Day Casebeer Weathers Storm Over Qualcomm Discovery

Zusha Elinson

The Recorder

The Qualcomm discovery fiasco dealt a blow to the lawyers involved at Day Casebeer Madrid & Batchelder. As the question of sanctions lingers in the courts, another big one remains: How badly will it hurt the highly respected patent litigation boutique?

Five Day Casebeer lawyers -- as well as one from Heller Ehrman -- were sanctioned in January after client Qualcomm failed to turn over crucial documents in a patent fight with Broadcom. Although the order has been vacated until the lawyers get to tell their side of the story, the final outcome is still uncertain.

The firm celebrated its anniversary over the July 4 weekend, marking 10 years since five Cooley Godward lawyers struck out on their own. Craig Casebeer, having hit 60, fulfilled longstanding plans to retire in December, and Lloyd "Rusty" Day has been left to groom the next generation of leadership while holding the firm together through the Qualcomm debacle.

"It's had a sobering effect on our firm in the sense that we have confronted, what is obvious to everyone, a very difficult situation," Day said quietly earlier this week. "I am proud to say that we've confronted it very responsibly."

The Qualcomm discovery disaster -- and the judge's harsh criticism of such a large group of well-known lawyers -- caused a crush of negative publicity and has quickly become an oft-repeated cautionary tale at law firms, law schools, conferences and CLE classes.

Since the scandal broke, five associates have left the firm, which now has 38 attorneys. Most recently, the two associates who were sanctioned, Adam Bier and Kevin Leung, departed.

The three partners who were sanctioned, James Batchelder, Lee Patch and Christian Mammen, are still with the firm. However, Patch is no longer a partner. He has the new title of senior counsel and has been circulating his resume at other firms, according to a source familiar with the matter. Batchelder was also rumored to be testing the market last year.

Between a founder retiring and a scandal, a small firm could find itself in danger of collapse or considering escape through merger. But several observers said that with a its solid reputation, strong leadership could guide the firm through the rough times.

"If they have good leadership -- and they do have great clients -- why wouldn't they stay together?" said Marty Africa, a veteran legal recruiter with Major, Lindsey & Africa.

Casebeer's retirement, observers say, does not create a leadership vacuum. The move had long been in the works, and Day has long been the driving force at the firm. Though Day, 56, continues to talk about grooming successors, a lot of the leadership role still appears to fall to him. He stepped into the managing partner position at the beginning of this year, a position Casebeer used to hold.

Ten years in, Day said that what he calls the "experiment" is still working.

"When we founded this firm, we did it with the attitude that this is an experiment: We think we know how to assemble a team of people that can represent a significant group of clients in significant matters," Day said. "Like any experiment, you meet with success and failure ... In general we still strongly believe that we've got the basic fundamentals right."

THE QUALCOMM EFFECT

U.S. Magistrate Judge Barbara Major's harsh criticism of Qualcomm's outside lawyers in her sanctions order caught the attention of lawyers everywhere. The attorneys "assisted Qualcomm in committing this incredible discovery violation," she wrote.

The discovery issue arose during the January 2007 trial over video compression patents. A Qualcomm witness disclosed the existence of e-mails that turned out to be highly relevant to the case. In April 2007, Qualcomm's then-General Counsel Louis Lupin and Batchelder apologized for neglecting to turn over the e-mails to Broadcom but argued that Qualcomm's trial team had never acted in bad faith.

Major's sanctions order has since been vacated and remanded by U.S. District Judge Rudi Brewster, who granted the lawyers' requests to give their side of the story free of attorney-client privilege. Qualcomm has appealed Brewster's order, and Major has put a hold on the proceedings in her courtroom.

Opinions vary on whether the lawyers deserved the sanctions, especially the young associates. But regardless of the merit, there's no doubt about the effect.

"Our discipline system is shame-based, and the only capital a lawyer has is his reputation," said Diane Karpman, a partner in Los Angeles' Karpman & Associates who defends lawyers against State Bar discipline charges. "This sort of negative publicity has a huge impact."

Both associates who were sanctioned left the firm in recent months. Leung is now consulting with lawyers and biotech startups on patent-related matters, said his lawyer, Joel Zeldin of Shartsis Friese, and is considering ditching law firm life.

"This whole Qualcomm thing was a tremendous bump in the road and caused him to re-evaluate things," Zeldin said, explaining that his client, "a gentle person and a real gentleman," is looking for an in-house job.

Bier, who said he's doing volunteer work, said he didn't leave over Qualcomm.

"I had some long-term interests in terms of how I wanted my career to proceed, and I thought those would be best pursued at another firm," he said, adding that the firm had been "supportive" throughout.

Patch, who joined Day Casebeer from firm client Sun Microsystems, did not return a phone call Wednesday. But Day said that Patch and the firm agreed at the beginning of the year that he would leave the partnership to become of counsel.

"It was mutually agreed upon that it was the best way for him to move forward," Day said.

Day said the rest of the firm, too, is ready to move forward.

"I'm sure that Qualcomm was very unsettling for a lot of people," Day said. "The question is: Does it cause you to lose focus and distract you from the opportunity that sits right in front of us? I'm confident that the people we have here are focused on the opportunities right in front of them."

THE FUTURE

Although it lost Qualcomm as a client, Day Casebeer is still working on patent cases for other marquee clients like Amgen, SAP and Symantec Corp. Day said the firm has been able to land new cases, though he conceded that losing Qualcomm as a client left a "hole."

"I don't think it's made it hard for us to get work," he said. "I think we're reasonably busy ... last year we were incredibly busy."

Palo Alto solo Julie Turner, who left the firm's partnership two years ago, said Day Casebeer won't lack for work because of the Qualcomm situation.

"I think that clients who know them know just how good they are, and they also know that the attorneys strive for the highest ethics and that the Qualcomm case is really a mischaracterization of the firm," Turner said.

Day said a new class of associates would be starting in the fall. Last year the firm added eight associates. Day said he's not sure yet how large the 2008 class will be.

He said that it's important to groom the next generation of leaders and points to partners Paul Grewal and Renee Dubord Brown, who serve with him on the management committee. He also points to Batchelder and partners David Madrid and Robert Galvin.

"My goal is to supplant myself -- I've said that for five years," Day said.

Day said the firm has been modeled after the spirit of his mentor at Cooley, the late Edwin Huddleson Jr. Huddleson would invite young lawyers to work for his clients and when they did a better job than him, he'd hand them over, Day said.

In a trial practice, Day said that can take a long time, maybe 10 to 20 years.

As to whether Day Casebeer will continue independently, Day said that he's consistently turned down offers from outside firms. But the fiercely independent lawyer wouldn't categorically rule out a merger in the future.

"We're continually assessing where we are and how we're doing," he said. "It's hard to lay down an absolute."

Day said he doesn't have retirement on his mind.

"When we started this firm we felt that we had an opportunity to build a really excellent practice that delivered superior trial services for really innovative companies. I still find that very satisfying and rewarding to do."