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British legal giant Clifford Chance is closing its offices in San Francisco and Los Angeles after the defection of several partners to Orrick, Herrington & Sutcliffe. Clifford Chance said the California office closings were the result of lower-than-expected profitability from the securities litigation group the firm recruited two years ago from the now-defunct Brobeck, Phleger & Harrison. But Michael Torpey, the former head of Clifford’s San Francisco litigation practice and one of the eight partners joining Orrick, denied that profitability in the group had been an issue and instead attributed the parting to Clifford’s failure to expand its West Coast operations. Aside from Torpey, San Francisco-based Clifford partners joining Orrick include James Burns, Karen Johnson-McKewan, James Kramer, Robert Varian and L. Christopher Vejnoska. Jerry J. Walsh and Daniel Tyukody will become partners in Orrick’s Los Angeles office. Clifford Chance will retain a seven-lawyer Palo Alto, Calif., office and a five-lawyer San Diego office. The firm entered the California market amid great fanfare in June 2002, when it attracted a large group of lawyers led by former Brobeck Chairman Tower Snow. The move was the first on the West Coast by a member of London’s “Magic Circle” of leading corporate firms. It was widely regarded at the time as a sign of Clifford Chance’s commitment to massive expansion across the United States. John Carroll, Clifford Chance’s New York-based managing partner for the Americas, said the firm remained committed to the United States, but was revising its strategy in light of its experience in San Francisco and Los Angeles. While Carroll praised Torpey and the other departing California partners as a “strong group of people,” Carroll said the firm’s management had been “somewhat disappointed” with the group’s performance. He attributed its lowered profitability to the changing nature of securities litigation practice. “A significant factor is that, coming out of the [technology] bubble, securities litigation has shifted from an issuer practice to one focused on financial institutions,” said Carroll, who said that the firm’s New York-based securities litigation practice focuses heavily on representing the banks now targeted by the securities class action bar. He also noted that the West Coast marketplace and its billing rates are different from those in New York. “It’s a difficult market to hit East Coast profit goals,” Carroll said. West Coast profitable Torpey acknowledged that the securities litigation practice had changed, but he said that the San Francisco-based practice had been almost as profitable as the New York practice. “The securities litigation group in San Francisco was one of the most profitable in the Americas for the immediate past fiscal year,” he said. But Torpey said the securities litigation group was unable to leverage its client contacts into building substantial transactional practices at Clifford Chance. He said potential corporate lateral hires were hesitant about joining a new entrant in the market. He said those hesitations increased after Clifford Chance partners on the East Coast began leaving in substantial numbers. “When you’re talking to lateral partners, it’s tough when you always have to explain things,” he said. The firm’s East Coast offices, most of which came to the firm in its 1999 merger with New York’s Rogers & Wells in 1999, first began to experience trouble in the fall of 2002, after a memo by New York associates detailing harsh work conditions became public. The first high-profile departure came when New York-based antitrust co-head Kevin Arquit left to join New York’s Simpson Thacher & Bartlett in December 2002. Partners began leaving in increasing numbers after Steven Newborn, antitrust co-head with Arquit, left with three others to join the Washington office of New York’s Weil, Gotshal & Manges in October 2003. Arquit and Newborn had been two of the firm’s biggest stars.

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