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Clifford Chance has agreed to pay $3.75 million to the estate of Brobeck, Phleger & Harrison to settle any claims related to the collapse of the firm. As part of the proposed settlement, Brobeck bankruptcy trustee Ronald Greenspan filed a complaint Friday against a group of former Brobeck partners and employees. The complaint accuses the Brobeck liquidation committee headed by former firm Chairman Stephen Snyder of assigning the rights to the Clifford Chance litigation to the liquidation trust in a way that “favored” those individuals at the expense of other creditors. Greenspan described the settlement with Clifford Chance in a Friday filing with the U.S. Bankruptcy Court in San Francisco. Greenspan said that after conducting an investigation of Brobeck’s claims against Clifford Chance and former Brobeck Chairman Tower Snow Jr., Greenspan had concluded that Brobeck was likely already insolvent when Snow and 16 other partners defected to Clifford Chance in May 2002. Therefore, he wrote, “The demise of Brobeck probably could not be laid at the feet of Clifford Chance” and Snow. But Greenspan said claims might exist against Clifford Chance and Snow for breach of the partners’ fiduciary duties to Brobeck. The $3.75 million settlement “appears to represent a substantial portion of the profits that Clifford Chance derived from unfinished Brobeck business and Brobeck partnership opportunities, and compares favorably to the likely net recoveries that would be attained in litigation of any claims against Clifford Chance,” Greenspan wrote. Brobeck announced it would dissolve in January 2003. In September its creditors successfully petitioned to put the firm in involuntary Chapter 7 bankruptcy. Shortly before the bankruptcy filing, Brobeck’s liquidation committee formed a liquidation trust, which sued Clifford Chance and Snow in October, alleging that they contributed to the collapse of the firm and seeking a minimum of $100 million in damages. Greenspan’s complaint states that the liquidation committee assigned away the rights to the Clifford Chance litigation for less than reasonable value. The complaint seeks to nullify, or in bankruptcy terms “avoid,” that transfer as fraudulent and preferential. The settlement also allows Clifford Chance to intervene in this avoidance action. In addition, the complaint asserts that the money the liquidation committee paid to Texas plaintiffs lawyer W. Mark Lanier to represent the liquidation trust in its suit against Clifford Chance and Snow is a fraudulent conveyance and should be recovered, with interest. According to the complaint, Lanier had a 40 percent to 45 percent contingency contract and had received $1 million in cash, liens and security interests as an advance. Of the $3.75 million Clifford Chance is paying, $350,000 will help pay for the trustee’s lawsuit. Snyder said he had no comment on the settlement or the complaint. Clifford Chance did not immediately reply to requests for comment.

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