News
Law Practice
Jul. 30, 2002
Tower of London
From Tower Snow's perch in an aerie in San Francisco's Financial District, he has the kind of Bay Bridge view that inspires dreams of global domination.
By John Ryan
From Tower Snow's perch in an aerie in San Francisco's Financial District, he has the kind of Bay Bridge view that inspires dreams of global domination.
Snow kept his eye on that bridge while he staked Brobeck, Phleger & Harrison's ascension as a world-class technology powerhouse during the past four years.
Today, he's still sitting there, watching the bridge and planning to conquer the world.
He crosses the same plaza and enters Boulevard restaurant, where he's escorted to the prime back booth by the window.
"The most important clients around the world will want what Clifford Chance can offer," Snow says, even before the menus are set down. "I have no doubt that Clifford Chance will be the pre-eminent global law firm."
Overnight, it seems, Snow has become the new face of the British Invasion, taking dozens of Brobeck Phleger attorneys and staff across One Market Plaza to Clifford Chance Rogers & Wells, where he will lead the West Coast offices and serve on the firm's Americas management board.
"It feels like we're in a parallel universe," the new Clifford Chance lawyers say.
After months of bad blood, Brobeck Phleger and Clifford Chance are feeling cozy in his-and-his twin towers.
As they walk through the plaza, a few Clifford Chance employees keep their heads down; it's still uncomfortable to make eye contact with former Brobeck Phleger colleagues. From their offices, they see their former law library.
Even the One Market employees are getting in on the act. After Brobeck Phleger booted Snow from the firm May 17 for shopping his partners to Clifford Chance, someone broke off a key in the lock to his office. The building repairman who fixed the lock - it reportedly took him several hours - showed up a few weeks later.
He installed the lock for Snow's new corner office at Clifford Chance.
There, unused computer monitors and hard drives are stashed in a corner; cardboard boxes of documents are piled to the ceiling; cubicles and bookcases are partially put together; ladders, toolboxes and crates of cleaning supplies far outnumber humans.
Snow loves it all, knowing that quality attorneys weaving through an endless maze of safety hazards captures the beauty of Clifford Chance in California: The firm is both a world power and a startup organization.
"We set this up in a week," Snow says while scanning the floor. "It looks pretty good for a week, doesn't it?"
Sure. Not bad.
But as they say, world domination is never easy.
Cut back to the evening of May 17. Snow and fellow Brobeck Phleger partners James Burns and Michael Torpey have just cleared customs at San Francisco International Airport on their return from London.
After a first round of talks with Clifford Chance, they were flying home empty-handed.
But not for long.
Snow was greeted by a United Airlines representative who handed him the now-infamous letter telling the former chairman he was no longer employed.
"I was absolutely stunned," Snow recalls.
"It was unfortunate, and I don't think particularly necessary," says Burns, now managing partner of Clifford Chance's West Coast operations.
Torpey, then chair of Brobeck Phleger's securities litigation group, says, "It wasn't the smart move."
Maybe, maybe not.
It didn't feel that way at Brobeck Phleger.
There, managers had felt their internal temperature rise to a seething point following the end of Snow's four-year tenure as chairman in November. It was bad enough he had told the world that Brobeck Phleger was to be a technology-only firm. It was worse that he had saddled them with 200 idle attorneys that they had to deal with.
To the new managers - whose personal charisma is almost diametrically opposed to that of Snow - the Clifford Chance talks were several steps beyond hubris.
Bloody treason more like it.
Reports in the British legal press May 13 indicated that 20 to 50 partners might be moving to Clifford Chance. And it was widely assumed the core would be the hot securities litigation practice that Snow built before taking Brobeck Phleger's reins.
As the Clifford Chance rumors spread, Brobeck Phleger managers attempted to behave cautiously. They initially claimed that the loss of the securities litigators would not hurt the firm financially but also voiced a desire to keep valued partners at the firm.
On May 16, they learned the Clifford Chance deal was dead. Emboldened, Brobeck Phleger managers decided to play hardball.
In the 24 hours after the Clifford Chance talks failed, Brobeck Phleger managers gathered enough votes to expel Snow.
"They thought the Clifford deal was dead," says one partner who since has joined Clifford Chance. "They thought if they expelled Tower, it would make him too hot to handle for another firm. They thought it would make it difficult for him to be successful."
Brobeck Phleger Chairman Richard Odom has denied such strategizing, and Paul Finigan, managing partner of the firm's San Francisco office, says the expulsion was carefully considered by the partnership.
Brobeck Phleger says that the partnership expelled Snow because his actions, quite simply, were unacceptable, even "shameful." They wanted to send a message about the importance of loyalty and fiduciary duty.
Next move: Snow.
The thing about a good game of hardball is that you need to make sure you are stronger than your opponent.
And there, Brobeck Phleger may have miscalculated.
The forces of Snow quickly got word to the press that Brobeck Phleger managers were launching a witch hunt, checking up on their partners and the like.
With his new idle time, Snow resumed the Clifford Chance talks - which it turns out may never have been quite as dead as it seemed.
"I was extremely concerned for the young partners that were part of the group that might have joined us," James Benedict, Clifford Chance's regional managing partner for the Americas, says from his New York office.
It was Benedict whom Snow called in January to initiate talks between the two firms. Both securities litigators, Snow and Benedict have known each other for more than 20 years.
"Tower could go overnight to virtually any law firm he wanted to," Benedict says. "Some young partner is in a very different position. Had the deal not come together, and had it been known who was talking to us, the careers of those individuals were on the line."
The first round of negotiations failed because Snow and Clifford Chance managers couldn't hammer out a specific proposal by May 17, the date Clifford Chance partners were scheduled to vote on the deal.
They also faltered because of concerns that the core group of securities litigators would not be a broad enough presence for Clifford Chance, which, as the world's highest-grossing law firm, was interested in more than a piddle across the pond.
"The core group widened out," says Peter Charlton, Clifford Chance's regional managing partner in London. "We began contemplating a lateral hire of between 40 to 45 partners, and from a mix of different practice areas.
"When it came to widening out the group, we probably underestimated the logistical problems and practical difficulties," Charlton says of the plans to add corporate and intellectual property partners.
Once the media had its hands on the story, he adds, it became impossible to negotiate with such a large group of Brobeck Phleger partners, who couldn't possibly be expected to engage in talks and make life-changing decisions while under the spotlight.
Instead of abandoning the deal, both sides simply agreed to scale back its size. Rapidly.
May 24.
Clifford Chance begins extending offers to Snow and 20 Brobeck Phleger partners. Seventeen accept, including 11 San Francisco securities litigation partners and partners from Palo Alto, Los Angeles and San Diego in the intellectual property, real estate and corporate practice groups. Snow immediately sets to work for Clifford Chance.
Next move: Brobeck Phleger.
The firm's partnership agreement requires departing partners to give 30-days' notice of their intent to leave - a common provision, but one that's rarely enforced.
But Brobeck Phleger managers enforced it, preventing the departing partners from soliciting associates, staff and clients for 30 days.
"It was a strange interlude," Burns says. "You're treated as if you have one foot out the door. You're estranged from your existing firm but not yet in the new firm. It would have been best for all parties concerned if that period had been shortened."
Finigan says that, for the sake of continuity, managers can't simply pick and choose what provisions they enforce.
"It's there for a number of reasons," Finigan, who also sits on Brobeck Phleger's operations committee, says of the 30-day provision. "It had applicability in this situation and was employed fairly."
Fair or not, it made for an excruciating month for the locked-down partners. They had just ironed out the biggest deal of the year and were prohibited from discussing it with the people who mattered most to them professionally and, in many cases, personally.
"There was this artificial barrier," Torpey says. "These are people we hang out with all the time. Normally, you would want to say, 'Gosh, we really want you to come with us.' But you couldn't talk about the deal."
Simply avoiding each other wasn't an option. The partners had to work side by side with associates and staff on client matters. And associates and staff wanted to know whether they would be offered jobs.
"Every time they raised a question about it, we had to tell them we were not permitted to talk about it," San Diego corporate partner Faye Russell says.
The 30-day period also strained some client interactions. Rules of ethics require a departing partner to inform clients about any plans to switch firms. However, if a client asks a partner why he is leaving, a detailed response could come across as a sales pitch for the new firm.
The partners leaving Brobeck Phleger believed that they had to be particularly careful because, as one partner put it, "Big Brother was watching."
During the 30-day period, there was a widespread belief among departing partners that their e-mail accounts were being monitored. The partners also experienced restricted access to electronic firm data, such as accounting files, and were removed from e-mail distribution lists for at least two weeks.
"I know what we did not do," Finigan says. "We did not impede any attorney from carrying out his duties to represent clients in the best way possible. Client service is always our top priority."
"That's a very carefully worded response," suggests one departed partner.
And while the departing partners were locked up, they knew that Brobeck Phleger was working hard to convince associates and clients to stay with the firm.
Though Snow had discussions with some clients, he says he spent most of his time lining up vendors for the new office. He also took calls from associates and staff who wondered whether they would have a place at Clifford Chance.
"I offered comfort when I could," Snow says.
Palo Alto-based intellectual property partner Daniel Harris echoes many members of the departed group by saying that focusing on client matters was the best way to get through the 30 days.
"I worked very hard during that period," Harris says. "Focusing on client matters made the time go easier and quicker and later helped to ensure a smooth transition to Clifford Chance."
The 30-day notice provision was among the issues that the departing partners and Clifford Chance managers negotiated with Brobeck Phleger managers in June.
The departing partners expressed hopes for an early end of the 30-day period and a timely return of their capital investment into Brobeck Phleger partnership. They also were willing to discuss placing a cap on the number of associates and staff they raided from Brobeck Phleger and to sublease much of Brobeck Phleger's excess real estate space.
Negotiations failed on all counts.
Not only did the 30-day period run to its entirety, but Brobeck Phleger managers also have not said when, or whether, any partners will receive their capital investment, which totals at least several million dollars. Clifford Chance eventually subleased space from Wilson Sonsini Goodrich & Rosati, Cooley Godward and other businesses.
Some of the departing partners believed Brobeck Phleger was emotionally unable to lease space to Snow and crew, especially from its San Francisco headquarters, where tensions were at their highest.
"There may have been some inability to wrap their brains around that whole concept," Los Angeles-based Gerard Walsh, who chaired Brobeck Phleger's real estate group before departing, says. "Economically, it made a lot of sense."
Brobeck Phleger reportedly could have saved $15 million from subleasing up to 170,000 square feet of unused space in the four locations.
While Finigan declined to comment on specific areas of negotiations because he believes both sides agreed to keep these matters confidential, he says that the departing group and Clifford Chance tried to "package together" a variety of unrelated issues into "an all or nothing" proposal.
This prevented negotiations from going forward, Finigan says, because Brobeck Phleger wanted to negotiate each issue separately.
Things got a little ugly at the end. Brobeck Phleger managers could not let go of the fact that the departing group and Clifford Chance had done something wrong, according to sources at the firm. Interview teams tried to question departing partners about all facets of the Clifford Chance deal before leaving. They generally refused to answer questions.
"In reality," as one departed partner says, "a group of partners were leaving. That's all they needed to know."
June 28. mmmmmmmmmmmmmmm mThe 30 days run out and bedlam ensues.mmmmmmmmmmmmmmmmm mmmClifford Chance went into a hiring frenzy Saturday, June 29, extending some offers as early as 12:01 a.m.
On Sunday, Torpey held a reception at his house for the new Clifford Chance partners and the 30 or so Bay Area associates and staff who received offers.
It was the first time "in what seemed like forever" that friends and colleagues could relax, socialize and talk about the future, those in attendance say.
Benedict, Charlton and Clifford Chance human resources personnel were on hand to answer any questions the prospective new employees had about working at the firm.
"It was quite a celebratory atmosphere," Charlton says. "That was the longest 30 days I've experienced in a long time."
July 1.
Clifford Chance opened offices in San Francisco, Palo Alto, Los Angeles and San Diego.
If any firm can open four offices on the same day without experiencing overwhelming panic, it's Clifford Chance, with 3,800 attorneys worldwide and annual revenues approaching $1.5 billion.
The firm pulled off a 700-attorney deal in 1999 with a three-way merger that morphed Clifford Chance into its present form. That year, it merged with New York's Rogers & Wells and Germany's Punder Volhard Weber & Axster.
Those mergers and all others feed Clifford Chance's oft-stated mission: to become the pre-eminent global law firm.
That is difficult if a firm is not in California, which has the world's sixth-largest economy.
Clifford Chance's U.S. presence was limited to New York and Washington, D.C., with a combined total of 600 attorneys.
"If we were in Prague, why not San Francisco?" Benedict says.
Not only was Snow's January call to Benedict welcome, but it also was well-timed. For Clifford Chance to pick up a top-flight securities litigation practice while Corporate America and the dot-coms were combusting was a great opportunity.
"It made more sense to invest in something that's pretty hot, then build on that," Charlton says. "It's a nice, stable economic platform to grow on."
The most attractive aspect of the group, Benedict and Charlton agree, was that it had strong, executive-level relationships with some of the world's leading technology companies, including the likes of Cisco Systems, Sun Microsystems and Broadcom - the client base Clifford Chance wanted to tap into.
And while Clifford Chance wanted to serve Snow & Co.'s client base throughout the world, Snow & Co. wanted to broaden the horizons on their practice.
The partners who left Brobeck Phleger for Clifford Chance, Snow says, share an intense desire to practice law at the highest level by handling the most important matters for the most important clients.
Doing so effectively, these partners believe, increasingly will require an integrated set of global legal services.
"I believe Clifford Chance is blazing the trail in this direction," Snow says.
Especially helpful is that Snow & Co. no longer will have to pass clients off to other firms when they go abroad.
During Snow's tenure at Brobeck Phleger, he grew the London office and opened offices in Munich, Germany, and Oxford, England, in joint ventures with Boston's Hale and Dorr. That's a far cry from Clifford Chance's worldwide presence, which includes 32 offices.
"It's so much easier for a client to call his local lawyer and say, 'I need one of your colleagues in Shanghai,' than it is to find a lawyer in Shanghai on your own," Torpey says.
Global vision does come at a price, however. At least a handful of partners are taking a pay cut to move to Clifford Chance.
Clifford Chance has a lock-step compensation system for partners that can't match what performance-based systems at large firms can pay top rainmakers. For a small number from Snow & Co., Clifford Chance reportedly may add a points-based component to the lock-step system.
Snow says that the lock-step system actually is a significant plus because it fosters teamwork and removes the corrosive elements of internal competition between partners.
With average profits per partner of $1.02 million at Clifford Chance, Snow adds, no one will be underpaid.
Many members of the legal community expect Clifford Chance's West Coast expansion to spur the general trend of law firm consolidation. More specifically, they expect that other London-based firms with global vision are planning to follow Clifford Chance's footsteps.
More than anything, Snow seems impressed, almost challenged, by Clifford Chance's boldness, which clearly surpasses his own.
"They have a history of bold moves," Snow has repeated in recent weeks.
In the past several weeks, Burns has said repeatedly, perhaps diplomatically, that Brobeck Phleger still can be a global power.
"The difference," he says, "is that Clifford Chance is already there."
July 11.
Snow crosses the plaza, ascends in an elevator and settles in to talk with a reporter.
He is loved and hated for his brash, at times cocky, leadership style. While he was at the helm of Brobeck Phleger, from 1998 to 2001, he nearly doubled the attorney head count from 500 to 950.
He decided to leave the firm he helped build when new management began "dismantling" it.
"More than anything else, I'm sad," he says. "I've felt an enormous sadness bordering on grief to watch four years of backbreaking labor of literally hundreds of people vaporize before my eyes. It's incredibly dispiriting."
Snow says that, until this past fall, Brobeck Phleger was superbly positioned to become the world's leading technology law firm. Odom and Parker have abandoned this vision, he says, in favor of an outdated "all services to all clients" model. And the layoffs of 170 associates, he adds, have ruined the cultural improvements he and Burns made over four years.
Across the way, legal work continues. Ongoing work of the highest order at Brobeck Phleger has been obscured in the brouhaha.
Still, much of the focus remains on Snow.
Brobeck Phleger has kept at least six associates and five staff members offered jobs by Clifford Chance. And it reportedly kept one associate with a bump up to partner status and has tried to keep select others with retention bonuses ranging anywhere from $10,000 to $75,000.
Finigan says that Brobeck Phleger is doing nothing of the sort.
Brobeck Phleger says that it lost "some" client matters to Clifford Chance, admitting that clients often prefer not to change attorney teams for unresolved matters.
Brobeck Phleger, Finigan says, provides a diverse range of services for many large clients. Losing a client's litigation work, for example, doesn't translate into the loss of corporate or employment or other practice group work for the client.
Now that things are cooling down, it seems Brobeck Phleger's future could be steadier than the recent defections suggest.
On the one hand, sources inside Brobeck Phleger say that the recent conflict has taken its toll on managers and that Odom and managing partner Richard Parker may decide to step down.
Finigan, however, says Odom and Parker aren't going anywhere. Although the recent months have been challenging, he says, the present administration enjoys the widespread appreciation and support of the partnership.
And many point out that Odom, who chaired the firm's complex litigation practice, and Parker, who managed its San Diego office, have a history of effective leadership.
Their biggest fault, by some measures, was inheriting a difficult situation that included a partnership demand for layoffs and declining profits, which dropped 44 percent in 2001 to $660,000.
And though their decisions drew negative attention to the firm, by year's end, they will have helped boost profits per partner by 20 percent to well in excess of $700,000, Brobeck Phleger managers predict.
Carmelo Gordian, co-chair of Brobeck Phleger's business and technology practice, says that the firm experienced an 8 percent uptick in corporate work between June and July.
The firm also recently nabbed two Fortune 100 companies and is recruiting lateral partners across all practice groups.
That's solid evidence, Gordian says, that Snow's rantings about a "dismantling" are ridiculous. He says Brobeck Phleger is what it always has been: a diverse firm with one of the top technology practices in the world.
Brobeck Phleger's biggest problem, most observers agree, is stemming the flow of departures. A significant contingent of Brobeck Phleger's intellectual property group reportedly is in discussions with a number of different firms, including Clifford Chance.
Finigan says the attrition concern is valid, but the firm has been addressing the issue and will continue to do so.
"We are very attuned to the fabric and continuing improvement of the partnership," he says. "We are looking at ways to improve the glue and to make sure people are working well together going forward. We are placing particular focus on this now and, I think, doing an excellent job."
Talk remains of a legal claim against the forces of Snow for breach of fiduciary duty and Clifford Chance for business interference.
Though the Clifford Chance side has said Brobeck Phleger "doesn't have a leg to stand on," Finigan won't say whether Brobeck Phleger is considering legal action. The tussle clearly has provided plenty of work for other lawyers. When Snow & Co. set out to negotiate with Clifford Chance, it relied on Washington, D.C.-based Williams & Connolly. Clifford Chance itself called on New York's Simpson Thacher & Bartlett. For its expulsion of Snow, Brobeck Phleger retained Los Angeles' Latham & Watkins. Finally, the departed partners are relying on the chairman of Cooley Godward, Stephen Neal, for advice on moving forward.
The two sides seem to be making progress, if at a snail's pace.
On June 30, Snow was allowed to return to his old office for the first and only time since his expulsion. He spent more than an hour gathering client files and personal belongings while Brobeck Phleger partner George Hisert looked on.
"And they may sell my furniture back to me," Snow says.
Finigan recognizes that most issues resulting from the Clifford Chance deal remain unresolved. He says Brobeck Phleger is open to have discussions about any of them.
"We are happy to move on from this," he says. "We are very pleased to get on with the practice of law."
Legal action, Torpey says, will only dredge up past events and perpetuate an unfortunate media frenzy.
"We've all got things to do," he says. "I've got a world to dominate."
That world domination has been manned for most of July by Alex Vejnoska, the 16-year-old son of San Francisco partner Chris Vejnoska.
Despite a month of work by Clifford Chance SWAT teams focused on human resources, information technology and other support, gaps remain.
As the firm gets off the ground in San Francisco, Alex and a high-school friend - who look like leftovers from the startup company that previously occupied the space - pitch in to answer phones and move boxes and equipment.
There and in the other three offices, 33 former Brobeck Phleger associates are settling in. So are 27 Brobeck Phleger staff members.
The Clifford Chance team's very first goal, Snow says, is to continue to represent its clients seamlessly throughout the transition.
He believes they have done that.
Departed partners say that virtually all of their client matters have transferred over to Clifford Chance.
Although Clifford Chance declined to list the clients it nabbed from the deal, sources familiar with Brobeck Phleger say clients generally attached to the 17-member team include Cisco Systems, E*TRADE, Citrix Systems, Intel, Broadcom, Nike, Siebel Systems, Sun Microsystems, eBay, Accelerated Networks, Versata, Bank of America and others.
The estimated value of the group's business is reportedly in the range of $75 million.
"We expect to build and expand on the matters and relationships we brought over," San Francisco litigator Karen Johnson-McKewan says. "We believe many client needs will be best served by Clifford Chance, given the firm's tremendous platform."
In the meantime, Snow & Co. has the huge challenge of integrating with the larger firm - first with the Americas region, then with the world.
"A lot of airplane miles are being burned up," Burns says. "The goal is to get Clifford Chance partners here in California to see our operations, to meet our clients and let them know firsthand what tremendous capabilities the firm has around the globe."
In addition to educating clients and new partners about expanded capabilities, Clifford Chance is having a handful of corporate, intellectual property and antitrust partners from the East Coast relocate to the West Coast.
Already, West Coast lawyers have begun working on existing antitrust matters handled from New York by Kevin Arquit, co-head of the firm's global antitrust group.
Arquit is expected to become a big selling point on the West Coast.
"Clients here have either been looking elsewhere for antitrust matters or settling on something that's not the best," Burns says.
Already, Benedict reports, Torpey has sent some securities litigation work to the firm's New York office.
In fact, the complementary nature of the securities litigation practices at Brobeck Phleger and Clifford Chance was one of the early reasons the deal moved forward.
"With the combination, I don't think any firm in the country has the size and depth of securities litigation experience that Clifford Chance now has," Torpey says.
New Clifford Chance partners also are busy attending "beauty contests" around the country.
Torpey, who has met with several prospective clients, says the buzz over Clifford Chance's West Coast expansion is remarkable. Russell and Harris report similar reactions in the corporate and intellectual property fields.
"If the client response in the next year is anything like it has been in the past two weeks, this will be terrific," Torpey says.
Attorneys at competing firms also are getting in on the game, expressing interest in joining Clifford Chance.
"We could have been up to 150 attorneys on the West Coast by now if we wanted to," Benedict says.
Snow expects the West Coast offices to add 40 more attorneys by the end of the year, bringing the total near 100.
A majority of these attorneys, including many associates and a smaller set of partners, likely will come from Brobeck Phleger, the Clifford Chance partners say.
Burns believes too much has been made of the recent drama. He is not alone in believing that California is big enough for both Brobeck Phleger and Clifford Chance.
By any reasonable perspective, his attitude suggests, all the individuals involved in this mess remain exactly what they were a year ago: capable attorneys in a state filled with 140,000 of them.
Maybe even One Market Plaza is big enough for both firms.
Snow, for one, doesn't avoid anybody when he walks through the lobby.
"I keep my head up because I'm proud of the people I'm working with and I'm privileged to be part of Clifford Chance," he says. "And each morning, I'm greeted by wonderful people who are still at Brobeck, who have said only nice things to me, whom I miss and wish only well."
From Tower Snow's perch in an aerie in San Francisco's Financial District, he has the kind of Bay Bridge view that inspires dreams of global domination.
Snow kept his eye on that bridge while he staked Brobeck, Phleger & Harrison's ascension as a world-class technology powerhouse during the past four years.
Today, he's still sitting there, watching the bridge and planning to conquer the world.
He crosses the same plaza and enters Boulevard restaurant, where he's escorted to the prime back booth by the window.
"The most important clients around the world will want what Clifford Chance can offer," Snow says, even before the menus are set down. "I have no doubt that Clifford Chance will be the pre-eminent global law firm."
Overnight, it seems, Snow has become the new face of the British Invasion, taking dozens of Brobeck Phleger attorneys and staff across One Market Plaza to Clifford Chance Rogers & Wells, where he will lead the West Coast offices and serve on the firm's Americas management board.
"It feels like we're in a parallel universe," the new Clifford Chance lawyers say.
After months of bad blood, Brobeck Phleger and Clifford Chance are feeling cozy in his-and-his twin towers.
As they walk through the plaza, a few Clifford Chance employees keep their heads down; it's still uncomfortable to make eye contact with former Brobeck Phleger colleagues. From their offices, they see their former law library.
Even the One Market employees are getting in on the act. After Brobeck Phleger booted Snow from the firm May 17 for shopping his partners to Clifford Chance, someone broke off a key in the lock to his office. The building repairman who fixed the lock - it reportedly took him several hours - showed up a few weeks later.
He installed the lock for Snow's new corner office at Clifford Chance.
There, unused computer monitors and hard drives are stashed in a corner; cardboard boxes of documents are piled to the ceiling; cubicles and bookcases are partially put together; ladders, toolboxes and crates of cleaning supplies far outnumber humans.
Snow loves it all, knowing that quality attorneys weaving through an endless maze of safety hazards captures the beauty of Clifford Chance in California: The firm is both a world power and a startup organization.
"We set this up in a week," Snow says while scanning the floor. "It looks pretty good for a week, doesn't it?"
Sure. Not bad.
But as they say, world domination is never easy.
Cut back to the evening of May 17. Snow and fellow Brobeck Phleger partners James Burns and Michael Torpey have just cleared customs at San Francisco International Airport on their return from London.
After a first round of talks with Clifford Chance, they were flying home empty-handed.
But not for long.
Snow was greeted by a United Airlines representative who handed him the now-infamous letter telling the former chairman he was no longer employed.
"I was absolutely stunned," Snow recalls.
"It was unfortunate, and I don't think particularly necessary," says Burns, now managing partner of Clifford Chance's West Coast operations.
Torpey, then chair of Brobeck Phleger's securities litigation group, says, "It wasn't the smart move."
Maybe, maybe not.
It didn't feel that way at Brobeck Phleger.
There, managers had felt their internal temperature rise to a seething point following the end of Snow's four-year tenure as chairman in November. It was bad enough he had told the world that Brobeck Phleger was to be a technology-only firm. It was worse that he had saddled them with 200 idle attorneys that they had to deal with.
To the new managers - whose personal charisma is almost diametrically opposed to that of Snow - the Clifford Chance talks were several steps beyond hubris.
Bloody treason more like it.
Reports in the British legal press May 13 indicated that 20 to 50 partners might be moving to Clifford Chance. And it was widely assumed the core would be the hot securities litigation practice that Snow built before taking Brobeck Phleger's reins.
As the Clifford Chance rumors spread, Brobeck Phleger managers attempted to behave cautiously. They initially claimed that the loss of the securities litigators would not hurt the firm financially but also voiced a desire to keep valued partners at the firm.
On May 16, they learned the Clifford Chance deal was dead. Emboldened, Brobeck Phleger managers decided to play hardball.
In the 24 hours after the Clifford Chance talks failed, Brobeck Phleger managers gathered enough votes to expel Snow.
"They thought the Clifford deal was dead," says one partner who since has joined Clifford Chance. "They thought if they expelled Tower, it would make him too hot to handle for another firm. They thought it would make it difficult for him to be successful."
Brobeck Phleger Chairman Richard Odom has denied such strategizing, and Paul Finigan, managing partner of the firm's San Francisco office, says the expulsion was carefully considered by the partnership.
Brobeck Phleger says that the partnership expelled Snow because his actions, quite simply, were unacceptable, even "shameful." They wanted to send a message about the importance of loyalty and fiduciary duty.
Next move: Snow.
The thing about a good game of hardball is that you need to make sure you are stronger than your opponent.
And there, Brobeck Phleger may have miscalculated.
The forces of Snow quickly got word to the press that Brobeck Phleger managers were launching a witch hunt, checking up on their partners and the like.
With his new idle time, Snow resumed the Clifford Chance talks - which it turns out may never have been quite as dead as it seemed.
"I was extremely concerned for the young partners that were part of the group that might have joined us," James Benedict, Clifford Chance's regional managing partner for the Americas, says from his New York office.
It was Benedict whom Snow called in January to initiate talks between the two firms. Both securities litigators, Snow and Benedict have known each other for more than 20 years.
"Tower could go overnight to virtually any law firm he wanted to," Benedict says. "Some young partner is in a very different position. Had the deal not come together, and had it been known who was talking to us, the careers of those individuals were on the line."
The first round of negotiations failed because Snow and Clifford Chance managers couldn't hammer out a specific proposal by May 17, the date Clifford Chance partners were scheduled to vote on the deal.
They also faltered because of concerns that the core group of securities litigators would not be a broad enough presence for Clifford Chance, which, as the world's highest-grossing law firm, was interested in more than a piddle across the pond.
"The core group widened out," says Peter Charlton, Clifford Chance's regional managing partner in London. "We began contemplating a lateral hire of between 40 to 45 partners, and from a mix of different practice areas.
"When it came to widening out the group, we probably underestimated the logistical problems and practical difficulties," Charlton says of the plans to add corporate and intellectual property partners.
Once the media had its hands on the story, he adds, it became impossible to negotiate with such a large group of Brobeck Phleger partners, who couldn't possibly be expected to engage in talks and make life-changing decisions while under the spotlight.
Instead of abandoning the deal, both sides simply agreed to scale back its size. Rapidly.
May 24.
Clifford Chance begins extending offers to Snow and 20 Brobeck Phleger partners. Seventeen accept, including 11 San Francisco securities litigation partners and partners from Palo Alto, Los Angeles and San Diego in the intellectual property, real estate and corporate practice groups. Snow immediately sets to work for Clifford Chance.
Next move: Brobeck Phleger.
The firm's partnership agreement requires departing partners to give 30-days' notice of their intent to leave - a common provision, but one that's rarely enforced.
But Brobeck Phleger managers enforced it, preventing the departing partners from soliciting associates, staff and clients for 30 days.
"It was a strange interlude," Burns says. "You're treated as if you have one foot out the door. You're estranged from your existing firm but not yet in the new firm. It would have been best for all parties concerned if that period had been shortened."
Finigan says that, for the sake of continuity, managers can't simply pick and choose what provisions they enforce.
"It's there for a number of reasons," Finigan, who also sits on Brobeck Phleger's operations committee, says of the 30-day provision. "It had applicability in this situation and was employed fairly."
Fair or not, it made for an excruciating month for the locked-down partners. They had just ironed out the biggest deal of the year and were prohibited from discussing it with the people who mattered most to them professionally and, in many cases, personally.
"There was this artificial barrier," Torpey says. "These are people we hang out with all the time. Normally, you would want to say, 'Gosh, we really want you to come with us.' But you couldn't talk about the deal."
Simply avoiding each other wasn't an option. The partners had to work side by side with associates and staff on client matters. And associates and staff wanted to know whether they would be offered jobs.
"Every time they raised a question about it, we had to tell them we were not permitted to talk about it," San Diego corporate partner Faye Russell says.
The 30-day period also strained some client interactions. Rules of ethics require a departing partner to inform clients about any plans to switch firms. However, if a client asks a partner why he is leaving, a detailed response could come across as a sales pitch for the new firm.
The partners leaving Brobeck Phleger believed that they had to be particularly careful because, as one partner put it, "Big Brother was watching."
During the 30-day period, there was a widespread belief among departing partners that their e-mail accounts were being monitored. The partners also experienced restricted access to electronic firm data, such as accounting files, and were removed from e-mail distribution lists for at least two weeks.
"I know what we did not do," Finigan says. "We did not impede any attorney from carrying out his duties to represent clients in the best way possible. Client service is always our top priority."
"That's a very carefully worded response," suggests one departed partner.
And while the departing partners were locked up, they knew that Brobeck Phleger was working hard to convince associates and clients to stay with the firm.
Though Snow had discussions with some clients, he says he spent most of his time lining up vendors for the new office. He also took calls from associates and staff who wondered whether they would have a place at Clifford Chance.
"I offered comfort when I could," Snow says.
Palo Alto-based intellectual property partner Daniel Harris echoes many members of the departed group by saying that focusing on client matters was the best way to get through the 30 days.
"I worked very hard during that period," Harris says. "Focusing on client matters made the time go easier and quicker and later helped to ensure a smooth transition to Clifford Chance."
The 30-day notice provision was among the issues that the departing partners and Clifford Chance managers negotiated with Brobeck Phleger managers in June.
The departing partners expressed hopes for an early end of the 30-day period and a timely return of their capital investment into Brobeck Phleger partnership. They also were willing to discuss placing a cap on the number of associates and staff they raided from Brobeck Phleger and to sublease much of Brobeck Phleger's excess real estate space.
Negotiations failed on all counts.
Not only did the 30-day period run to its entirety, but Brobeck Phleger managers also have not said when, or whether, any partners will receive their capital investment, which totals at least several million dollars. Clifford Chance eventually subleased space from Wilson Sonsini Goodrich & Rosati, Cooley Godward and other businesses.
Some of the departing partners believed Brobeck Phleger was emotionally unable to lease space to Snow and crew, especially from its San Francisco headquarters, where tensions were at their highest.
"There may have been some inability to wrap their brains around that whole concept," Los Angeles-based Gerard Walsh, who chaired Brobeck Phleger's real estate group before departing, says. "Economically, it made a lot of sense."
Brobeck Phleger reportedly could have saved $15 million from subleasing up to 170,000 square feet of unused space in the four locations.
While Finigan declined to comment on specific areas of negotiations because he believes both sides agreed to keep these matters confidential, he says that the departing group and Clifford Chance tried to "package together" a variety of unrelated issues into "an all or nothing" proposal.
This prevented negotiations from going forward, Finigan says, because Brobeck Phleger wanted to negotiate each issue separately.
Things got a little ugly at the end. Brobeck Phleger managers could not let go of the fact that the departing group and Clifford Chance had done something wrong, according to sources at the firm. Interview teams tried to question departing partners about all facets of the Clifford Chance deal before leaving. They generally refused to answer questions.
"In reality," as one departed partner says, "a group of partners were leaving. That's all they needed to know."
June 28. mmmmmmmmmmmmmmm mThe 30 days run out and bedlam ensues.mmmmmmmmmmmmmmmmm mmmClifford Chance went into a hiring frenzy Saturday, June 29, extending some offers as early as 12:01 a.m.
On Sunday, Torpey held a reception at his house for the new Clifford Chance partners and the 30 or so Bay Area associates and staff who received offers.
It was the first time "in what seemed like forever" that friends and colleagues could relax, socialize and talk about the future, those in attendance say.
Benedict, Charlton and Clifford Chance human resources personnel were on hand to answer any questions the prospective new employees had about working at the firm.
"It was quite a celebratory atmosphere," Charlton says. "That was the longest 30 days I've experienced in a long time."
July 1.
Clifford Chance opened offices in San Francisco, Palo Alto, Los Angeles and San Diego.
If any firm can open four offices on the same day without experiencing overwhelming panic, it's Clifford Chance, with 3,800 attorneys worldwide and annual revenues approaching $1.5 billion.
The firm pulled off a 700-attorney deal in 1999 with a three-way merger that morphed Clifford Chance into its present form. That year, it merged with New York's Rogers & Wells and Germany's Punder Volhard Weber & Axster.
Those mergers and all others feed Clifford Chance's oft-stated mission: to become the pre-eminent global law firm.
That is difficult if a firm is not in California, which has the world's sixth-largest economy.
Clifford Chance's U.S. presence was limited to New York and Washington, D.C., with a combined total of 600 attorneys.
"If we were in Prague, why not San Francisco?" Benedict says.
Not only was Snow's January call to Benedict welcome, but it also was well-timed. For Clifford Chance to pick up a top-flight securities litigation practice while Corporate America and the dot-coms were combusting was a great opportunity.
"It made more sense to invest in something that's pretty hot, then build on that," Charlton says. "It's a nice, stable economic platform to grow on."
The most attractive aspect of the group, Benedict and Charlton agree, was that it had strong, executive-level relationships with some of the world's leading technology companies, including the likes of Cisco Systems, Sun Microsystems and Broadcom - the client base Clifford Chance wanted to tap into.
And while Clifford Chance wanted to serve Snow & Co.'s client base throughout the world, Snow & Co. wanted to broaden the horizons on their practice.
The partners who left Brobeck Phleger for Clifford Chance, Snow says, share an intense desire to practice law at the highest level by handling the most important matters for the most important clients.
Doing so effectively, these partners believe, increasingly will require an integrated set of global legal services.
"I believe Clifford Chance is blazing the trail in this direction," Snow says.
Especially helpful is that Snow & Co. no longer will have to pass clients off to other firms when they go abroad.
During Snow's tenure at Brobeck Phleger, he grew the London office and opened offices in Munich, Germany, and Oxford, England, in joint ventures with Boston's Hale and Dorr. That's a far cry from Clifford Chance's worldwide presence, which includes 32 offices.
"It's so much easier for a client to call his local lawyer and say, 'I need one of your colleagues in Shanghai,' than it is to find a lawyer in Shanghai on your own," Torpey says.
Global vision does come at a price, however. At least a handful of partners are taking a pay cut to move to Clifford Chance.
Clifford Chance has a lock-step compensation system for partners that can't match what performance-based systems at large firms can pay top rainmakers. For a small number from Snow & Co., Clifford Chance reportedly may add a points-based component to the lock-step system.
Snow says that the lock-step system actually is a significant plus because it fosters teamwork and removes the corrosive elements of internal competition between partners.
With average profits per partner of $1.02 million at Clifford Chance, Snow adds, no one will be underpaid.
Many members of the legal community expect Clifford Chance's West Coast expansion to spur the general trend of law firm consolidation. More specifically, they expect that other London-based firms with global vision are planning to follow Clifford Chance's footsteps.
More than anything, Snow seems impressed, almost challenged, by Clifford Chance's boldness, which clearly surpasses his own.
"They have a history of bold moves," Snow has repeated in recent weeks.
In the past several weeks, Burns has said repeatedly, perhaps diplomatically, that Brobeck Phleger still can be a global power.
"The difference," he says, "is that Clifford Chance is already there."
July 11.
Snow crosses the plaza, ascends in an elevator and settles in to talk with a reporter.
He is loved and hated for his brash, at times cocky, leadership style. While he was at the helm of Brobeck Phleger, from 1998 to 2001, he nearly doubled the attorney head count from 500 to 950.
He decided to leave the firm he helped build when new management began "dismantling" it.
"More than anything else, I'm sad," he says. "I've felt an enormous sadness bordering on grief to watch four years of backbreaking labor of literally hundreds of people vaporize before my eyes. It's incredibly dispiriting."
Snow says that, until this past fall, Brobeck Phleger was superbly positioned to become the world's leading technology law firm. Odom and Parker have abandoned this vision, he says, in favor of an outdated "all services to all clients" model. And the layoffs of 170 associates, he adds, have ruined the cultural improvements he and Burns made over four years.
Across the way, legal work continues. Ongoing work of the highest order at Brobeck Phleger has been obscured in the brouhaha.
Still, much of the focus remains on Snow.
Brobeck Phleger has kept at least six associates and five staff members offered jobs by Clifford Chance. And it reportedly kept one associate with a bump up to partner status and has tried to keep select others with retention bonuses ranging anywhere from $10,000 to $75,000.
Finigan says that Brobeck Phleger is doing nothing of the sort.
Brobeck Phleger says that it lost "some" client matters to Clifford Chance, admitting that clients often prefer not to change attorney teams for unresolved matters.
Brobeck Phleger, Finigan says, provides a diverse range of services for many large clients. Losing a client's litigation work, for example, doesn't translate into the loss of corporate or employment or other practice group work for the client.
Now that things are cooling down, it seems Brobeck Phleger's future could be steadier than the recent defections suggest.
On the one hand, sources inside Brobeck Phleger say that the recent conflict has taken its toll on managers and that Odom and managing partner Richard Parker may decide to step down.
Finigan, however, says Odom and Parker aren't going anywhere. Although the recent months have been challenging, he says, the present administration enjoys the widespread appreciation and support of the partnership.
And many point out that Odom, who chaired the firm's complex litigation practice, and Parker, who managed its San Diego office, have a history of effective leadership.
Their biggest fault, by some measures, was inheriting a difficult situation that included a partnership demand for layoffs and declining profits, which dropped 44 percent in 2001 to $660,000.
And though their decisions drew negative attention to the firm, by year's end, they will have helped boost profits per partner by 20 percent to well in excess of $700,000, Brobeck Phleger managers predict.
Carmelo Gordian, co-chair of Brobeck Phleger's business and technology practice, says that the firm experienced an 8 percent uptick in corporate work between June and July.
The firm also recently nabbed two Fortune 100 companies and is recruiting lateral partners across all practice groups.
That's solid evidence, Gordian says, that Snow's rantings about a "dismantling" are ridiculous. He says Brobeck Phleger is what it always has been: a diverse firm with one of the top technology practices in the world.
Brobeck Phleger's biggest problem, most observers agree, is stemming the flow of departures. A significant contingent of Brobeck Phleger's intellectual property group reportedly is in discussions with a number of different firms, including Clifford Chance.
Finigan says the attrition concern is valid, but the firm has been addressing the issue and will continue to do so.
"We are very attuned to the fabric and continuing improvement of the partnership," he says. "We are looking at ways to improve the glue and to make sure people are working well together going forward. We are placing particular focus on this now and, I think, doing an excellent job."
Talk remains of a legal claim against the forces of Snow for breach of fiduciary duty and Clifford Chance for business interference.
Though the Clifford Chance side has said Brobeck Phleger "doesn't have a leg to stand on," Finigan won't say whether Brobeck Phleger is considering legal action. The tussle clearly has provided plenty of work for other lawyers. When Snow & Co. set out to negotiate with Clifford Chance, it relied on Washington, D.C.-based Williams & Connolly. Clifford Chance itself called on New York's Simpson Thacher & Bartlett. For its expulsion of Snow, Brobeck Phleger retained Los Angeles' Latham & Watkins. Finally, the departed partners are relying on the chairman of Cooley Godward, Stephen Neal, for advice on moving forward.
The two sides seem to be making progress, if at a snail's pace.
On June 30, Snow was allowed to return to his old office for the first and only time since his expulsion. He spent more than an hour gathering client files and personal belongings while Brobeck Phleger partner George Hisert looked on.
"And they may sell my furniture back to me," Snow says.
Finigan recognizes that most issues resulting from the Clifford Chance deal remain unresolved. He says Brobeck Phleger is open to have discussions about any of them.
"We are happy to move on from this," he says. "We are very pleased to get on with the practice of law."
Legal action, Torpey says, will only dredge up past events and perpetuate an unfortunate media frenzy.
"We've all got things to do," he says. "I've got a world to dominate."
That world domination has been manned for most of July by Alex Vejnoska, the 16-year-old son of San Francisco partner Chris Vejnoska.
Despite a month of work by Clifford Chance SWAT teams focused on human resources, information technology and other support, gaps remain.
As the firm gets off the ground in San Francisco, Alex and a high-school friend - who look like leftovers from the startup company that previously occupied the space - pitch in to answer phones and move boxes and equipment.
There and in the other three offices, 33 former Brobeck Phleger associates are settling in. So are 27 Brobeck Phleger staff members.
The Clifford Chance team's very first goal, Snow says, is to continue to represent its clients seamlessly throughout the transition.
He believes they have done that.
Departed partners say that virtually all of their client matters have transferred over to Clifford Chance.
Although Clifford Chance declined to list the clients it nabbed from the deal, sources familiar with Brobeck Phleger say clients generally attached to the 17-member team include Cisco Systems, E*TRADE, Citrix Systems, Intel, Broadcom, Nike, Siebel Systems, Sun Microsystems, eBay, Accelerated Networks, Versata, Bank of America and others.
The estimated value of the group's business is reportedly in the range of $75 million.
"We expect to build and expand on the matters and relationships we brought over," San Francisco litigator Karen Johnson-McKewan says. "We believe many client needs will be best served by Clifford Chance, given the firm's tremendous platform."
In the meantime, Snow & Co. has the huge challenge of integrating with the larger firm - first with the Americas region, then with the world.
"A lot of airplane miles are being burned up," Burns says. "The goal is to get Clifford Chance partners here in California to see our operations, to meet our clients and let them know firsthand what tremendous capabilities the firm has around the globe."
In addition to educating clients and new partners about expanded capabilities, Clifford Chance is having a handful of corporate, intellectual property and antitrust partners from the East Coast relocate to the West Coast.
Already, West Coast lawyers have begun working on existing antitrust matters handled from New York by Kevin Arquit, co-head of the firm's global antitrust group.
Arquit is expected to become a big selling point on the West Coast.
"Clients here have either been looking elsewhere for antitrust matters or settling on something that's not the best," Burns says.
Already, Benedict reports, Torpey has sent some securities litigation work to the firm's New York office.
In fact, the complementary nature of the securities litigation practices at Brobeck Phleger and Clifford Chance was one of the early reasons the deal moved forward.
"With the combination, I don't think any firm in the country has the size and depth of securities litigation experience that Clifford Chance now has," Torpey says.
New Clifford Chance partners also are busy attending "beauty contests" around the country.
Torpey, who has met with several prospective clients, says the buzz over Clifford Chance's West Coast expansion is remarkable. Russell and Harris report similar reactions in the corporate and intellectual property fields.
"If the client response in the next year is anything like it has been in the past two weeks, this will be terrific," Torpey says.
Attorneys at competing firms also are getting in on the game, expressing interest in joining Clifford Chance.
"We could have been up to 150 attorneys on the West Coast by now if we wanted to," Benedict says.
Snow expects the West Coast offices to add 40 more attorneys by the end of the year, bringing the total near 100.
A majority of these attorneys, including many associates and a smaller set of partners, likely will come from Brobeck Phleger, the Clifford Chance partners say.
Burns believes too much has been made of the recent drama. He is not alone in believing that California is big enough for both Brobeck Phleger and Clifford Chance.
By any reasonable perspective, his attitude suggests, all the individuals involved in this mess remain exactly what they were a year ago: capable attorneys in a state filled with 140,000 of them.
Maybe even One Market Plaza is big enough for both firms.
Snow, for one, doesn't avoid anybody when he walks through the lobby.
"I keep my head up because I'm proud of the people I'm working with and I'm privileged to be part of Clifford Chance," he says. "And each morning, I'm greeted by wonderful people who are still at Brobeck, who have said only nice things to me, whom I miss and wish only well."
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John Ryan
Daily Journal Staff Writer
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