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Brobeck, Phleger & Harrison’s estate is set to receive millions of dollars in attorney fees for representing Western MacArthur Co. in a decade-long battle with its insurance carriers over their failure to provide coverage of asbestos claims. A court order Tuesday clears the way for the release of about $10 million in fees, to be divvied up between Brobeck and several other law firms involved in the litigation. The payment was contingent upon the U.S. bankruptcy court in Oakland, Calif., approving Western MacArthur’s bankruptcy plan, which it did while approving $2 billion in settlements between Western MacArthur, and Hartford Insurance Co. and United States Fidelity & Guaranty Co. “It’s a step in the direction of getting those fees confirmed,” said former Brobeck partner Stephen Snyder, who is overseeing the firm’s liquidation. A district court may still have to approve a fee application. The award will help Brobeck make a dent in its remaining debt of about $47 million. As of November, the firm owed Citibank $28.5 million, and it owed $18.5 million to unsecured creditors with known claims. The remaining attorney fees are tied to the amount of money the insulation contractor recovers from other insurance carriers. Snyder said the total sum of attorney fees is “south of $50 million” and that Brobeck’s share, if approved by the court, “should exceed $15 million.” Other firms that will get a cut of the fees include Faricy & Roen; Miller, Starr & Regalia; and Morgan, Lewis & Bockius. It’s unclear how much each of these firms will get. Morgan Lewis got involved in the case last year following Brobeck’s February 2003 collapse. Many of the Brobeck lawyers representing Western MacArthur joined Morgan Lewis. Snyder said Brobeck’s partnership agreement was amended in February to specify the percentage of fees that Morgan Lewis would get from taking over the case. But he said Citibank, Brobeck’s biggest creditor, might have changed those terms in its negotiations with Morgan Lewis. David Halbreich, now a partner at Morgan Lewis and one of the lead lawyers in the Western MacArthur litigation, said the amount of attorney fees designated to Morgan Lewis “changed because Citibank got involved,” but said he couldn’t say what the terms were. Snyder and Halbreich both said they don’t anticipate any wrangling over fees since the firms previously worked out the details. Brobeck began representing Oakland-based Western MacArthur in 1993 in coverage litigation against several insurance companies, including USF&G, Hartford and Argonaut Group Inc. The carriers had denied Western MacArthur coverage for thousands of asbestos-related bodily injury claims brought against the company as a successor to Western Asbestos, which it acquired in 1967. USF&G reached a settlement with Western MacArthur in June 2002 for $987 million, and Hartford finalized a settlement with the company last month for $1.5 billion. Another suit is pending against Argonaut. “It’s probably one of the largest cases Brobeck handled,” Halbreich said, “at least since I joined Brobeck in 1988.”

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