Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In the wake of Brobeck, Phleger & Harrison’s collapse, a handful of partners have been left to sift through the rubble. Stephen Snyder, who served as Brobeck’s chairman from 1996 to 1998, was named head of the firm’s liquidation committee on Feb. 11. He then brought on Brobeck partners G. Larry Engel, James Miller and Luther Orton to assist him. Snyder was a bit overwhelmed when he took on the task. “It was like Dorothy walking out of the house in ‘The Wizard of Oz,’” Snyder said. The committee’s biggest task has been negotiating with a group of banks — led by Citibank — to pay off Brobeck’s current debt of $56 million and sell the firm’s assets. “When I got involved they were in a grim mood, not knowing when they would get paid,” Snyder said. The committee is also collecting bills, reporting to the government agency that looks over retirement funds, fielding hundreds of phone calls from vendors who want to be paid and clients who want to know where their files are, and dealing with a suit by former employees seeking two months’ severance pay. Employees had no warning that the firm was disbanding — and, unlike Brobeck partners, many have had difficulty finding new jobs. While some Brobeck lawyers are sympathetic to the staff’s situation, partner Steven Zager derided their suit, noting that partners had taken a big hit as the firm’s fortunes fell. Zager, formerly the head of Brobeck’s litigation department, said partner income dropped 43 percent from 2001 to 2002 and 82 percent from 2002 to 2003. Brobeck’s profits per partner went from a high of $1.1 million in 2000 to $555,000 in 2002. On top of the decline in income, Zager said partners also lost all their retained capital. As for the staff, they “got paid time off and vacation [pay],” Zager said. “People want to be paid for not working. It’s puzzling to me.” Employees are also battling to get their 401(k) retirement funds, which have been frozen since Brobeck went into liquidation. Barbara Creed, a partner at Trucker Huss who represents the retirement plan, said employees would begin receiving distributions by the end of the month. However, 1.5 percent of the accounts will be held back to help cover administrative costs. Brobeck did not pay administrative fees on the 401(k) plan for the last three quarters of 2002, and that money will now come out of the employees’ distribution. Creed said she did not know how much money Brobeck had failed to pay the plan. Snyder said partners have lost about half their retirement funds. That’s because the plan had an unfunded component, which was dependent on the firm continuing to be profitable. The liquidation committee will have to wrestle with a number of other issues, such as potential claims from partners over unpaid bonuses and lost capital. Tower Snow Jr. and other former partners who joined Clifford Chance have a $10 million arbitration claim against Brobeck for breach of fiduciary duty, breach of partnership agreement and defamation. Brobeck has a counterclaim of $10 million against the group for breach of fiduciary duty. Snyder said he expected the wind-down of Brobeck to take at least as long as it has taken Pettit & Martin. Although Pettit disbanded in 1995, a former partner is still dealing with the firm’s business. But Snyder, 60, said he doesn’t plan to be involved with Brobeck’s liquidation beyond the first couple of years. Currently, the liquidation committee has a staff of about 30 people. Snyder said several retired partners are also lending their help at no cost. The committee members are getting some compensation for their efforts. Snyder’s compensation of $600,000 is contingent on the firm’s debt being paid off. He said the sum is about what he was receiving as a semi-retired partner at Brobeck. In the meantime, Snyder is being paid $6.75 per hour — California’s minimum wage — in order to be counted as a member of the firm’s health plan. The plan requires at least one active member in order for former employees to receive COBRA coverage.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.