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San Francisco-based Brobeck, Phleger & Harrison, wracked by a year of partner defections and continued decline in corporate work, is attempting to take the offensive to keep remaining partners on board and to remain an attractive candidate for a merger. Partners have launched an initiative to keep their colleagues from immediately jumping ship, asking them to stick with the firm beyond the end of 2002. And they are said to be considering steps that would make it financially painful for partners to quit. So far, the strategy has been bearing some fruit. Brobeck is understood to be in merger discussions with Philadelphia-based Morgan, Lewis & Bockius, resignations have dropped off, and partners have circled the wagons when it comes to promoting the firm. Nary a negative comment about Brobeck’s future is emanating from the firm these days. “There is a consensus for everybody to stay together,” said John Benassi, a partner in Brobeck’s San Diego office. “There is a bright future at Brobeck” regardless of whether or not there is a merger. But there are still potholes in the road. Brobeck’s merger talks with Hogan & Hartson broke down in October, leading lawyers at other firms to speculate that Brobeck’s debt load and lease obligations may have been an issue. And at least one rainmaker at Brobeck, Warren Lazarow, has had his r�sum� shopped to other firms. That issue alone could be critical to merger discussions with Morgan Lewis. “Holding onto their key people is critical whether they merge or survive on their own,” said consultant Peter Zeughauser. “Making it attractive for partners to stay and trimming overhead is what they need to do.” While the loss of a significant partner wouldn’t in itself harm Brobeck, Zeughauser said it could reflect badly on the firm’s ability to keep key people. “It’s an indication of the issue of whether they’ve turned the corner,” he said. “As long as partners keep trickling out, it’s an indication that they haven’t gotten there and will make it difficult to merge.” Brobeck acknowledged that it’s trying to shore up its ranks. “As a result of a recent partners meeting, Brobeck is taking a number of initiatives aimed at enhancing its business position,” said John Pachtner, the firm’s director of communications. These include “actions to retain key talent and better utilize all of our people.” He said the firm also “may decide to lay off a small number of people this year” in certain geographic locations. He said any layoffs would be in the “single digits.” While Pachtner declined to specify what initiatives the firm is taking, former partners and other industry insiders say Brobeck may be considering a revision of its partnership agreement to require partners to pay back their pro rata share of bank debt upon their departure. At its partner retreat last month, Brobeck also reportedly asked partners to agree not to resign before the end of the year. Brobeck has lost about 60 partners this year — including more than a dozen securities litigators who went to Clifford Chance and 11 members of its intellectual property group who jumped to Dewey Ballantine. Several industry insiders said that Lazarow, who heads Brobeck’s business and technology practice for Northern California, is ready to jump ship. “Warren’s talked to at least a dozen firms,” a former Brobeck partner said. “Everyone knows that. It’s the worst kept secret in Silicon Valley.” Lazarow did not return several phone calls. O’Melveny & Myers is reportedly among the firms Lazarow has spoken with. But O’Melveny partner Peter Healy said the firm is “not able to make a statement about any prospective lateral partners.” Likewise, Mayer, Brown, Rowe & Maw — one of several out-of-town firms looking to beef up their corporate practice — said it could not discuss whether it was in discussions with any particular candidate. “We’re interested in adding a marquee kind of corporate person, and Warren is the sort of person we’d like to add,” said Martin Collins, a partner in Mayer Brown’s Palo Alto, Calif., office. One of the most prominent corporate attorneys in Silicon Valley, Lazarow is reputed to have a book of business in the $10 million to $15 million range. In 2001 and 2002 he was included on Forbes‘ “Midas Touch List” of the top 100 venture capital dealmakers in the United States. Lazarow, who obtained a law degree from Brooklyn Law School in 1986, joined Brobeck as an associate in 1990 and became partner four years later. He is a member of the firm’s executive committee. Whatever concerns Brobeck may have about its partnership ranks, partners are casting the firm in a positive light. “I’m hoping that partners are staying,” said partner John Larson. “The future is good. On the corporate side we could use more business like everybody else could. The business and technology group is sized about right now, and other practice areas are going along strong.”

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