CC-Brobeck fight drags on as group bids to buy claim

Clifford Chance

’s protracted battle with the defunct Brobeck Phleger & Harrison has taken another twist with a group of former Brobeck partners and some asbestos lawyers bidding to acquire the claim from the defunct firm.

The US Bankruptcy Court’s Judge Montali will tomorrow (30 November) decide whether to approve the $3.75m (£2m) settlement agreed between Clifford Chance and Brobeck trustee Ronald Greenspan in July this year. Brobeck’s major creditor Citibank and the firm’s former landlords support the agreement. However, Greenspan and Clifford Chance must still battle with a group of former Brobeck partners who are opposing the settlement for being too low.

Texan asbestos litigator Mark Lanier is advising an independent group of 20 people, including former Brobeck partners, a widow of a former Brobeck partner as well as former staff in claims against Clifford Chance.

They allege that the UK firm triggered the collapse of Brobeck after the hire of 16 partners in 2002.

In an unwelcome development for Clifford Chance, a cabal of 10 lawyers has offered to acquire Brobeck’s claim for $4.05m (£2.2m). They include some former Brobeck partners and Stephen McClain and Stephen Kazan, name partners at Californian asbestos firm Kazan McClain Abrams Fernandez Lyons Farrise.

If successful, the group would then seek to have the claim heard before a jury in the Californian state court where, it is thought, their chances of victory before a jury would be greater.

The bid is contingent on Judge Montali approving a swathe of orders requested by the group, including making previous findings of the Bankruptcy Court and previous statements made by trustee Greenspan inadmissible in the state action.

In other developments, Greenspan has thrown down the gauntlet to former Brobeck partners who received distributions in 2001 and 2002, allegedly after the firm became insolvent. A meeting has been scheduled for early next month in which Greenspan will propose a settlement with the partners concerned.

Sources close to Clifford Chance are arguing that the news is vindication for the magic circle firm as, by extension, it could not have caused Brobeck’s collapse as the Californian firm was already insolvent when Clifford Chance took 16 of its partners.

Kirkland & Ellis is advising Clifford Chance.