The bankruptcy judge in the bankruptcy case of former tech law firm Brobeck, Phleger & Harrison has decided to conduct an auction of Brobeck’s cause of action against old line law firm Clifford Chance.
The theory of Brobeck’s case is that Clifford Chance caused Brobeck’s decline by inducing 17 key Brobeck partners to defect to Clifford Chance.
The idea of the auction arose earlier this week when the trustee in Brobeck’s bankruptcy case attempted to settle the lawsuit against Clifford Chance for $4.5 million. At the hearing on approval of the settlement, a group of creditors objected to the settlement when a coalition of plaintiff’s lawyers (including several from the Houston area) offered $4.8 million for the lawsuit, and the bankruptcy judge decided simply to sell the lawsuit to highest bidder. Both Clifford Chance and the plaintiff’s lawyers group appear poised to participate in the “lawsuit auction.”
Interestingly, there has been no outcry from tort reformers regarding this unseemly trading in outlandish damage claims. ;^)