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In an effort to avoid potential conflicts of interest, Stephen Snyder and James Miller are leaving Morgan, Lewis & Bockius to form their own firm to focus on the liquidation of Brobeck, Phleger & Harrison. Snyder and Miller joined Morgan, Lewis as of counsel following Brobeck’s demise in February. Since then the two have dealt with tying up Brobeck affairs. In addition to negotiating with a group of banks to pay off Brobeck’s debt — which totaled $56 million in April — they have collected bills, communicated with vendors and former Brobeck clients and dealt with litigation resulting from the firm’s collapse. Three landlords forced the firm into involuntary bankruptcy in September, claiming Brobeck owed them $50.4 million. Snyder, who is head of the liquidation committee, did not return phone calls, and Miller declined to comment on his and Snyder’s departure. But Franklin “Brock” Gowdy, managing partner of Morgan, Lewis’ San Francisco office, said the two decided to leave to avoid conflicts with other former Brobeck partners. “Steve and Jim represent all Brobeck partners as the stewards of the remainder of the enterprise,” Gowdy said. “People felt third parties [could] take a position that put Jim and Steve in a spot” since they are speaking for all Brobeck. Gowdy said he and Morgan, Lewis partner Stephen Finn met with Snyder and Lewis about three weeks ago. “They said they were feeling uncomfortable because [the liquidation] hadn’t resolved itself and they felt it would get more intense rather than less and they perceived potential for conflicts of interest,” Gowdy said. A date for their departure from Morgan, Lewis has not been set. Snyder spent his career at Brobeck and served as chairman from 1996 to 1998. As members of Brobeck’s liquidation committee, Snyder and Lewis have been embroiled in lawsuits filed in the wake of Brobeck’s collapse. A group of former employees filed suit against the firm seeking severance pay, and landlords have filed two separate suits against the firm and individual partners for unpaid rent. Meanwhile, Snyder helped coordinate a suit by retired Brobeck partners and former Brobeck staff against former Chairman Tower Snow Jr. and Clifford Chance, the firm Snow joined in May 2002. The group alleges Snow and Clifford Chance contributed to Brobeck’s unraveling. To pay for the litigation, Gowdy said, a trust fund was set up in conjunction with Citibank in the early part of the year, and money was set aside to pay legal expenses. More recently, he said, the liquidations committee set up another trust fund, and former Brobeck partners were given the opportunity to guarantee either the cost or part of the cost of the litigation. In exchange for their guarantee, Snyder arranged that retired partners would be the first beneficiaries of the case “and get some significant portion” of any award after attorneys fees were paid, Gowdy said. The Brobeck liquidation committee would be entitled to the next bite, and partners guaranteeing the cost of the litigation would get some portion of the remaining sum. “People passed the hat to fund the case,” Gowdy said. The lead plaintiff in the suit is Faye Hanger, the widow of former Brobeck partner Charles Hanger. David McClain, of Oakland’s Kazan, McClain, Edises, Abrams, Fernandez, Lyons & Farrise, is one of the lawyers representing the plaintiffs. In addition to handling Brobeck matters, Gowdy said Snyder and Lewis would work on matters relating to Oakland-based Western MacArthur Co. Brobeck is still owed millions of dollars in contingency fees for representing MacArthur in a suit against several insurance companies for failing to provide coverage for asbestos claims. Western MacArthur has filed for Chapter 11 bankruptcy, and it’s unclear how much money Brobeck will end up getting. Gowdy said he was unhappy to see his two former colleagues leave Morgan, Lewis . While some in the legal community speculate Morgan, Lewis might decide not to retain all the Brobeck lawyers it hired after Brobeck disbanded, Gowdy said that is not the case. Morgan, Lewis recently conducted its forward-looking compensation cycle, and no one at the firm said there were Brobeck lawyers they did not want, Gowdy said. “Everyone is doing well.”

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