The high times in America are slowed for the World’s largest law firm. Clifford Chance has closed three of its four California offices and has now paid $3.75 million to settle claims related to the collapse of Brobeck Phleger & Harrison.
Brobeck’s bankruptcy trustee has filed a complaint against some of the former Brobeck partners and employees. According to American Lawyer, the complaint relates to an assignment of rights in the Clifford Chance litigation to a trust that favored those individuals over other creditors.
The bankruptcy trustee said Brobecks was likely insolvent when its former chairman Tower Snow and 16 partners defected to the huge British, so-called “Magic Circle” firm.
The settlement to Clifford Chance, whose San Francisco office has seen four of its 14 partners leave last month alone, in contrast with aggressive expansion plans for the West Coast operation, was regarded as a substantial portion of the profits the firm might have derived from uncompleted Brobecks business and other matters.
The ‘litigation trust’ founded by the firm’s liquidation committee had sued Clifford Chance and Snow for $100 million in damages.
The trustee’s recently-filed complaint alleges that the committee assigned the litigation rights away for less than reasonable value and attempts to nullify or avoid the transfer and fraudulent and preferential. Clifford Chance can join in the avoidance action.
Last month it announced that it would close its Los Angeles and San Francisco offices and leave two offices in San Diego. It now says it will retain only its Palo Alto office, which it intends expanding.
Clifford Chance, which employs 3,700 lawyers and had a reported $1.47 billion in billings last year, has lost 25 partners in its New York and Washignton DC offices in the past 18 months.
The closings have resulted in 43 lawyers, including 13 partners, go to other firms.