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When news filtered through Edward Lewis last June that the firm had lost its place on the commercial lines panel of its biggest client, Zurich Commercial/Eagle Star, the reaction within the firm was surprising.“If you lose your place on a panel, you would normally expect people to be worried about their futures,” says one source. “But there was actually a sense of jubilation among some people.” This reaction, the source says, was prompted by the fact that it was the firm’s chairman, Tony Collins, who handled Zurich’s account. “They knew it would weaken his powerbase.”If a partnership loses the glue that holds it together, it can come unstuck very quickly. By the time of the Zurich panel rebuff, relations were deteriorating rapidly at the firm, which closed its doors last week.Its demise left many people within and outside the firm asking what had happened and why it had unravelled so quickly.In fact, trouble had been brewing for years. And it was not one single factor that led to the firm’s collapse, but a combination of reasons. The list includes disagreements about how the firm should have been run; uncertainty over the long-term relationship with Zurich; and allegations of sex discrimination made by one partner, Susannah Quinn, against the firm and Collins. These factors led to a breakdown in the relationship between the 17 equity partners last summer.It was not the first time the firm had seen a major power struggle.In 1996, conflict between the senior partners and the junior partners saw the then senior partner, Philip Langford, depart for Goodman Derrick. Others left for firms including DJ Freeman. Insurance litigation partner Collins, the firm’s biggest biller, took over as chairman of a firm with a very young partnership.The difference between this power struggle and the one that erupted last year was that – for better or for worse – it was resolved. This time it was not.As with many firms there had been rumblings over the equity. Sources say there were the usual arguments about the division of the cake: who should be allowed to share in it and who was drawing more than they should.There was also growing division over the behaviour of some parts of the firm – from the partners themselves downwards.As one former lawyer wrote in Legal Week: “There was a streak of boorishness that ran through sections of the firm.”“There was a poisonous atmosphere of sniggering, sneering and leering from those that behaved like lager louts,” the source said.When Langford left for Goodmans three years ago, it is understood he warned those remaining that their behaviour would end in tears.But it did not stop. At the 1997 Christmas party, one partner is said to have stood up and apologised for the behaviour of some of his fellow partners who had arrived late and drunk. The following year, someone commissioned two ice statues, one male and one female, that dispensed vodka shots through their genitalia.With the benefit of hindsight, this behaviour seems extraordinary for a law firm. And within the firm, the number of people who failed to see the funny side of this sort of behaviour had increased. These tensions had already put strain on the firm. Events in 1999 were to prove fatal.Collins had already been the subject of two sex discrimination claims in the previous two years; one by a former secretary and one by a junior lawyer in his department. Both were settled without admission of liability.Now one of his fellow partners, Susannah Quinn, made fresh allegations of sex discrimination against him and the firm. Sources claim the value of Quinn’s claim was as high as £300,000.Meanwhile, the practice was threatened by industry consolidation in its largest and best-known practice area: insurance litigation. Insurance giant Zurich had taken over the firm’s biggest client, Eagle Star, in 1998. Like many other insurers, it undertook a complete review of its panels. For Edward Lewis this was a serious threat. The insurer was easily its biggest client, reputedly worth more than £1m in fees annually, and sometimes a lot more, to a firm with a turnover of less than £10m. Collins – whose now retired father had held a senior post at Eagle Star – handled the account. And, according to many, he handled it well. He had a well-merited reputation as an excellent litigator.But the Zurich Commercial/ Eagle Star review ran deep. In June, it cut the number of firms from more than 100 to just 16 for its commercial lines work. And Edward Lewis was not one of them.As it turned out, the firm was retained by Zurich to handle personal lines work, dealing with catastrophic personal injury cases. This represented the bulk of the turnover and it was profitable work.But the uncertainty and confusion over the relationship with Zurich, which sources say Collins had failed to alleviate, created a huge amount of instability.The equity partnership had by now disintegrated into factions.A rebel group, led by management board member Michael Breen and the firm’s longest-serving partner Jeremy Rutter, sought to oust Collins, but was foiled.It is understood that Collins indicated that he was prepared to resign from the partnership in return for a pay-off for his substantial equity share. In September, the tension exploded into the public arena when Legal Week reported the bid to oust Collins. That same week, Collins resigned from the management board and a new board was elected.But the crisis deepened with factions within the equity partnership barely speaking to each other. A meeting of the equity partners was scheduled for 23 September when the rebels were to propose Rutter as chairman. But sources say it was soon clear that the partnership was not going to stay together and the meeting disintegrated. In October, the partners reached an agreement in principle to dissolve the practice. A concerted effort, led by corporate partner Julian Fellerman, was made to try and keep the firm together – if not in name then by forming a new firm out of the ashes of the old one. But it is understood these efforts failed because those involved could not agree on the best way forward. Staff were officially told about the firm’s closure on 13 December. There is no doubt that taking the decision to break up a firm is extremely difficult both financially and emotionally. But it can be the right decision – Frere Cholmeley Bischoff’s split (broadly into Eversheds and Forsters) is a classic break-up that turned out well for those involved.As with the Frere Cholmeley break-up, the firm benefited from its landlord – in Edward Lewis’ case Scottish Life – offering to take back the lease for its Gray’s Inn Road offices. Scottish made its offer shortly after Edge Ellison’s management thought it had secured a deal. This will greatly reduce the partners’ long-term liabilities. The threat of a group action by staff over their redundancy has also receded. Sources said that up to 100 staff had contributed to a fund to pay for legal advice, but less than a dozen are still considering taking the firm to an industrial tribunal.And the majority of partners and staff have already agreed to join an array of successful firms. (See sidebar) The fact that more than a dozen firms have benefited from Edward Lewis’ disintegration is an indication of how far relationships within the firm had deteriorated.As one former partner remarked when asked why people were being dispersed so widely: “If the glue is not there, then there is not much point in staying together.”

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