group of former Brobeck lawyers and employees are planning to launch a claim against the firm this week which will state they are owed two months-worth of pay due to not being given 60 days notice before the closure.
Morgan Lewis could end up picking up the tab on severance since the suit will also try to prove that it is liable for the payments, if it can be argued that by taking on 50 former Brobeck partners plus other lawyers constitutes a continuation of the business.
By that rationale Morgan Lewis would be classed as the successor to Brobeck.
The claim is being brought on behalf of a number of former Brobeck employees who are being represented by Mark Thierman, a class action specialist. At present 187 former Brobeck members of staff have expressed interest in joining the suit.
Thierman told The Lawyer he would also be seeking a lien on future payments by former Brobeck clients on work begun when the firm was still intact.
Under a 1984 case Jewel v Boxer, fees generated by a departed partner on existing work can be deemed the property of their former firm.
This could mean that the hopes of Morgan Lewis to pick up a rush of additional fees from its new partners could be dashed.
Thierman is arguing that under labour law, employees are first in line to receive any monies recovered.
However, he will have a fight on his hands since Brobeck's bank, Citibank, is the largest creditor and under bankruptcy law will be at the front of the queue to recover owed debts.