West Coast Law Firm Closing After Dot-Com Collapse
By JONATHAN GLATER
artners at the San Francisco law firm of Brobeck, Phleger & Harrison decided yesterday to wind down the firm, bringing to an end a 77-year-old Bay Area institution that rose flamboyantly and rapidly on the Internet boom. [NYTimes.com: full article]
Top S.F. dot-com law firm to close
Brobeck, Phleger & Harrison grew with tech boom
Todd Wallack, Harriet Chiang, Chronicle Staff Writers
One of San Francisco’s largest and most prestigious law firms told shocked employees Thursday that it was shutting down, a victim of the tech implosion.
Brobeck, Phleger & Harrison, which rose to national prominence by handling hundreds of dot-com IPOs and mergers during the Internet bubble, leaves 1,100 lawyers and support staff in 14 cities out of work. [SF Chronicle: full article]
But the San Jose Mercury News seems to dig beneath the sound bite and get closer to some of the root causes of this implosion:
- “The firm prospered until 2000, but made some bad moves at the peak of the stock market. Its most expensive: agreeing to a 12-year lease for 191,000 square feet of the brand-new $260 million University Circle office-retail complex in East Palo Alto — just before real estate rents in the area plunged almost 70 percent.”
“Then, in another big blow, former chairman Tower Snow defected from the firm in May, taking with him 21 partners to a London competitor, Clifford Chance. Snow kept poaching, snapping up another 30 or so Brobeck lawyers since then.”
“Other firms, smelling blood, began poaching too, and soon Brobeck was reeling — having even fewer partners to help pay the debt. Its lawyer ranks shriveled to 500, from a high of 921 in 2000. Last week, the firm’s partners had to cough up $26 million to reduce its debt with its nervous lead-lender, Citibank.”
What the Times and the Chronicle fail to address is why other firms who were equally dependent on the tech boom haven’t failed so spectacularly. If Brobeck’s failure were truly a failure of relying on the tech companies, you would have seen a number of other high profile firms go belly-up as well. But that hasn’t happened.