Morgan Lewis & Bockius is set to pay out millions of dollars to Brobeck Phleger & Harrison’s estate, as Clifford Chance continues its battle to agree a settlement with the collapsed West Coast firm’s liquidation committee.
Morgan Lewis’s surprise move emerged at a hearing last week, when the firm, a one-time potential merger partner of Brobeck which eventually recruited 155 lawyers from the firm, entered into a compromise with the bankruptcy trustee Ronald Greenspan to pay $10.2m (£5.7m).
Under the 1984 case Jewel v Boxer, fees generated by a departed partner on existing work can be deemed the property of their former firm, although it is not certain that Morgan Lewis was facing litigation based on this issue.
Clifford Chance is yet to cement an agreement with the estate after the liquidation committee objected to its offer of $3.75m (£2.1m) to settle claims that it and former Brobeck chairman Tower Snow contributed to the collapse of the West Coast firm.
A team of 17 Brobeck partners joined the magic circle firm in 2002 and in the following January, the West Coast firm imploded under a mountain of debt. It is too early to tell if Morgan Lewis’ move will help pave the way for Clifford Chance’s settlement.
California-based bankruptcy specialist Kornfield Paul & Nyberg’s managing partner Eric Nyberg, who is representing the liquidation committee, said: “My own personal view is that the two are unrelated.”
Clifford Chance declined to comment.