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These are turbulent times for Lieff Cabraser Heimann & Bernstein. When its partnership meets this month, Elizabeth Cabraser, the firm’s co-founder and whirlwind mass torts maven, will make a play for a seat on the executive committee. It is a measure of how much the 34-year-old firm has changed that Cabraser’s place is no longer assumed; she still needs a formal vote of approval from the partnership. The firm’s other co-founder and longtime creative force, Robert Lieff, is pulling out his equity stake and management sway and starting a five-lawyer aviation shop loosely affilated with his old firm. Firm leaders Richard Heimann and William Bernstein left the executive committee last year; James Finberg, 48, a longtime partner who grew the firm’s employment practice, is resigning his seat this month. On top of the management shifts, the firm has suffered some big setbacks in court, and the value of its trademark mass torts inventory has plummeted. But new leaders have emerged. Partners who were barely in grade school when the firm opened its doors have already begun to reshape its core business, strengthening its antitrust, consumer and securities class action practices. While there are no plans to change the firm’s name, “of necessity [it] will be a different firm,” says Steven Fineman, the 43-year-old managing partner. Lieff Cabraser’s glory days began in the mid-1990s, when the firm was known for taking multimillion-dollar risks and collecting even greater rewards. Lieff was the visionary with the Midas touch, choosing the most viable big-ticket claims and knowing when to close a deal. Cabraser was the procedural master, winning respect nationally for her expertise on class action rules. Together with Heimann, the team engineered several jaw-dropping settlements, including a $4.2 billion settlement in the silicone gel breast implant litigation in 1998, and a $4.8 billion fen-phen diet drug settlement in 1999. Its lawyers also profited in 1998 from the $206 billion Master Settlement Agreement in tobacco litigation, where it represented several large state and city plaintiffs (13 people who were partners that year will share a $15 million annual fee distribution until 2024). But the glory is, if not over, at least changing shape, in part because of economic realities. The firm’s mass torts practice is fading. In August 2005 an appellate court reversed a $1.2 billion consumer class action award the firm won in Avery v. State Farm Mutual Automobile Insurance Co. Three months earlier, a nationwide class action brought by the firm against tobacco companies was scuttled when the Second Circuit U.S. Court of Appeals decertified the class of plaintiffs. Elsewhere, the firm is still waiting for the payoff on some major investments. The $5 billion award (and $50 million in potential firm fees) in the Exxon Valdez oil spill litigation is on hold while the case goes through seemingly endless appeals. (The firm represents 32,000 fishermen.) Vioxx litigation � the firm has about 210 cases pending � has been a huge money pit, costing the firm several million dollars this year alone, Cabraser says. “You bet the farm on Vioxx, you better have other cases paying the bills,” says a partner at a competing firm. In this light, Lieff’s failed attempt last summer to acquire the remnants of Milberg Weiss Bershad & Schulman looks like a Hail Mary from an aging quarterback. The firm actively pursued securities fraud claims in the 1980s, but with its attention on tobacco and other mass torts, the firm stayed on the sidelines as stock-drop suits drove profits at Milberg and others in the mid-1990s. The aborted merger was intended to jump-start the practice. Lieff says he first talked merger with Melvyn Weiss (Milberg’s founder and name partner) about five years ago. Negotiations resumed days after Milberg was indicted for allegedly paying kickbacks to plaintiffs. Lieff proposed that Milberg’s lawyers and inventory be incorporated under the Lieff Cabraser name. “For Mel, that would have been very difficult, to see another name on the wall,” Lieff says. Ultimately, Milberg decided to go it alone. (Weiss could not be reached for comment.) Under Fineman, the firm is pursuing a different strategy for capturing securities class action business; representing opt-out plaintiffs, and working its way onto more than a dozen approved counsel lists for state and city pension plans. In one of its most significant recent cases, the firm won $145 million for an opt-out plaintiff, the Merrill Lynch Mutual Funds, in litigation against McKesson Corp. and others in state court in California in late 2005. (Attorneys fees were not made public, but a standard benchmark for securities class actions is a 25 percent contingency, or roughly $36 million.) Additionally, the firm is relying more on consumer class actions for revenues. Lieff lawyers recently achieved a settlement as co-lead counsel in a New York state class action against Microsoft Corp., claiming that Microsoft used anticompetitive means � e.g., preloading bundles of software on PCs � to sell its software. The case has a potential value of $350 million. (Class members had submitted claims for $201 million at press time.) Lieff and two other firms stand to share $23.5 million in proposed fees, and the firm has successfully replicated the suit across several states. The lawyers who are leading the firm’s tranformation include Fineman; Kelly Dermody, 39, who recently led a consumer class action against Sutter Health that resulted in $276 million worth of refunds and bill reductions; Joseph Saveri, 44, who is spearheading several antitrust cases; and Jonathan Selbin, 39, a New York-based consumer class action rainmaker. The new leadership is brash and aggressive, competitors say, but so far lacks an individual with either the charisma or tested trial mettle of its name partners. While change is under way, the firm is still managing to pay the bills. The firm’s inventory of fen-phen cases is expected to continue to spin off tens of millions of dollars in fees over the next few years. Fineman also cites a series of favorable verdicts and settlements, including a handful of Ford Motor Co. fire and injury individual settlements valued at six to seven figures. “We’re at a good place for the time being,” he says. Still, these cases register as very modest by the standards of the mass torts mother lode of the firm’s go-go years. “I don’t mourn the loss of megatorts,” Cabraser responds. “Those cases take a lot of risk, and they can distort the economics of a firm for years.” Whether the firm continues to lead the plaintiffs pack is an open question. “We always thought that this firm would be the first [plaintiff] firm that would make it to the second generation,” says a former associate. “That premise is going to be put to the test.” Julie Triedman is a reporter with The American Lawyer, a Recorder affiliate based in New York City.

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