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Top partners at Brobeck, Phleger & Harrison were continuing to enjoy million dollar-plus paydays even as the firm rapidly lost steam in the wake of the dot-com bust, partner compensation records show. And in some cases, rainmakers pocketed $200,000 or more in bonuses in the months before the firm’s January announcement that it would close its doors. The partner compensation records — which recently came to light as part of the firm’s bankruptcy — provide a detailed look into the financial life of Brobeck as it struggled through its final year. The records also provide a rare glimpse of which partners were bringing home the biggest paychecks and may be a good indicator of the current earning power of ex-Brobeck rainmakers. “There is no way that a top partner at Brobeck would trade down,” said recruiter Avis Caravello. “In the lateral market if a partner is sought after, a firm will rarely make an offer for less money and usually offer more.” The records show that Tower Snow Jr., a securities litigation rainmaker and former firm chairman, was at the top of Brobeck’s partnership compensation pyramid– which consisted of 12 separate levels. Snow was the only partner occupying a spot in the 12th tier, and in 2001 — his last full year with Brobeck — he took home an estimated $1.4 million, not counting bonuses. Snow was expelled from the firm in May 2002 and later joined Clifford Chance. Corporate honcho Warren Lazarow — now a partner at O’Melveny & Myers — also brought home a tidy sum. His 2001 base pay was $1.14 million. In 2002, he picked up a $250,000 bonus and occupied a compensation level just under Snow’s. He was joined by one other partner in the 11th tier, firm Chairman Richard Odom. The records do not give specific dollar amounts for 2002 base compensation. But former partners — using their own paychecks as a guide — estimated that senior-level Brobeck veterans like Lazarow and Odom would have taken home as much as $1.1 million in base pay in 2002. A partner in the 10th tier would have taken home approximately $980,000 under that formula. But base pay wasn’t the only money available for partners. Like Lazarow, other partners pulled in hundreds of thousands of dollars in bonus cash. Large bonuses, former partners said, were paid out to top billers to compensate them for their rainmaking abilities. Steven Zager, the Texas-based head of the litigation department, scored a $200,000 bonus in 2002. Zager — whose total income topped $1 million in 2001 and $1.8 million in 2000 — was in the 9th partnership tier. His 2002 base pay likely topped $850,000 if partner estimates hold true. Zager was a key rainmaker whose January jump to Akin Gump Strauss Hauer & Feld was part of a chain of events that led to the firm’s demise. Following his resignation, Morgan, Lewis & Bockius immediately called off merger discussions with Brobeck, and Brobeck’s policy committee decided to pull the plug on the firm. The partner compensation review includes the salary levels of Brobeck partners, bonus distribution, billable hours and income generated from specific clients. Former Managing Partner Richard Parker submitted it to Brobeck’s management committees on Jan. 10, anticipating that it would provide a guide for compensation levels in 2003. However, the firm pulled the plug just three weeks later. Brobeck had suffered two years of double-digit declines in profitability. Average profits per partner peaked at $1.17 million in 2000, and by the end of 2002 had slid to $555,000. As the firm neared a meltdown, partners like Lazarow and Zager were still billing for millions of dollars. But occupying a top compensation tier wasn’t necessarily based upon billables. Odom, for example, billed just 109 hours in 2002, but as chairman of the firm was in the million-dollar club. Snow had comparable billables during 2001 when he was still chairman, the records show. The compensation records may be used by bankruptcy trustees to evaluate the firm’s financial standing prior to its collapse. Former Brobeck senior counsel Jayne Loughry, one of the plaintiffs in an employee suit against Brobeck for severance pay, submitted the document to interim trustee Lynn Schoenmann at a meeting of creditors two weeks ago. Partners contacted for this story confirmed the accuracy of the document. The firm’s liquidation committee also recently filed documents with the U.S. Bankruptcy Court for the Northern District of California that reveal Brobeck has a current debt level of $47.1 million. The documents also detail the money the firm has paid out since its dissolution, including capital payouts to former partners. Brobeck currently owes Citibank $28.5 million and $18.5 million to unsecured creditors with known claims. The liquidation committee lists firm assets of $44 million. This sum includes $20 million in accounts receivable as of Nov. 7 and $10 million in unbilled work in progress, such as contingency fee matters. The firm had revenue of $51 million from January through July 2003. While the liquidation committee has been paying off Citibank, it has also doled out money to cover its own operations. The four members of the committee — former Brobeck partners Stephen Snyder, G. Larry Engel, James Miller and Luther Orton — received $1.4 million through the end of September in base compensation and bonuses. Miller earned the most income with base pay of $283,000 and a signing bonus of $150,000. Snyder, the chair of the committee, received base compensation of $11,315 and a performance bonus of $310,000. The firm also made capital payouts to 41 former Brobeck partners in September, October and November 2003. Snow is listed in the document as receiving no capital payout. However, other former partners who went with him to Clifford Chance got their capital back. James Burns Jr. and Christopher Vejnoska each received $91,588, and Karen Johnson-McKewan was paid $59,038. Among its assets the firm lists a $1 million promissory note from a liquidation trust set up to pay for a suit against Clifford Chance and Snow by retired Brobeck partners and several staff members. They claim Snow and Clifford Chance contributed to the collapse of Brobeck and are seeking at least $100 million in damages. “The debtor has a contractual right to receive a certain percentage of net recoveries from claims against” Clifford Chance and Snow, the document states. Brobeck has paid $287,000 to several firms for legal counseling related to its debt and bankruptcy. In addition it paid $300,000 to Gibson, Dunn & Crutcher for legal fees as Citibank’s legal counsel and $272,000 to Allen Matkins Leck Gamble & Mallory for legal fees representing one of Brobeck’s landlords.

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