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A battle begins today in a Malibu, Calif., courtroom that may help define the rules in law firm lateral hiring. In one corner are the partners from a now-defunct Santa Monica, Calif., firm who claim Brobeck, Phleger & Harrison poached two top litigators and the firm’s most lucrative client. In the other are Brobeck and partners Debra Pole and William Fitzgerald, who joined the firm in 1995 from what was then Dickson, Carlson & Campillo. It’s the second match between the two sides. A Los Angeles judge dismissed Dickson Carlson’s suit against Brobeck in 1998. But an appeals court ruled two years later that the trial court made a mistake in barring Dickson Carlson from recovering any damages from the defection of the two partners. At issue in Campillo v. Pole, SC039135 and SC039264, is whether the former Dickson Carlson partners are owed money from the “unfinished business” that Pole and Fitzgerald took with them to Brobeck and whether the two partners breached their fiduciary duty in sharing proprietary information with Brobeck prior to their departures. As a partner at Dickson Carlson, Pole was the national trial counsel and national coordinating counsel for all breast-implant litigation against Baxter Healthcare Corp. The former Dickson Carlson partners claim the firm was receiving more than $1 million per month for this work, which represented more than 60 percent of the firm’s revenues. They contend that Pole and Fitzgerald gave Brobeck information about Dickson Carlson’s billing rates, resource projections and other data and that Brobeck used this information to draft a proposal and ultimately win Baxter’s work. They also say Pole and Fitzgerald’s hiring at Brobeck was conditioned on the firm’s defending them if they were sued for breach of fiduciary duty. The former Dickson Carlson partners filed a tort action against Brobeck, Pole and Fitzgerald, claiming breach of fiduciary duty, breach of contract, interference with contractual relations and unfair competition. Those claims will be put before a jury — but before that happens, Los Angeles County Superior Court Judge Cesar Sarmiento will address a separate action against the defendants. Specifically, he will determine whether a 1984 court of appeal decision — Jewel v. Boxer, 156 Cal.App.3d 171 — applies in the Brobeck dispute. The appellate court found that partners from a dissolved law firm must share profits from the unfinished business of the firm, unless they have an agreement that says otherwise. The partners at Dickson Carlson dissolved their firm a few weeks after Pole and Fitzgerald resigned and reconstituted the firm the following day. The firm folded for good in 1997. In their complaint they demand the return of more than $32 million in net income that Brobeck has earned by completing unfinished business of the original Dickson Carlson firm. L.A. County Superior Court Judge Julius Title ruled in 1998 that Jewel did not apply in this situation. Retired L.A. County Superior Court Judge Richard Harris later consolidated the Jewel action with the tort claim and dismissed the case. The appeal court subsequently ruled that the Dickson Carlson group was free to pursue all of its claims. If Sarmiento determines Jewel applies, he will then decide how much of the Baxter work completed at Brobeck constitutes unfinished business and the amount of Brobeck profits that must be returned to the dissolved partnership. This first phase of the trial, which begins today, is scheduled to last two weeks. But Brian Lysaght, a partner at Santa Monica’s O’Neill, Lysaght & Sun who represents the plaintiffs, said the trial might be longer if opposing counsel “goes off on tangents.” Specifically, he said, Keker & Van Nest partner John Keker, who is defending Brobeck, Pole and Fitzgerald, may argue that the former Dickson Carlson partners acted inequitably in declining to represent Baxter after they reformed their firm. Keker, however, said trying to invoke Jewel in this case is “ridiculous.” “Under Jewel v. Boxer the unfinished business of the old firm is done by the old firm’s partners,” he said. “It’s only about partners and the winding up of the partnership.” Keker partner Elliot Peters, who is co-counsel on the case, said the Dickson Carlson partners got the idea that if they “dissolved and reconstituted 15 minutes later they would capture money they would otherwise not get.” But Lysaght characterized the dissolution as an act of self-defense. “Pole and Fitzgerald took all the assets and left the partners with liabilities, so the firm dissolved to protect itself and make sure Fitzgerald and Pole paid what they owed,” he said. Peters said this case doesn’t really address questionable practices in partner defections. He said he’s never heard of anyone else employing Jewel to get revenue that partners generate after their departure. As for the tort claim, he said the lesson in the Brobeck case is that “if you have a Debra Pole in your firm that is accounting for $16 million of profits — 60 percent of firm revenue — you don’t pay her $300,000. You have to make sure your valuable people are paid and happy.”

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