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Morgan, Lewis & Bockius has been effectively freed from the tangle of litigation surrounding Brobeck, Phleger & Harrison’s collapse. On Thursday, U.S. Bankruptcy Judge Dennis Montali said he was prepared to approve the firm’s $10.2 million settlement agreement with Brobeck’s bankruptcy trustee, Ronald Greenspan. The parties must work out one kink, however — clarifying whether former Brobeck partners who joined Morgan Lewis can be sued by other former Brobeck partners. “My concern comes down to identifying the parties that might be precluded from pursuing actions” against the former Brobeck partners at Morgan Lewis, Montali said. “That can be resolved,” he said, with precise language in the settlement agreement. Under the deal, Morgan Lewis will pay $10.2 million to cover claims the trustee might have pursued against the firm — particularly claims for profits Morgan Lewis received from unfinished business that Brobeck partners took with them to Morgan Lewis. An attorney representing a group of former Brobeck partners had objected to the agreement, saying it was unclear which claims former Brobeck partners might be prevented from bringing against the Morgan Lewis group. Montali seemed to indicate that the agreement would prevent Brobeck partners at Morgan Lewis from being sued for revenue from unfinished business. A group of former Brobeck staffers also have a suit pending against Brobeck and Morgan Lewis, and objected to the settlement as well. They specifically opposed a clause stating that the trustee would cooperate in Morgan Lewis’ defense against that suit. Led by Robert McCaffrey, the employees claim they are owed 60 days of severance pay. But upon questioning from Montali, the trustee’s attorney said the trustee would only provide documents and information to Morgan Lewis and would also make them available to the McCaffrey group as well. The settlement agreement specifies that Morgan Lewis will pay $10.2 million from funds it received for work in a case once handled by Brobeck. Former 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. At press time, Montali had not ruled on attorney fee applications, saying he had further questions. Greenspan’s lawyers at Los Angeles-based Hennigan, Bennett & Dorman requested more than $1 million in fees and expenses. FTI Consulting Inc., where Greenspan is a senior managing director, is seeking $1.3 million in fees. Montali shaved $600 off Jeffer, Mangels, Butler & Marmaro’s request for $34,000 in fees for its work as special counsel in the case. He questioned the involvement of one of the firm’s partners in the case. Montali has yet to address two other settlement agreements Greenspan has inked. Clifford Chance has agreed to pay $3.75 million to settle any claims related to Brobeck’s collapse, and Citibank FSB agreed to take $2.85 million as full payment for the $8.2 million it is still owed by the Brobeck estate. The proposed deal with Citibank, filed with the bankruptcy court last month, would settle potential counterclaims and actions by the estate against Citibank. Greenspan had looked into whether the bank could be held liable for paying distributions to partners while the firm was insolvent. Montali is scheduled to hold a hearing on the motion to accept the Citibank settlement agreement Nov. 19.

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