Partner Feud Roils Lieff Cabraser

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Consistently reputed to be a collegial work environment with high job satisfaction, the elite San Francisco-based plaintiffs’ firm, Lieff Cabraser Heimann & Bernstein, has recently experienced internal conflict that has found its way into discussions on blogs and legal-themed message boards. The conflict’s rough outlines are as follows: Barry Himmelstein, a partner at Lieff Cabraser, is attempting to dissolve the firm, while the firm’s other partners have petitioned to send the dispute into arbitration to avoid the public relations debacle that could result from internal conflicts being aired in public court proceedings. Thus far, the bulk of the dispute’s substantive legal content is unknown, and the papers supporting the motion to compel arbitration cryptically allude to the competing legal theories and evidence that will be in play.

In an interview with The Recorder, Himmelstein located the dispute’s genesis in a debt-card fee class action in which Wells Fargo was ordered to pay $203 million, Gutierrez v. Wells Fargo Bank, No. C 07-05923 (N.D. Cal. Aug. 10, 2010). Himmelstein told The Recorder that he had urged the pursuit of punitive damages, which could have substantially increased the already ample damages award, as well as Himmelstein’s bonus share. Himmelstein’s strategy was rebuffed; the dispute burgeoned, resulting in Himmelstein being stripped of his voting rights. (See Kate Moser, Ex-Lieff Partner Says Strategy Feud Is Behind Ouster, THE RECORDER, Mar. 4, 2011, available here.)

Himmelstein’s bonus share in the Wells Fargo litigation is in abeyance, likely to be determined in the parties’ litigation or arbitration, as is his potential bonus share of a $410 million award that resulted from a MDL case that had been pending in a Florida United States District Court. Himmelstein’s claims may extend to other bonus sources, as well. While the Wells Fargo strategy dispute appears to have incited the parties’ conflict, it is not clear what role it will play in the actual legal theories at issue when the parties either litigate or arbitrate their dispute.

Also as reported in The Recorder, in a February 15, 2011 email responding to the suggestion that the parties arbitrate, Himmelstein augmented an initial “LOLOLOLOLOLOLOL!” response by adding, in a second email, “That was a big, fat, f*****g, ‘No,’ in case you needed translation.” (Kate Moser, Lieff Cabraser Partners in Nasty Feud, THE RECORDER, Feb. 25, 2011, available here.) Accordingly, indications are that Himmelstein will formally oppose the arbitration petition.