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Morgan, Lewis & Bockius has agreed to pay $10.2 million to the estate of Brobeck, Phleger & Harrison to avoid litigation with Brobeck’s bankruptcy trustee. A lawyer for bankruptcy trustee Ronald Greenspan announced the agreement at a hearing Tuesday before U.S. Bankruptcy Judge Dennis Montali. Greenspan is to file a motion seeking the court’s approval within the next few days. The issues raised by the trustee “were far from clear,” said Morgan Lewis Chairman Francis Milone. But, he added, “We don’t want to get involved in protracted litigation that would be expensive for us.” Milone said one potential claim by the trustee concerns revenue from unfinished business that Brobeck lawyers took with them to Morgan Lewis. Under a 1984 court decision — Jewel v. Boxer, 156 Cal.App.3d 171 — a firm’s unfinished business is an asset of the dissolved partnership. Philadelphia-based Morgan Lewis took on unfinished business when it hired 58 Brobeck partners, 19 counsel and 78 associates after Brobeck’s February 2003 collapse. Morgan Lewis’ agreement with the trustee follows on the heels of a similar arrangement between Clifford Chance and Greenspan. In July, Clifford Chance agreed to pay the Brobeck estate $3.75 million to settle any claims relating to Brobeck’s collapse. Former Brobeck partners are contesting the Clifford Chance agreement. Shortly after the agreement was announced, a coalition of 10 plaintiff lawyers put in a bid to purchase the Brobeck estate’s rights to a suit brought against Clifford Chance by a trust set up by Brobeck’s liquidation committee. The majority of the lawyers are asbestos litigators who know Stephen Snyder, head of the liquidation committee, from having worked opposite him in several cases over the years. In the proposed agreement with Clifford Chance, Greenspan said the $3.75 million figure “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.” Last week, Greenspan presented a more detailed argument for the Clifford Chance settlement in a filing with the bankruptcy court. He said it “is puzzling” that Brobeck’s liquidation committee regards the suit against Clifford Chance as the best hope to bring significant income to the estate. “Substantial other, better and more valuable assets exist, including claims against the partners for return of distributions and claims against other firms that assumed Brobeck’s business,” the filing states. Greenspan said the estate could potentially recover $275 million in distributions made to partners while Brobeck was insolvent. He also cited claims against Morgan Lewis, noting that the firm had recently placed $12 million in contingent bonus fees from the Western MacArthur case into escrow. Brobeck partners spent a decade representing Western MacArthur Co. in a battle with its insurance carriers over their failure to provide coverage for asbestos claims. They continued that work when they joined Morgan Lewis. Milone said there is “no direct tie between the bonus Morgan, Lewis got in the Western MacArthur case” and the $10.2 million proposed settlement with Greenspan. Also at the hearing Tuesday, new counsel appeared for a group of 128 Brobeck partners. Last month, Judge Montali granted Greenspan’s request to disqualify Pachulski, Stang, Ziehl, Young, Jones & Weintraub from representing a large group of former Brobeck partners because of the firm’s previous representation of Brobeck. While Pachulski Stang has asked Montali to reconsider his decision, Eliot Jubelirer, of Morgenstein & Jubelirer, is coming on as counsel to the bulk of the group. But the trustee may attempt to disqualify Jubelirer as well since he represented Brobeck in a suit brought against it by the now-defunct Santa Monica, Calif., firm Dickson, Carlson & Campillo. That case also involved Jewel v. Boxer claims over the departure of two Dickson Carlson partners to Brobeck. Greenspan’s lawyer, Hennigan, Bennett & Dorman partner James Johnston, said he would let the court know by the beginning of next week whether Greenspan had any objection to Jubelirer’s involvement.

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