UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION. Judge: Hon. Dennis Montali

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1 John D. Fiero (CA Bar No ) Kenneth H. Brown (CA Bar No ) Miriam P. Khatiblou (CA Bar No ) Teddy M. Kapur (CA Bar No ) PACHULSKI STANG ZIEHL & JONES LLP 150 California Street, 15th Floor San Francisco, California Telephone: 415/ Facsimile: 415/ PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA jfiero@pszjlaw.com kbrown@pszjlaw.com mkhatiblou@pszjlaw.com tkapur@pszjlaw.com Attorneys for Heller Ehrman LLP, Debtor and Debtor in Possession In re: The Heller Ehrman LLP, 1 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA Debtor. SAN FRANCISCO DIVISION Case No.: Chapter 11 DEBTOR S MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES Time: April 24, 2009 Date: 10:00 AM Place: US Bankruptcy Court 235 Pine Street, Courtroom 22, San Francisco, CA Judge: Hon. Dennis Montali Heller Ehrman LLP, the debtor and debtor in possession herein ( the Debtor ), moves the court for an order approving the Debtor s records disposition procedures pursuant to sections 105(a), 363(b)(1), and 554 of title 11 of the United States Bankruptcy Code ( Bankruptcy Code ) and Rules 6004 and 6007 of the Federal Rules of Bankruptcy Procedure ( Rules ). By this motion, the Debtor seeks approval of its proposed procedures concerning the future disposition of its client files. This motion is based upon this Motion and Memorandum of Points and Authorities, the Notice of Motion, and the Declaration of Paul Sugarman ( Sugarman Declaration ), filed and served herewith. 1 The Debtor s address is 333 Bush Street, San Francisco, CA 94104, Federal Tax I.D. No \DOCS_SF: DEBTOR S MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

2 PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA In support of this Motion, the Debtor asserts as follows: 1. On December 28, 2008, the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, the Debtor remains in possession of its property and is managing its affairs and operating its business as debtor in possession. 2. The Debtor practiced law for 118 years. During that time, it accumulated and stored thousands of boxes of records consisting of former client files. The Debtor currently maintains some of those files at its former offices but the vast majority of the files are stored at off-site storage facilities at a great expense to the estate. The Debtor proposes to implement a file disposition procedure which will effectively enable the Debtor to either transfer the records back to its former clients or dispose of the records where the client so chooses or fails to provide any instruction regarding the disposition of its files. The Debtor intends to provide its former clients with 90 days notice regarding the proposed disposition of the client files. However, in the event the former clients do not respond to the notice, the Debtor seeks Court approval to abandon the files. The Debtor believes that its file disposition procedures will enable the Debtor to take into consideration its obligations to the estate s creditors as well as its ethical obligations to its former clients. 3. The Debtor seeks authorization for the file disposition procedures pursuant to sections 544(a), 363(b) and in accordance with the Court s equitable powers under section 105(a) of the Bankruptcy Code. WHEREFORE, the Debtor respectfully requests that this Court grant the Motion in its entirety and approve the file disposition procedures. 22 Dated: April 3, 2009 PACHULSKI STANG ZIEHL & JONES LLP By /s/ Miriam Khatiblou John D. Fiero Kenneth H. Brown Miriam P. Khatiblou Teddy M. Kapur Attorneys for The Debtor Ehrman LLP, Debtor and Debtor in Possession \DOCS_SF: DEBTOR S MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

3 p......l...l rjl z 12 0 >-:>...l ::r: N 13 0 z 14...:... r:n :2 15 rjl...l :;) ::r: u...: p John D. Fiero (CA Bar No ) Kenneth H. Brown (CA Bar No ) Miriam P. Khatiblou (CA Bar No ) Teddy M. Kapur (CA Bar No ) PACHULSKI STANG ZIEHL & JONES LLP 150 California Street, 15th Floor San Francisco, California Telephone: 415/ Facsimile: 415/ jfiero@pszjlaw.com kbrown@pszjlaw.com mkhatiblou@pszjlaw.com tkapur@pszjlaw.com Attorneys for The Debtor Ehrman LLP, Debtor and Debtor in Possession In re: The Debtor Ehrman LLP, I UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA Debtor. SAN FRANCISCO DIVISION Case No.: Chapter 11 DECLARATION OF PAUL SUGARMAN IN SUPPORT OF DEBTOR'S MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES Time: April 24, 2009 Date: 10:00 AM Place: US Bankruptcy Court 235 Pine Street, Courtroom 22, San Francisco, CA Judge: Hon. Dennis Montali I, Paul W. Sugarman, do hereby declare: 1. I an1 a men1ber ofthe Dissolution Committee created by the Plan of Dissolution adopted as of September 26, 2008, by Heller Ehrman LLP, formerly known as Heller Ehrman White McAuliffe LLP, the debtor and debtor-in-possession in the above-captioned case (the "Debtor"). I I The Debtor's address is 333 Bush Street, San Francisco, CA 94104, Federal Tax I.D. No DECLARATION OF PAUL SUGARMAN IN I\DOCS_SF:64 I80.1 SUPPORT OF MOTION FOR APPROVAL OF 1 FILE DISPOSITION PROCEDURE

4 l...l en z 12 0 dd...l :r: N z'" «: Eo-< (/J :2 15 en...l :r: u «: am authorized to submit this declaration on behalf of the Debtor. Except where indicated otherwise, I have personal knowledge of the facts set forth below, and if called to testify, I would testify competently thereto. 2. The Debtor has filed the Motion For Approval offile Disposition Procedures (the "Motion") and I make this declaration in support thereof. 3. On December 28, 2008, the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, the Debtor remains in possession of its property and is managing its affairs and operating its business as debtor in possession. 4. On January 5, 2009, the United States Trustee for this district appointed an official committee of unsecured creditors (the "Committee"). 5. The Debtor, a 118 year-old international law firm, is currently winding down its business and affairs following the adoption of a Plan of Dissolution by the shareholders of the Debtor's limited partners in September, Although the Debtor is no longer engaged in the practice of law, there remain a substantial number of unperformed, yet necessary, tasks relating to winding down the business, maximizing the value of the Debtor's assets for the benefit of its creditors and equity interest holders, and discharging the Debtor's obligations to its former clients. Thus, the Debtor still maintains a workforce of approximately 50 employees (including temporary employees) to provide these necessary services, and incurs routine business expenses (including payroll, employee benefits, office space and equipment, insurance, and costs for other goods and services) as part of the winding down process. Among other things, winding down the Debtor's business includes pursuing the collection of its outstanding accounts receivable, coordinating and managing the transition and securing of client and firm business records, assisting in negotiations with key creditor constituencies, and performing a number of bookkeeping, office and administrative services. 6. As a result of the wind-down and prior thereto, substantially all of the Debtor's attorneys became affiliated with other law firms. In all cases, as each attorney transferred to other firms, that attorney's open client files are being transferred as well. However, during the Debtor's DECLARATION OF PAUL SUGARMAN IN \DOCS_SF: SUPPORT OF MOTION FOR APPROVAL OF 2 FILE DISPOSITION PROCEDURE

5 118-plus year history, over 190,000 closed client files have been retained and stored by the Debtor, l...l r:n z 0 'J c:d...l :r: N 0 z 14 -< 1-< en :2 15 r:n...l :::J :I:: u -< in some manner, for various reasons, including compliance with applicable rules ofprofessional responsibility. The Debtor's domestic client files, which are the subject of the Motion, are located in California, New York, Oregon, Alaska, Wisconsin, Washington and Washington D.C. The Debtor remains in control ofthe retained client files, though many files are not in the physical possession of the firm but rather are located at off-site storage facilities (the "Retained Client Files"). 7. Upon Court approval ofthe File Disposition Procedures, the Debtor will make reasonable efforts to send a copy ofthe "Notice of Intent to Dispose of Client Files" (the "Notice of Intent"), a copy of which is attached hereto as Exhibit A, by first class mail to those former clients whose files may be included in the Retained Client Files using the most current contact information available to the Debtor. 8. While the Debtor will be able to identify names and addresses related to the Retained Client Files that were created as new matters beginning in 2001, the Debtor is unclear whether such names and addresses remain valid as ofthe date ofthis Motion. However, such information represents the best available to the Debtor. Additionally, given the longevity ofthe Debtor's operations, the Debtor is simply uncertain ofthe addresses of some former clients whose files have been in storage for more than 10 or 20 years and as such, the Debtor proposes to provide such forme clients with notice ofthe File Disposition Procedures by publication notice as more fully described below. 9. The Notice of Intent will advise that the Debtor may currently be in possession of certain client files, which it intends to dispose of by July 30, 2009, unless the former client directs otherwise. The July 30, 2009 deadline will be no less than 90 days after the Notice of Intent is mailed to former clients. I am informed and believe that such 90 day notice period is reasonable and adequate under the circumstances. 10. To claim and retrieve a client file, an interested party must complete and return the File Retrieval Form (which is attached to the Notice of Intent), to the Debtor no later than July 30, In the event that the former client does not return the File Retrieval Form to the Debtor by \DOCS_SF: DECLARATION OF PAUL SUGARMAN IN SUPPORT OF MOTION FOR APPROVAL OF 3 FILE DISPOSITION PROCEDURE

6 p......:l...:l <rj z 12 0 :r: '"" N " z <: Eo-< en <rj ::> '"" :r: u <: p July 30, 2009, those Retained Client Files for which no File Retrieval Form will be destroyed in a manner that preserves the confidentiality of the contents of the Client Files. 11. In order to provide broad and appropriate notice to former clients regarding the File Disposition Procedures, the Debtor proposes to provide publication notice ("Publication Notice") no later than April 30, 2009, one time each in the National Edition ofthe Wall Street Journal, the National Edition of the New York Times, the San Francisco Chronicle, Los Angeles Times, Washington Post, Seattle Times, the San Diego Union-Tribune, the Wisconsin State Journal, Portland Oregonian, and the Anchorage Daily News. A copy ofthe proposed Publication Notice is attached hereto as Exhibit B. 12. I am informed and believe that by publishing notice in the referenced publications, which have a combined readership of well over three million persons, the Debtor will provide adequate notice ofthe File Disposition Procedures to former clients whose addresses are not known to the Debtor or who cannot be located. 13. As with written notice, a former client will have 90 days after the Publication Notice is published to contact the Debtor and request that its files be returned to it or request that its files be destroyed. Furthermore, 90 days after the last date of publication ofthe Publication Notice or mailing of the "Notice of Intent", whichever is later, with respect to those Retained Client Files for which no File Retrieval Form has been received, the Debtor will dispose of the Retained Client Files in the manner that preserves the confidentiality of the contents of the Client Files. 14. The efforts to retrieve a file for a former client upon request will result in a cost to the estate. The Debtor does not anticipate charging a fee for the retrieval of a Retained Client File within its possession except for mailing and shipping charges. The Debtor, however, does anticipate charging for the retrieval of electronic data which will require the Debtor to incur substantial time and expense processing, compiling and delivering such data to former clients. 15. As previously noted, the Debtor is not in physical possession of all Retained Client Files and certain storage facilities where the Retained Client Files are located may charge retrieval related fees. The Debtor will not pay any retrieval fee to a storage facility or any other third party \DOCS_SF: DECLARATION OF PAUL SUGARMAN IN SUPPORT OF MOTION FOR APPROVAL OF 4 FILE DISPOSITION PROCEDURE

7 fee to deliver or facilitate the return of a Retained Client File to any party. Instead, the Debtor will require the former client to pay such fees. 16. To the extent the Retained Client Files involve criminal defense matters, the Debtor does not intend to destroy such records. Furthermore, the Debtor will take reasonable steps to avoid the destruction of certain estate planning documents, such as wills, and intrinsically valuable documents. I declare under penalty of perjury that the foregoing is true and correct to the best ofmy knowledge, information, and belief. Executed this 1st day of April 2009, at San Francisco, California. 10 Cl U) w z 12 0 < :;:...l 13 :I: w u N t:l z <: E-< U) CIl...l ::J :I: u <: Cl.. 0 u u 14 ""' z en < By \DOCS_SF: DECLARATION OF PAUL SUGARMAN IN SUPPORT OF MOTION FOR APPROYAL OF 5 FILE DISPOSITION PROCEDURE

8 Exhibit A

9 April 2, 2009 The Dissolution Committee Direct Fax +1 (415) Main +1 (415) «ClientName» «Address1» «Address2» «Address3» «Address4» «City», «State» «PostalCode» «Country» Re: Disposition of Files in Matters for «ClientName» Dear Sir/Madam: As you may know, on September 26,2008 Heller Ehrman LLP (the "Firm") elected to dissolve and to wind up its business operations under the direction of the Firm's Dissolution Committee. That Committee is directing the effort to liquidate the remaining inventories of former client files located at off-site storage facilities. The Firm's records indicate that there may be files in storage pertaining to the Firm's former representation of [Client Name]. Enclosed is a printout listing those files that we believe are in storage. The purpose of this letter is to determine whether you would like to take custody of any of those files, or whether the records instead may now be destroyed. Please review the enclosed list of files to determine whether or not you wish to receive the records identified. Once you have done so, please fill out the enclosed form ("Instructions Re Disposition of Files") and return it to us. The Firm will need to authorize the off-site storage facility to transfer your files directly to you, so it is important that you return the form to us if you intend to obtain custody of any materials stored off-site. If you do not wish to receive custody of your files, either hardcopy or electronic, please so indicate on the enclosed form, thereby approving their destruction. IF WE DO NOT RECEIVE A RESPONSE FROM YOU POSTMARKED BY JULY 30, 2009, THE RECORDS SHOWN ON THE ENCLOSED LIST WILL AUTOMATICALLY BE PERMANENTLY DESTROYED WITHOUT FURTHER NOTICE TO YOU. Heller Ehnnan LLP, a California limited liability partnership in dissolution, 333 Bush Street, San Francisco, CA \DOCS_SF:

10 I-IellerEhrmanLLP April 2, 2009 Page 2 In light of its dissolution, the Firm is not in a position to absorb any of the costs associated with transferring records to its former clients. You will therefore be responsible for all costs associated with the transfer of these records, including any hourly charges, file access charges, shipping, handling, and permanent removal charges. For matters handled by the Firm for you in recent years, the Firm is also likely to have custody of electronic files containing such items as documents, s, and other electronic images or data. You are entitled to receive those materials, in electronic form, should you so desire. The Firm is not in a position to absorb any of the costs associated with copying or transferring these files. Therefore, you will be asked to pay for the copying and related charges. If you wish to obtain the electronic records, please so indicate in the attached form. We will then contact you and provide you with an estimate of the costs associated with copying and transferring these records, along with instructions concerning the necessary electronic hardware you will need to provide to us for this task. We look forward to receiving your response as soon as possible. Thank you for your cooperation. Very truly yours, Enclosures: Instructions re Disposition of Files Off-Site Facility Contact Information Client Records List The Dissolution Committee Heller Ehrman LLP 4/2/09 9:48 PM \DOCS_SF:

11 (Please provide the following information) Contact Name: Address Direct Telephone Fax Number address «ClientNarne» «Client» Instructions re Disposition of Files D I DO wish to take custody of ALL hard copy records for the matters identified in the attached list(s). I hereby agree to make arrangements directly with the off-site storage facility(ies) identified in the attached list(s) for transfer of the records to the location(s) I will identify. I agree to be responsible for all costs associated with such transfer. D I DO wish to take custody of ALL electronic records for the matters identified in the attached list(s). I hereby agree to pay the costs associated with copying and shipping such electronic records to the location(s) I will identify upon request, and to pay such amounts upon request. D I DO NOT wish to take custody of any records identified in the attached list(s), whether in hard copy or electronic format. I hereby authorize Heller Ehrman LLP to DESTROY ALL of these records, whether in hard copy or electronic format, without further notice. D I DO wish to take custody of some but not all of the records identified in the attached list(s). I have marked each page to indicate which hard copy and electronic records will be transferred to the location(s) I will designate, and which may be destroyed. I hereby agree to make arrangements directly with the off-site storage facility(ies) identified in the attached list(s) for transfer of hard copy records to the location(s) I will identify. I agree to be responsible for all costs associated with such transfer. I agree to be responsible for, and to pay upon request, the costs associated with the copying and shipping of electronic records to the location(s) I will designate upon request. I hereby authorize Heller Ehrman LLP to destroy all of the remaining records, whether in hard copy or electronic format, that I did not mark for transfer, without further notice. Signature Dated \DOCS_SF:

12 HellerEhrmanLLP April 2, 2009 Page 4 Print Name Please thisformto:recordsrequest@hellerehrman.com or Please FAX to: +1 (415) or mail to: Heller Ehrman 333 Bush Street San Francisco, CA \DOCS_SF:

13 HellerEhrmanu.,p April 2, 2009 Page 5 Off-Site Facility Contacts Facility Name Address Phone Contact \DOCS_SF:

14 HellerEhrmanLlJJ April 2, 2009 Page \DOCS_SF:

15 Exhibit B

16 PUBLICATION NOTICE Heller Ehrman LLP (the "Debtor"), a chapter 11 debtor, was an international law firm founded in the 1890's with its headquarters in San Francisco, California. On April 24, 2009, the United States Bankruptcy Court for the Northern District of California (the "Bankruptcy Court") entered an Order authorizing the Debtor to dispose of certain client files remaining in its possession pursuant to certain file disposition procedures set forth herein. Parties who believe that their file(s) are in the possession ofthe Debtor and desire to retrieve such file(s) are asked to follow these file disposition procedures. There is no equirement that you retrieve your file(s). However, after a certain period oftime, set forth below, all unretrieved files will be destroyed. 1. HOW TO REQUEST AN OPPORTUNITY TO RETRIEVE YOUR FILE To request an opportunity to claim and retrieve a client file, (i) the former client on whose behalf services were rendered; (ii) a qualified agent of such client; or (iii) the attorney formerly or presently responsible for the file, shall complete and return a File Retrieval Form, according to the instructions contained therein, which form can be obtained by contacting the Debtor at: Records Request@HellerEhrman.com or Heller Ehrman Attention: Records Request Fax: +1 (415) Phone: +1 (415) Such forms must be received by the Debtor by July 30, To the extent a File Retrieval Form is timely received, the identity ofthe client or qualified agent requesting the file(s) will be verified and all available information concerning the location ofthe file(s) will be provided and such former client or qualified agent will be provided an opportunity to obtain the file(s). It will be the client's responsibility to pay for all delivery and related retrieval charges. Such file(s) will not be disposed of or abandoned by the Debtor if adequate arrangements are made with the Debtor or the possessor ofthe file by August 31, If adequate arrangements are not made for the retrieval ofthe files by Septenlber 30,2009, the files may be destroyed without further notice. 2. CONSEQUENCES OF FAILURE TO REQUEST AN OPPORTUNITY TO RETRIEVE YOUR CLIENT FILE FOR THOSE FILES FOR WHICH NO FILE RETRIEVAL FORM IS TIMELY RECEIVED, THE BANKRUPTCY COURT HAS GRANTED THE DEBTOR THE AUTHORITY TO DESTROY SUCH FILES. ACCORDINGLY, YOUR FILE (OR YOUR CLIENT'S FILE) MAY BE DESTROYED IF YOU CHOOSE NOT TO ACT BY JULY 30, \DOCS_SF: NOTICE OF INTENT TO DISPOSE OF CLIENT FILES

17 John D. Fiero (CA Bar No ) Kenneth H. Brown (CA Bar No ) Miriam P. Khatiblou (CA Bar No ) Teddy M. Kapur (CA Bar No ) PACHULSKI STANG ZIEHL & JONES LLP 150 California Street, 15th Floor San Francisco, California Telephone: 415/ Facsimile: 415/ PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA jfiero@pszjlaw.com kbrown@pszjlaw.com mkhatiblou@pszjlaw.com tkapur@pszjlaw.com Attorneys for Heller Ehrman LLP, Debtor and Debtor in Possession In re: The Heller Ehrman LLP, 1 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA Debtor. SAN FRANCISCO DIVISION Case No.: Chapter 11 DEBTOR S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES Time: April 24, 2009 Date: 10:00 AM Place: US Bankruptcy Court 235 Pine Street, Courtroom 22, San Francisco, CA Judge: Hon. Dennis Montali Heller Ehrman LLP, the debtor and debtor in possession herein ( The Debtor ), moves the court for an order approving the Debtor s records disposition procedures pursuant to sections 105(a), 363(b)(1), and 554 of title 11 of the United States Bankruptcy Code ( Bankruptcy Code ) and Rules 6004 and 6007 of the Federal Rules of Bankruptcy Procedure ( Rules ). By this motion, the Debtor seeks approval of its proposed procedures concerning the future disposition of its client files. This motion is based upon this Motion and Memorandum of Points and Authorities, the Notice of Motion, 1 The Debtor s address is 333 Bush Street, San Francisco, CA 94104, Federal Tax I.D. No \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

18 and the Declaration of Paul Sugarman ( Sugarman Declaration ), filed concurrently herewith, all pleadings and papers on file in this case, the oral argument of counsel, and any evidence submitted to the Court prior to or during the hearing on this Motion. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION The Debtor practiced law for 118 years. During that time, it accumulated and stored thousands of boxes of records consisting of former client files. The Debtor currently maintains some of those files at its former offices but the majority of the files are stored at off-site storage facilities at a great expense to the estate. The Debtor proposes to implement a file disposition procedure PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA which will effectively enable the Debtor to either transfer the records back to the former clients or dispose of the records where the client so chooses or fails to provide any instruction regarding the disposition of its files. II. STATEMENT OF FACTS On December 28, 2008 (the Petition Date ), the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, the Debtor remains in possession of its property and is managing its affairs and operating its business as debtor in possession. On January 5, 2009, the United States Trustee for this district appointed an official committee of unsecured creditors (the Committee ). The Debtor, a 118 year-old international law firm, is currently winding down its business and affairs following the adoption of a Plan of Dissolution by the shareholders of the Debtor s limited partners in September, Although the Debtor is no longer engaged in the practice of law, there remain a substantial number of unperformed, yet necessary, tasks relating to winding down the business, maximizing the value of the Debtor s assets for the benefit of its creditors and equity interest holders, and discharging the Debtor s obligations to its former clients. Thus, the Debtor still maintains a workforce of approximately 50 employees (including temporary employees) to provide \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

19 these necessary services, and incurs routine business expenses (including payroll, employee benefits, office space and equipment, insurance, and costs for other goods and services) as part of the winding down process. Among other things, winding down the Debtor s business includes pursuing the collection of its outstanding accounts receivable, coordinating and managing the transition and securing of client and firm business records, assisting in negotiations with key creditor constituencies, and performing a number of bookkeeping, office and administrative services. As a result of the wind-down and prior thereto, substantially all of the Debtor s attorneys became affiliated with other law firms. In all cases, as each attorney transferred to other firms, that attorney s open client files are being transferred as well. However, during the Debtor s 118-plus year history, over 190,000 closed client files have been retained and stored by the Debtor, in some PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA manner, for various reasons, including compliance with applicable rules of professional responsibility. The Debtor s domestic client files, which are the subject of this Motion, are located in California, New York, Oregon, Alaska, Wisconsin, Washington and Washington D.C. in off-site storage facilities. The Debtor remains in control of the retained client files, though many files are not in the physical possession of the firm but rather, at off-site storage facilities (the Retained Client Files ) III. FILE DISPOSITION PROCEDURES The Debtor has prepared a set of procedures, which it believes adequately addresses its ethical obligations under the applicable ethical rules of the various jurisdictions where the Retained Client Files are stored, while allowing it to rid itself of the burdensome files which continue to impair the effective administration of its estate. These proposed procedures (the File Disposition Procedures ) and a brief explanation of the rationale behind each are set forth as follows: 2 This Motion deals exclusively with client files that are located in the United States. All files that are located in foreign jurisdictions, such as the UK, Hong Kong, and Singapore, will be disposed of by the Debtor s foreign affiliate and in accordance with the laws of the applicable foreign jurisdiction \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

20 A. Written Notice. Upon Court approval of the File Disposition Procedures, the Debtor will make reasonable efforts to send a copy of the Notice of Intent to Dispose of Client Files, a copy of which is attached to the Sugarman Declaration as Exhibit A (the Notice of Intent ), by first class mail to those former clients whose files may be included in the Retained Client Files using the most current contact information available to the Debtor. While the Debtor will be able to identify names and addresses related to the Retained Client Files that were created as new matters beginning in 2001, the Debtor is unclear whether such names and addresses remain valid as of the date of this Motion. However, such information represents the best available to the Debtor. Additionally, given the remarkable longevity of the Debtor s PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA operations, the Debtor is simply uncertain of the address of some former clients whose files have been in storage for more than 10 or 20 years and as such, the Debtor proposes to provide such former clients with notice of the File Disposition Procedures by publication notice as more fully described below. The Notice of Intent will advise that the Debtor may currently be in possession of certain client files, which it intends to dispose of by July 30, 2009, unless the client directs otherwise. The July 30, 2009 deadline shall be no less than 90 days after the Notice of Intent is mailed to former clients. To claim and retrieve a client file, an interested party must complete and return the File Retrieval Form (which is attached to the Notice of Intent), to the Debtor no later than July 30, In the event that the former client does not return the File Retrieval Form to the Debtor by July 30, 2009, those Retained Client Files for which no File Retrieval Form has been received shall be deemed abandoned by the former client and will be destroyed. The 90 day notice period is tailored to mirror the requirement of the ethical rules (cited below) that such notice period be provided to a client in the event of a sale of a law firm or the termination of the lawyer s employment. As noted herein, while none of the ethical rules addresses the dissolution of a law firm or a law firm in bankruptcy, the Debtor believes that such notice period is reasonable and adequate under the circumstances \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

21 B. Notice by Publication. In order to provide broad and appropriate notice to former clients regarding the File Disposition Procedures, the Debtor proposes, pursuant to Fed. R. Bankr. P. 2002(l), to provide publication notice ( Publication Notice ) no later than April 30, 2009, one time each in the National Edition of the Wall Street Journal, the National Edition of the New York Times, the San Francisco Chronicle, Los Angeles Times, Washington Post, Seattle Times, the San Diego Union-Tribune and the Wisconsin State Journal, Portland Oregonian, and the Anchorage Daily News. A copy of the proposed Publication Notice is attached hereto as Exhibit B to the Sugarman Declaration. The Debtor believes that by publishing notice in the referenced publications, which have a combined readership of well over three million, the Debtor will provide adequate notice of the File PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA Disposition Procedures. Moreover, any other approach would simply be impracticable. The Debtor believes that this broad national and local publication provides more than adequate notice of the File Disposition Procedures to former clients whose addresses are not known to the Debtor or who cannot be located. As with written notice, the former client will have 90 days after the Publication Notice is published to contact the Debtor and request that its files be returned to it or request that its files be destroyed. Furthermore, 90 days after the last date of publication of the Publication Notice or mailing of the Notice of Intent, whichever is later, those Retained Client Files for which no File Retrieval Form has been received shall be deemed abandoned by the Debtor without the need for further order of this Court and the Debtor will be permitted to dispose of the Client Files in the manner it deems fit that preserves the confidentiality of the contents of the Client Files. The Debtor seeks authorization of this provision in accordance with the Court s equitable powers and its powers under section 105(a) of the Bankruptcy Code. Specifically, the Debtor is seeking the kind of order contemplated by Rule 1.17(c)(3) of the ABA Model Rules of Professional Conduct, cited below, which allows a court to permit the transfer of a client file if notice to the client is otherwise impossible \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

22 C. Retrieval of Files Shall Be At Client s Expense The efforts to retrieve a file for a former client upon request will result in a cost to the estate. The Debtor does not anticipate charging a fee for the retrieval of a Retained Client File within its possession except for mailing and shipping charges. The Debtor, however, does anticipate charging for the retrieval of electronic data which will require the Debtor to incur substantial time and expense processing, compiling and delivering such data to its former clients. The Debtor is not in physical possession of all Retained Client Files and certain storage facilities where Retained Client Files are located may charge retrieval related fees. The Debtor will not pay any retrieval fee to a storage facility or any other third party fee to deliver or facilitate the return of a Retained Client File to any party. Instead, the Debtor will require the former client to pay PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA such fees if the client notifies the Debtor that it wishes to retrieve its documents or have them destroyed. In the event that the Debtor does not receive a File Retrieval Form from its former clients regarding the disposition of their files, the Debtor will assume the costs for the destruction of the client records so that it can be assured that the storage facilities employ means of destruction that will ensure that client confidences are not compromised. D. Files Must Be Retrieved Within a Reasonable Period To the extent a File Retrieval Form is timely received, the former client shall have a reasonable opportunity thereafter to make arrangements to retrieve its files, either in hard copy or electronic version. However, in the event the former client fails to make efforts to retrieve its files or fails to retrieve its files by September 30, 2009, the Debtor requests Court approval that said files be deemed abandoned and that the Debtor may dispose of said files as it sees fit. E. Debtor May Retain Some Files Notwithstanding the authority granted to the Debtor to abandon a Retained Client File and/or the timely receipt of a File Retrieval Form, the Debtor, in consultation with the Committee and their respective professionals, seeks authorization to determine (a) which, if any, of the Retained Client Files must be withheld for use in the administration of the Debtor s estate and (b) what period of time such Retained Client Files must be retained for such purposes \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

23 Additionally, to the extent the Retained Client Files involve criminal defense matters, the Debtor does not intend to destroy such records. Furthermore, the Debtor will take reasonable steps to avoid the destruction of certain estate planning documents, such as wills, and intrinsically valuable documents. IV. BASIS FOR RELIEF A. Abandonment of Client Files is in Best Interests of Estate Pursuant to 11 U.S.C. 554(a), after notice and a hearing, the Debtor may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate. The Retained Client Files are likely not considered property of the Debtor s estate. In PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA California, client files belong to the client rather than to the law firm. See, e.g., Rose vs. State Bar, 49 Cal. 3d 646, 655 (1989). However, in an abundance of caution and to the extent that the Debtor retains an interest in certain of the information contained in the Retained Client Files, such property interests constitutes property of the Debtor s estate pursuant to section 541 of the Bankruptcy Code which the Debtor may abandon. The Retained Client Files are not only unnecessary for the Debtor s chapter 11 wind- down process, but their maintenance imposes a significant ongoing financial and administrative burden to the estate. The estate incurs approximately $87,000 per month in storage fees and additional costs for retaining personnel to handle the transfer and disposition of the client files. There is thus no question that the continued and indefinite storage of the Retained Client Files poses and undue burden to the estate with no corresponding benefit to the estate or its creditors. Accordingly, the Debtor seeks authority to abandon the Retained Client Files in accordance with the File Disposition Procedures which will enable the Debtor to take into consideration its obligations to the estate s creditors as well as its ethical obligations to its former clients. B. The File Disposition Procedures Are Justified Under Sections 363(b) and 105 The Court should approve the File Disposition Procedures under the authority of Bankruptcy Code section 363(b), which provides, [t]he trustee, after notice and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate. In determining whether to \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

24 authorize a use of property of the estate under this section, courts require the debtor to show that a sound business purpose justifies its action and are cautious not to substitute the court s business judgment for the debtor s. See e.g., In re Crystal Apparel, 207 B.R. 406, 410 (S.D.N.Y. 1997) ( [C]ourts must exercise great deference in reviewing a corporation s desire to pay its managers.); Gilson, Executive Compensation and Corporate Governance: An Academic Perspective, 792 PLI/Corp. 647, 673 (1992) ( Courts are least suitable monitor of compensation decisions [B]ecause these are local decisions that not only lack a determinative framework, but depend on the peculiarities of particular companies and particular industries, it is difficult to imagine how a court bent on monitoring compensation decisions would proceed). The File Disposition Procedures are a reasonable and efficient means of handling the over one hundred thousand Retained Client PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA Files and should be approved. The relief requested in this Motion is also authorized by Bankruptcy Code 105(a) which provides that... [t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). The purpose of Bankruptcy Code 105(a) is to assure the bankruptcy courts power to take whatever action is appropriate or necessary in aid of the exercise of their jurisdiction. 2 Collier on Bankruptcy, , at (15 th ed. rev. 1999). Thus, section 105 essentially codifies the Bankruptcy Court s inherent equitable powers. See Management Tech. Corp. v. Pardo (In re Management Tech. Corp.), 56 B.R. 337, 339 (Bankr. D.N.J. 1985) (indicating that court s equitable powers are derived from 105). Based on the court s equitable powers, the Debtor respectfully request that the Court approve File Disposition Procedures. C. Intersection with Applicable Ethical and Professional Considerations The Retained Client Files are located in jurisdictions that apply one of two sets of ethical rules that address a law firm s handing of closed client files. They are (a) California, which has its own Rules of Professional Conduct; and (b) any other state in which the Debtor practiced law 3, 3 The only other state that has not adopted the ABA Model Rules of Professional Conduct is Maine, which, like California, has adopted its own Rules of Professional Responsibility. However, the Debtor has never maintained an office for the practice of law in Maine and does not believe that any Retained Client Files exist there at this time \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

25 which has adopted the ABA Model Rules of Professional Conduct. The ethical rules of these domestic jurisdictions are referred to collectively herein as the Ethical Rules. While the Debtor is not currently engaged in the practice of law, the Debtor is sensitive to the Ethical Rules and their suggested applicability to all matters concerning the practice of law. Therefore, in establishing procedures for the disposition of the Retained Client Files, the Debtor has looked to the Ethical Rules for guidance while attempting to balance its fiduciary duties to its creditors and the estate. While none of the Ethical Rules specifically address the disposition of client files in the context of the dissolution of a law firm or a bankruptcy proceeding, certain provisions as noted below, are instructive. PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA California Rules of Professional Conduct and Ethic Opinions The California Rules of Professional Conduct are silent on the discrete issue as to when a law firm undergoing a dissolution or in bankruptcy may dispose of closed client files. However, the Rules of Professional Conduct regarding the termination of employment and/or the sale or transfer of a law practice are instructive. Rule 2-300, which relates to the sale or transfer of a law practice, requires the attorney to provide 90 days written notice to the client that such a transfer is proposed and that the client may take possession of the client file or retain other counsel if it so chooses. If no response is received within 90 days, then the client s consent to the proposed transfer of its files is presumed. Rule also provides, in relevant part that, upon the termination of the attorney s employment, said attorney shall promptly release to the client, at the request of the client, all the client papers and property. Client papers and property includes correspondence, pleadings, deposition transcripts, exhibits, physical evidence, expert s reports, and other items reasonably necessary to the client s representation, whether the client has paid for them or not Lastly, Rule 4-100(B)(3) requires that client accounting records be maintained for a period of five years \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

26 1 2 3 One of the few ethics opinions relating to the disposition of client files is California ethics opinion 474 (1993) issued by the Los Angeles County Bar Association. That opinion suggests that the attorney provide notice to the former client s last known addresses and PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA offer the files to the former client, seek instructions regarding the files disposition, and contain a warning that absent contrary instruction the files will be destroyed and when. When former clients cannot be located or do not respond to the notice, except for intrinsically valuable documents such as money orders, travelers checks, stocks, bonds, original notes, wills, original deeds and judgments, the committee suggests the firm hold the materials for five years after the cases close unless the former clients authorized the firm to dispose of or release the materials earlier. The committee also suggests that 90 days is a sufficient amount to time to wait for a response after a notice is sent, although circumstances vary with each case and the lawyers responsible for each case must be guided by their own judgments. (emphasis added). As recommended by the opinion, the Debtor intends to provide written and publication notice to its former clients and advise them that absent contrary instructions, their records will be destroyed by July 30, 2009 a date which will be at least 90 days after the Notice of Intent and Publication Notice is provided to the former client. Additionally, while the Debtor believes that most, if not all, of the Retained Client Files are more than 5 years old, some files may have been placed in storage less than 5 years ago. Furthermore, and consistent with the opinion, the Debtor will strive to retain all intrinsically valuable documents in the event that the former client fails to respond to the Notice of Intent or Publication Notice. 2. ABA Model Rules of Professional Conduct The ABA Model Rules of Professional Conduct which are applicable to the jurisdictions of Washington, Alaska, Washington D.C., Oregon, Wisconsin and New York 4, articulate three rules which are informative to the handling of client files. Rule 1.15 Safekeeping Property provides as follows: (a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be 4 New York adopted a version of the ABA Model Rules effective April 1, \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

27 PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA kept by the lawyer and shall be preserved for a period of [five years or seven] after termination of the representation. Rule 1.16 Declining or Terminating Representation sets forth in relevant part as follows: (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred. The lawyer may retain papers relating to the client to the extent permitted by other law. Finally, Rule 1.17 Sale of Practice of Law sets forth in relevant part as follows: A lawyer or a law firm may sell or purchase a law practice, or an area of law practice, including good will, if the following conditions are satisfied: (c) The seller gives written notice to each of the seller's clients regarding: (1) the proposed sale; (2) the client's right to retain other counsel or to take possession of the file; and (3) the fact that the client's consent to the transfer of the client's files will be presumed if the client does not take any action or does not otherwise object within ninety (90) days of receipt of the notice. 5 If a client cannot be given notice, the representation of that client may be transferred to the purchaser only upon entry of an order so authorizing by a court having jurisdiction. The seller may disclose to the court in camera information relating to the representation only to the extent necessary to obtain an order authorizing the transfer of a file. A review of the applicable Ethics Rules in California and elsewhere, indicates a focus on the provision of reasonable notice to the client before transferring or otherwise disposing of client files. The benchmark notice period is unequivocally and consistently 90 days. While each of the Ethics Rules contains a requirement of preserving certain portions of a client file for a period of 5 or 7 years after the termination of representation, none of these rules applies to a law firm undergoing a dissolution or a liquidation in the context of a chapter 11 proceeding In Wisconsin, a client s consent to the transfer of its files is presumed after 45 days \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

28 Similar Relief Granted in Other Cases Relief similar to that requested herein has been sought and granted in cases involving the liquidation/restructuring of a law firm. See, In re: Brobeck, Phleger & Harrison LLP, No DM7 (Bankr. N.D.Ca. May 7, 2004)(granting chapter 7 trustee s motion to release or dispose of law firm s client files in accordance with notice procedures); In re Landels, Ripley & Diamond, No DM (Bankr. N.D.Cal 2007); Coudert Brothers LLP, No RDD (S.D. NY 2006) (authorizing chapter 11 debtor s disposition of client files located in US and abroad upon written notice to former clients); See also, In re: The McCabe Group, No WCH (Bankr. E.D.Ma. 2005)(authorizing chapter 7 trustee s abandonment of law firm s client files after lone objector failed 10 to appear at hearing). 6 The Debtor believes that the File Disposition Procedures are as protective as PACHULSKI STANG ZIEHL & JONES LLP A TTORNEYS A T LAW S AN F RANCISCO, CALIFORNIA those proposed and approved by the Brobeck, Landels, Coudert and McCabe bankruptcies. V. CONCLUSION For these reasons, and based on the authorities cited above, the Debtor respectfully requests that this Court grant the Motion in its entirety and approve the File Disposition Procedure. Dated: April 3, 2009 PACHULSKI STANG ZIEHL & JONES LLP By /s/ Miriam Khatiblou John D. Fiero Kenneth H. Brown Miriam P. Khatiblou Teddy M. Kapur Attorneys for The Debtor Ehrman LLP, Debtor and Debtor in Possession Copies of these unreported orders as well as the corresponding applications are attached hereto as Exhibit A \DOCS_SF: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURES

29 Exhibit A

30 WILLIAMP. WEINTRAUB, ESQ. (SBN ) KENNETH H. BROWN, ESQ. (SBN ) GABRIELLE L. ALBERT, ESQ. (SBN ) PACHULSKI, STANG, ZIEHL YOUNG & JONES P.C. 650 California Street, 15th Floor San Francisco, CA Telephone: (415) Facsimile: (415) Attorneys for Landels Ripley & Diamond, Debtor and Debtor In Possession 7 u g,; (/) lzl., Z 0 <kl 11 CI z r :I: 13 lzl N CI" z CI.l :;;l (/)...:I :I: u < In re LANDELS, RIPLEY & DIAMOND, a California limited liability partnership, Debtor. Federal Tax J.D. # UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Chapter 11 Case No.: DM NOTICE OF MOTION AND MOTION FOR APPROVAL OF FILE DISPOSITION PROCEDURE; MEMORANDUM OF POINTS AND AUTHORITIES Date: Time: Place: Judge: December 8, :00 a.m. 235 Pine Street, 22 nd Floor San Francisco, CA Hon. Dennis Montali TO THE UNITED STATES TRUSTEE, AND PARTIES IN INTEREST: PLEASE TAKE NOTICE that on December 8,2000, at 10:00 a.m., or as soon thereafter as the matter may be heard, in the Courtroom ofthe Honorable Dennis Montali, United States Bankruptcy Court, 235 Pine Street, 22nd Floor, San Francisco, California, Landels Ripley & Diamond, a limited liability partnership, the debtor and debtor in possession herein ("LRD" or the "Debtor"), will, and hereby does, move the court for an order approving the Debtor's records retention program pursuant to Bankruptcy Code section 363(b)(l). III III S13S2-o02\DOCS_SF: NOTICE OF MOTION AND MOTION FOR APPROVAL OF FILE DlsPosmON -1- PROCEDURE; MEMORANDUM OF POINTS & AtITHORlTIES

31 d c.: CI) lzl 11 Z., 0 12 Cl Z Z oil ::I 3: 0 o... ><...:1::; I- 13 -< tj...l co :z:: >< 0 I:ZI.. U % NOIlU 14 -<lr.o < :z: E-o a::l CI) t;;l CI)...l ::I :z:: tj < By this motion, the Debtor seeks approval of its proposed procedures concerning future retention ofclient and firm files. This motion is based upon this Notice ofmotion and Motion, the Memorandum of Points and Authorities, the Declaration of Theodore A. Griffinger, Jr., filed concurrently herewith, all pleadings and papers on file in this case, the oral argument of counsel, and any evidence submitted to the Court prior to or during the hearing on this motion. PLEASE TAKE FURTHER NOTICE that any opposition or other response to the Motion must be served upon the undersigned and the original and one copy of such papers with proofofservice must be filed with the Clerk ofthe United States Bankruptcy Court at 235 Pine Street, 19th Floor, San Francisco, California, 94104, NOT LATER THAN FIVE (5) DAYS PRIOR TO THE SCHEDULED HEARING DATE. PLEASE TAKE FURTHER NOTICE that, pursuant to Local Bankruptcy Rule (b), if no timely response or opposition to the Motion is received, the Court may enter an order granting the relief requested in the Motion without further notice and without a hearing. WHEREFORE, the Debtor respectfully requests that the Court enter its order (1) approving the Debtor's procedures for its firm and client files; and (2) granting the Debtor such other and further relief as may be appropriate under the circumstances Dated: November _, 2000 PACHULSKI, STANG, ZIEHL, YOUNG & JONESP.C. By _ Gabrielle L. Albert Attorneys for Landels Ripley & Diamond, LLP, Debtor and Debtor in Possession NOTICE OF MOTION AND MOTION FOR APPROVAL OF FILE DISPOSITION \DOCS_SF: PROCEDURE; MEMORANDUM OF POINTS & AUTHORITIES

32 d en 10 Z 0 Od 11 < z 0 :; 12 >< < u..r :z: 0 i:l 13 N :c e5 Z lao < :c l-< fi.l i;;: en..j :z: u < 14 (f.l < MEMORANDUM OF POINTS AND ALTTHORITIES I. INTRODUCTION Landels Ripley & Diamond, LLP, the debtor and debtor in possession herein (the "Debtor" or "LRD") practiced law for almost eighty (80) years. During that time, it accumulated and stored thousands ofboxed ofrecords with both client and firm files. The Debtor currently maintains those files at great expense to the estate. In order to deal with these records, the Debtor proposes to implement a file disposition procedure. II. STATEMENT OF FACTS} On June 16, 2000 (the "Petition Date"), LRD filed a voluntary petition for relief under chapter 11 ofthe Bankruptcy Code. Pursuant to sections 1107(a) and 1108 ofthe Bankruptcy Code, LRD remains in possession of its property and is managing its affairs and operating its business as debtor in possession. Prior to June 30, 2000, LRD was a law partnership actively engaged in the practice oflaw. LRD had offices in San Francisco and Sacramento, California. It began operations in the 1920's, and grew to over eighty (80) full time attorneys by LRD specialized in environmental litigation while also representing clients in a number of other areas of specialization. After almost eighty (80) years ofpractice, starting in December, 1999, LRD began to experience serious attrition problems. Prior to the Petition Date, LRD actively pursued merger opportunities to help re-build its attorney population. These efforts ultimately failed in late May, 2000, when the partnership's prime merger candidate decided to discontinue further negotiations. When the merger failed to proceed, LRD's remaining partners determined that their business was no longer viable as structured because LRD could not maintain necessary levels of partnership compensation with its existing overhead and attorney census and could not recruit attorneys in the numbers required to rebuild the census due in large part to negative publicity concerning its condition. Therefore, the partners voted to attempt a reorganization as a much smaller firm while liquidating all unnecessary assets. If a reorganization was determined not to 1 All facts stated herein are supported by the Declaration of Theodore A. Griffinger, Jr. (the "Griffinger Declaration"). NOTICE OF MOTION AND MOTION FOR APPROVAL OF FU..E DISPosmON \DOCS_SF: PROCEDURE; MEMORANDUM OF POINTS & AUTHORITIES

33 1 be feasible, the partners voted to liquidate and dissolve LRD. LRD ceased the practice of law on 10 2 June 30, III. 4 FILE DISPOSITION PROCEDURE The Debtor has formed the Landels Ripley & Diamond, LLP File Disposition Procedures 5 (the "File Disposition Procedure"), a true and correct copy of which is attached hereto as Exhibit 6 "A." In summary, the File Disposition Procedure provides for the disposition client files and 7 LRD firm files as follows: 8 9 A. Client Files 1. Clients With On-Going Matters: Clients with on-going matters were notified via letter when the attorney handling their matter left LRD and given the option of having their files transferred with their attorney to hislher new law firm or having their files transferred directly to them or their designee. A copy of the general form ofthe letter is attached to the File Disposition Procedure as Exhibit "I." 2. Clients Without On-Going Matters: LRD is attempting to obtain instructions from all clients without on-going matters as to the future disposition of their files. These clients are sent letters advising them that they have two options for the disposition oftheir files: (1) having the files transferred to the client at the client's expense, or (2) leaving the files with LRD to be destroyed without further notice. A copy of the general form ofthe letter sent to clients without anyon-going matters is attached to the File Disposition Procedures as Exhibit "2." There are two means by which closed files can be deemed ready for destruction. The client can respond to LRD's letter seeking its instructions, expressly authorizing LRD to destroy the files. Alternatively, the client may simply fail to respond to the LRD's inquiry, either after receiving the letter or where the letter is returned to LRD as undeliverable. Under either ofthe latter scenarios, LRD is ethically entitled to destroy the files since it has provided reasonable notice and an opportunity for the client to respond, or it has made reasonable efforts to attempt to contact the client before destroying closed files. Thus, unless a client directs that files are to be NOTICE OF MOTION AND MOTION FOR APPROVAL OF FILE DlSPosmON \DOCS_SF: PROCEDURE; MEMORANDUM OF POINTS &. AUTHORITIES

34 cj on!oj 11 Z 0 </Cj cc 12 CI Z l:i 0 OcC'" ;><..:1::;... cc 13.< u..:i... :I: >- 0!oJ" tj... ;I: N.. ;l: I: cc < -< :z f-< cc en en r;;l en..:i l:i :I: 0 -< o tj returned to the client or transferred to a third party, LRD may begin destroying closed files after 30 days have elapsed from the date the closed file disposition letter was sent to the client. However, to provide clients with additional time in which to respond to LRD's letter, no closed files will actually be destroyed until at least 60 days have elapsed from the date the closed file disposition letter was sent. B. LRD Firm Files All accounting and finance-related records will be maintained for six (6) years. This includes general ledger, charts ofaccounts, accounts payable, accounts receivable, check registers and cancelled checks, depreciation schedules, payroll records, budgets and financial reports. All records pertaining to tax audits, tax returns and workpapers will be maintained for six (6) years after the completion or final audit ofthe returns. At this time, we anticipate that we will maintain records regarding pension reporting and benefits programs for a period ofup to 30 years. Personnel files (attorney and staff), medical files, safety and security records, and OSHA records will be maintained for a period ofup to ten (10) years. EEO, Affirmative Action, and COBRA records will be maintained for three (3) years. Records regarding workers' compensation claims will be maintained for two (2) years after the employee's termination ofemployment. Resumes and applications for employment will be kept for a period ofone (1) year. 1-9 (Immigration Reform Act) records will be kept for one (l) year following termination of employment. IV. ARGUMENT The Court should approve the File Disposition Procedure under the authority of Bankruptcy Code section 363(b), which provides, "[t]he trustee, after notice and a hearing, may use, sell or lease, other than in the ordinary course ofbusiness, property ofthe estate." In determining whether to authorize a use ofproperty ofthe estate under this section, courts require the debtor to show that a sound business purpose justifies its action and are cautious not to NOTICE OF MOTION AND MOTION FOR APPROVAL OF Fll.E DISPOSITION \DOCS_SF: PROCEDURE; MEMORANDUM OF POINTS & AUTIiORJTIES

35 d en 11 l.:i Z 0 -< 12 t:) z i oc ::> 0 >< -< 13 u...i :r:.; l.:i N z c:; 14 r.i Z li. z en -< 'I) l;;l en ::> :r: u < Q..o substitute the court's business judgment for the debtor's. See, In re Crystal Apparel, 207 B.R. 406,410 (S.D.N.Y. 1997) ("[C]ourts must exercise great deference in reviewing a corporations desire to pay its Managers.); Gilson, Executive Compensation and Corporate Governance: An Academic Perspective, 792 PLIICorp. 647, 673 (1992) ("Courts are least suitable monitor of compensation decisions... [B]ecause these are "local" decisions that not only lack a determinative framework, but depend on the peculiarities ofparticular companies and particular industries, it is difficult to imagine how a court bent on monitoring compensation decisions would proceed."). The File Disposition Procedure is a reasonable and efficient means ofhandling the Debtor's thousands of files and should be approved. The relief requested in this Motion is also authorized by Bankruptcy Code 105(a) which provides that... "[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions ofthis title." 11 U.S.C. 105(a). The purpose of Bankruptcy Code 105(a) is "to assure the bankruptcy courts power to take whatever action is appropriate or necessary in aid ofthe exercise oftheir jurisdiction." 2 Collier on Bankruptcy, , at (15 th ed. rev. 1999). Thus, 105 essentially codifies the Bankruptcy Court's inherent equitable powers. See Management Tech. Com. v. Pardo (In re Management Tech. Corp.), 56 B.R. 337, 339 (Bankr. D.N.J. 1985) (indicating that court's equitable powers are derived from 105). Based thereon, the Debtor respectfully request that the Court approve File Disposition Procedure. III III III III III III III III 28 NOTICE OF MOTION AND MOTION FOR APPROVAI. OF m.e DISPOSITION \DOCS_SF: PROCEDURE; MEMORANDUM OF POINTS & AUTIlORITIES

36 v. CONCLUSION For these reasons, and based on the authorities cited above, the Debtor respectfully requests that this Court grant the Motion in its entirety and approve the File Disposition Procedure. c:,) CI) 11 I>l Z 0 dl:i 12 Cl z i :J '" 0 :>t 13 tj..i :I: 0 I>l lil Cj N 14 li: c5 z i5 "" en CI)..I 0 :I: t) li: en Dated: November _' 2000 PACHULSKI, STANG, ZIEHL, YOUNG & JONES P.C. By_-: Gabrielle L. Albert Attorneys for Landels Ripley & Diamond, LLP, Debtor and Debtor in Possession \DOCS_SF: NOTICE OF MOTION AND MOTION FOR APPROVAL OF Fo..E DISPOSITION -7- PROCEDURE; MEMORANDUM OF POINTS &. AUTHORITIES

37 cj fi). lij Z 0 11 < C1 Z 111. :J 3: 0 0<'" >o...l::; 12 I- < -< U..J... ::c z _ 13 N'" o u z g :t <!-' < 14 en a:l i:2 fi)..j :J :I: 0 < l:l WILLIAM P. WEINTRAUB, ESQ. (SBN ) KENNETH H. BROWN, ESQ. (SBN ) GABRIELLE L. ALBERT, ESQ. (SBN ) PACHULSKI, STANG, ZIEHL YOUNG & JONES P.C. 650 California Street, 15th Floor San Francisco, CA Telephone: (415) Facsimile: (415) Attorneys for LANDELS RIPLEY & DIAMOND, LLP Debtor and Debtor in Possession In re LANDELS RIPLEY & DIAMOND LLP, a limited liability partnership, Debtor. Federal Tax LD. No UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Chapter 11 Case No DM ORDER APPROVING FILE DISPOSITION PROCEDURE Date: Time: Place: Judge: December 8, :00 a.m. 235 Pine Street, 22 nd Floor San Francisco, CA Hon. Dennis Montali The Debtor's Motion for Approval offile Disposition Procedure (the "Motion,,)1 filed by Landels Ripley & Diamond, LLP, a California limited liability partnership, the debtor and debtor in possession in the above captioned bankruptcy case ("LRD" or the "Debtor"), duly came on for a hearing before the undersigned United States Bankruptcy Judge on December 8, 2000 at 10:00 a.m. (the "Hearing"). Gabrielle L. Albert of Pachulski, Stang, Ziehl, Young & Jones, P.C. appeared on behalf oflrd. Other appearances were noted on the record of the hearing on the Motion. 1 Defined terms herein have the meaning ascribed in the Motion \DOCS_SF: ORDER APPROVING FILE DISPOSITION PROCEDURE

38 u 0.: CIl lzl Z.., t,) Z ::J li: OJ 13 ;:.."" -< t,)!< -"" Cf.) t:2 CIl o-j ::J :t: u et: The Court has reviewed and considered the Griffinger Declaration and the Motion, all other papers filed in connection with the Motion, and the representations and statements of counsel at the Hearing. Based upon the foregoing, and the Court finding that notice ofthe Hearing was duly given and appropriate under the circumstances, and upon the record of the proceedings, and other good cause appearing therefor, IT IS HEREBY ORDERED THAT: 1. The Motion is granted in its entirety; 2. LRD is authorized to implement the File Disposition Procedure; and 3. LRD is authorized to transfer files according to client instructions and/or destroy files according to the terms ofthe File Disposition Procedure without further order ofthis Court. Dated: Submitted by: PACHULSKI, STANG, ZIEHL, YOUNG & JONES P.C. By_----="...--:-...--=-=---=---:-:-::--- _ Gabrielle L. Albert Attorneys for Landels Ripley & Diamond, LLP, Debtor and Debtor in Possession UNITED STATES BANKRUPTCY JUDGE o-j.. :t:>lzl'"... li: N ORDER APPROVING FILE DISPOSITION PROCEDURE

39 1 HENNIGAN. BENNEIT & DORMAN LLP Bennett J. Murphy (SBN ) 2 James O. Johnston (SBN ) 601 South Figueroa Street, Suite Los Angeles, California Telephone: (213) Facsimile: (213) Counsel for Ronald F. Greenspan Chapter 7 Trustee for Brobeck, Phleger &Harrison UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICf OF CALIFORNIA 10 SAN FRANCISCO DIVISION 11 In Ie ) Case No IS-DM7 ) 12 BROBEC, PHLBOER &. HARRISON LLP ) Chapter7 ) 13 Debtor. NOTICE OF MOTION AND MOTION FOR ) ORDER (A) AUTHORIZiNG AND 14 ) DIRECTlNGTHEABANDONMENTOF. ) mes AND OTHER MATERIALS OF ls ) FORMER BROBECK CLIENTS; ) (B). AUl'HORIZlNG AND DIRECTING THE 16 ) TRUSTEE TO TRANSMlT NOTICE OF ) ABANDONMENT TO FORMER CLIENTS; 17 ) AND (C) GRANTING RELATED RELIEF ) 18 ) Hearing ) 19 ) Date: March 21, 2005 ) Time: 9:30 a.m.. 20 ) Place: Hon. Dennis Montali ) Courtroom ) 235 Pine Street ) San Francisco, CA : ') 23 BEAJUNG: On March 21,2005, at 9:30 a.m., or as'soon thereafter as the matter may be 24 heard, in Courtroom 22 located at 235 Pine Street, San Francisco, CA 94104, the Honorable Dennis 25 Montali win hold a bearing on this Motion \v2 NOTICE OF MOTION AND MOTION FOR ORDER (A) AlmJORlZlNG AND DJRECTJNG THE ABANDONMENT OP F'ILBS AND 011IP.R. MAiBlUALS OF FORMER BROBECK CUBNTS; (B) AUTHORlZINO AND DlRBCTlNG metrustbb TO TRANSMIT NonCE OF ABANDONMENT TO formatcijbntsi.and.(c) OIV.NTINQ.8BLAtaJ>., JS.mP -SCASE NO gDM7 Case: Doc #: 1016 filed: 02/14/200 Page I of I

40 1 OBJECTIONS: Pursuant to Rule (c)(1) of the Bankruptcy Local Rules of the United 2 States District Court for the Northern District of California. any written ObJectioD to the rellef 3 requested in ihfs Motion must be med with the Bankruptcy Court and served upon counse for 4 Ronald F. Greenspan, Chapter 7 Trustee lor Brobeck, Pbleger'" Harrison LLP at the address 5 listed above so as to be received at least five (5) days prior to the date of ':he hearing. Any such 6 written objection must be accompanied by any declarations or memoranda of law the party objecting 7 wishes to present in support of its position. Only those parties who have timely filed and served 8 responses will be heard at such bearing. Ifthere is no timely objection to the requested relief, the 9 Court may enter an order granting such relief without further notice or haring. 10. RELIEF REQUESTED: By this Motion, the Trustee hereby moves this Court, pursuant to 11 section 554 of the Bankruptcy Code, for an order, substantially in the fonn ofthe proposed order 12 attached hereto as Exhibit A, authorizing the Trustee to (i) immediately abandon any interest of the 13 estate in and to the Client Files (as that term is defined herein); and (ii) transmit by United States 14 mail, postage prepaid, notice of the foregoing abandonment (such notice indicating that fonner 15 clients should contact third parties in possession of the Client Files directly) (the Abandonment 16 Notice") to those foimer Brobeck chents that were sent notice of the Brobeck liquidation 17 Committee's document retrieval program in lune and August This Motion is based upon the record in this case, the accompanying Declaration of Ronald 19 F. Greenspan (the "Greenspan Declaration") and the facts and argument set forth below. 20 BACKGROUND On September certain of Brobeck's creditors petitioned this Court to 22 commence an involuntary bankruptcy case against Brobeck under the Bankruptcy Code. An Order 23 for Relief in this bankruptcy case was granted on October 10, 2003, and on October 14, 2003, 24 E. Lynn Schoemnann was appointed as interim ljustee. 2S 2. On November , Ronald F. Greenspan was elected as Trustee by the creditors 26 in this bankruptcy case. Following such election, on December 5, 2003, the Office of the United \v2 1 NOTICE OF MOnON AND MOTION FOR ORDER (A) AunIORIZING AND DIRECTING nib ABANDONMBNTOF FILES AND OTHER MATBRIALS OP FORMER BROBECK CLlBNTSi (B) AunIORJZINO AND DIRE!CTlNG THE TRUSTBB TO TRANSMIT NOTICS OP ABANDONMENT TO PORMBR CLIBNTS AND.(C) GRANTING RELAT2D RELIBF - CASE NO DM1 Case: Doc #: 1016 Filed: 02/14/2005 Page 2 of 9

41 1 States Trustee filed a certification ofmr. Oreenspan t s election as Trustee. Thereafter, on 2 December 12, 2003, the Office ofthe United States Trustee executed a Notice ofelection and 3 Qualification as Trustee with respect to Mr. Greenspan Soon after such qualification, the Trustee became aware that files and other materials 5 belonging to fonner clients of Brobeck (together, the ''Client FUes tj ) were held by a variety of 6 parties in a variety of locations across the United States. The entities in possession of Client Files 7 included: (j) Morgan, Lewis & Bockius, which had occupied space in Brobeck's fonner San 8 Francisco office; (ii) former landlords of Brobeck, who had taken possession of space fonnerly 9 leased to Brobeck; and (iii) other parties who had provided "off-site storage" services to Brobeck 10 before its dissolution. While the scope and extent of the Client Files were not immediately apparent 11 to the Trustee, over a period of months the Trustee learned that the physical quantity of the Client 12 Files was simply staggering. All told, the CHent Files in question add up to nearly 200, standard-size document boxes. according to records reviewed by the Trostee or by professionals at 14 the Trustee's request In interviews with fonner members of the Brobeck Liquidation Committee (the 16 "Liguidation Committee"), in particular James L. Miller, the Trustee learned that the LiqQidation 17 Committee and other Brobeck partners had made a concened effort to return the Client Files to their 18 owners following Brobeck's dissolution in early In particular, the Liquidation Conunittee had 19 set up and publicized a procedure for handling client requests for the return of <:=lient Files. This 20 consisted of naming a fanner Brobeck partner as the point ofcontact for each of Brobeck's former 21 offices. and creating a system for client requests to be directed to the contact partner, as well as the 22 partner responsible for the relationship with fonner Brobeck. client Z \v NOTICE OP MOTION AND MOTION FOR ORDER (A) AUTHORIZING AND DIRECTING THE' ABANDONMENT OF FILES AND 0'1HER MATERIA13 OF FORMER BROBECK CLIENTS; (8) AUTIlORlZING AND DIRBCTING nib TRUSTEE TO TRANSMIT Nones OF ABANDONMENT TO FORMER CLlENTS t AND (C) GRANTING RELATED RELIEP CASE NO DM7 Case: Doc #: 1016 Filed: 02/14/2005 Page 3 of 9

42 1 S. The TIUstee also learned that three mass mailings have been made to Brobeck's 2 fanner clients in 2003 concerning, inter alia the status of Client Files. Two of these advised 3 Brobeck clients of the details of the system established for the return of their Client Files: a 4 June 2003 mailing to 16,000 clients at addresses maintained in Brobeck's computers, and an 5 August 2003 mailing to approximately 10,500 clients In late 2003 and early 2004, the Trustee talked with Mr. Miller about the success of 7 the program. Mr. Miller stated that a high volume of requests from fonner clients had been received 8 and processed under the program, and, as of the fall of 2003, requests continued to come in, though 9 at a diminished rate..accordingly, on or about March 3, 2004, the Trustee filed a motion 10 authorizing the return of client files, which motion was granted by order of this Court entered 11 May 7t 2004 [Docket No. 281] (the ' Client Files Order"). The puipose of the Client Files Order 12 was to remove any concern that Brobeck's bankruptcy would inhibit the continued operation of the 13 prepetition program for retwn of Client Files Requests for Client Files continued into early 2004, through with decreasing 15 frequency. In the course of supervising FTI's responses to Client File quests, the Trustee learned 16 that certain off-site storage finns were not always cooperating with 'clients in the retrieval and 17 release ofdocuments, and that at least one firm, Sentry Storage in San Diego, had exercised self help 18 and destroyed all or substantially all of the Client Files in its possession Given the reduced pace of requests for client files, in the fall of 2004, the Trustee 20.requested ofmr. Miller that he provide a declaration supporting a motion to authorize the 21 abandonment of Client Files. Unfortunately, by that time non-administrative matters had begun to 22 dominate the Trustee's discussions with members of the Liquidation Committee, including matters 23 of some controversy. These controversial matters included the Trustee's ultimately successful 24 demand for a turnover of files by Brobeck's former counsel, Pachulski, Stang, Ziehl, Young, Jones 25 & Weintraub (the 'Pachulski Firm Jt ), and the disqualification of the Pachulski Firm from 26 representation adverse to Brobeck, and the Trustee's motion to approve a settlement with Clifford \v2 3 NonCB OF MonON AND MOTION POll ORDa (A) AUTHORlZINO AND DlRECl'lNG THB ABANDONMBNT OFPD..BS AND OTHER MATERIALS OF FORMER BROBECK CLIBNTS: (B) AUl1fORIZINO AND DJRBCTJNG nibtrusnm TO TRANSMITNOTICB OF ABANDONMENT TO POC1BNTS' AND.(C) ANTINQ..RBLA'J}!P. CASE NO S-DM7 Case: !Joe #: 1016 Filed: 02/14/2005 Page 4 of 9

43 S Chance. In seeking Mr. Miller t s cooperation to subt the declaration laying out the full etajls of the Liquidation CoI1'UJ1ittee's document retrieval program, the Tmstee had hoped that the various controversies would be set aside and that goal of minimizing prejudice to former clients would be shared by Mr. Miller, and other former members ofthe Liquidation Committee. 9. Accordingly, both personally, and later through counsel, the Trostee sought a specific written declaration from Mr. Miller on numerous occasions beginning in October, Counsel to the Trustee supplied Mr. Miller's counsel with an itemized a list ofquestions to be addressed by Mr. Miller in his declaration. At no lime did Mr. Miller expressly refuse to cooperate, but rather he repeatedly sought to delay his assistance for a variety of reasons. 10. In the meantime, individuals at FTI, under the Trusteets supervision had discussion with two document storage finns, Datasafe and Recall, concerning the mechanism to be used for providing a final opportunity for clients to retrieve their property. The two offsite storage finns had filed applications for payment of an administrative expense in the middle of 2004, but had deferred any litigation based on the Trustee's offer to work with them to define their part, jncuding their demand for payment from the estate or from fodder clients, for costs related to the Client Files. These discussions did not bear fruit, and the company's applications for paent of administrative expenses have been set for,hearing. 11. In light ofthe scheduling ofthe storage fmn t s applications for payment of administrative expense, the Trustee has detennined to no longer to wait for cooperation from Mr. Miller or other members from the Liquidation Committee. Despite the lack of detailed infonnation concerning the Liquidation Committee program, the Trustee believes that enough is known about the program to support the relief requested herein, and that in any event such relief is appropriate under the law and fact. RELIEF REQUESTED AND THE BAS THEREFOR 12. By this Motion, the Trustee hereby moves this Court for an order, pursuant to section 554 of the 'Bankruptcy Code, authorizing the Trustee to (i) immediately abandon any interest \v2 4 NOTICE OF MonON AND MOTION FOR ORDER (A) AUTHORJZINO AND DJRBCTING nib ABANDONMENT OFFn.ES AND 0'1'HER MATERIALS Of FORMER BROBECK CLIBNTS; (B) AUlHORlZlNG AND DIRBCTING nib TRUSTBB TO TRANSMIT NOTICB OF ABANDONMENT TO FORMER CLIENTS AND.(C) Q11NG RBLATED RELlEP CASB NO S-DM7 Case: Doc #: 1016 Filed: 02/14/2005 Page 5 of 9

44 1 ofthe estate in and to the Client Files; and (ii) transmit the Abandonment Notice to those fonner 2 Brobeck clients that were sent notice of the Brobeck Liquidation Committee's document retrieval 3 program in June and August A. AbandonmeDt of the Client FUes is Appropriate under tbe CireumstaDces Section 554 ofthe Bankruptcy Code provides that "[alfter notice and a hearing, the 6 trustee may abandon any property of the estate that is burdensome to the estate or that is of 7 inconsequential value and benefit to the estate." 11 U.S.C Section 554 ofthe Bankruptcy 8 Code uires two showings. Fint. the assets at issue must constitute property of the estate. See 11 9 U.S,C. 541 and 554; see also EstateofMcGahren v. Heck (In re Weiss), 111 F.3d 1159, 1167 (4 rb 10 Cir. 1997); In re Xonics, Inc., 813 F.2d (7 th Gr. 1987); In re Delash, 260 B.R. 4,13 11 (Banke. B.D. Cal. 2000). Second. the property to be abandoned must burden the estate or have 12 inconsequential value and benefit to the estate. See Ybarra v. Boeing N. Am., Inc. (In re 13 Ybarra), 29 B.R. 609, 618 (B.A.P. 9 th Cir. 2003); see also In re Delash, 260 B.R. at In reviewing the Trustee's decision to abandon the Inventory. the Court need only 15 ensure that the decision to abandon the property reflects a sound business judgment made in good 16 faith. See In re Moore, 110 B.R. 924,927 (Bankr. C.D. Cal. 1990) euaccording]y. when called 17 upon to review contested applications for abandonment, a court must focus its examination upon the 18 reasons underlying the trustee's determination and affirm a decision which reflects a business 19 judgment made in good faith y upon a reasonable basis and within the scope of his authority under 20 the Code!" (quoting In re Wilson, 94 B.R. 886, 888 (Bankr. B.D. Va. 1989». Thus. if a ttustee's 21 business judgment has been reasonably exercised, a court should approve the abandonment of 22 assets. See Moore, 110 B.R. at The Client Files are likely not considered property of the Brobeck estate. In 24 California. it is we]] settled that the Client Piles belong to former Brobeck clients rather than 2S Brobeck. See t e.g. t Rose v. State Bar, 49 Cal. 3d 646, 655 (1989) (u.. th.ere can be no doubt that 26 the balance of an attorney's Jitigation file is the property afthc client and must be sunendcred \v2 S NOTICE OF ManON AND MonON FOR ORDBR A) AtmlORJZING ANDDJRBCI'ING THE ABANDONMENT OP FILES AND OTHBR MATERrALS Of FORMER BROBECK CLIBNTS; (8) AumOlUZlNO AND DIRECTING THB TRUSTBS 10 TRANSMIT NOTICE OF ABANDONMENT. TO FORMBR CLIENTS; AND (C) GRANTING RELATED RP.LlBP - CASE NO DM7 Case: Doc #: 1016 Filed: 02/14/2005 Page 6 of 9

45 1.promptly upon request to the client or the client's new counsel once the representation has 2 tenninated."; Weiss v. Marcus 51 Cal.App.3d 590,599 (1975) ("The 'work product t ofan attomey 3 belongs to the client, whether arnot the attorney has been paid for his services.") (citations omitted). 4 Out ofan abundance ofcaution, howcvertthe Trustee seeks to abandon the estate's interest, if anyt 5 in the Client Files. The burdensome nature of whatever interest the estate mayor may not have in 6 the Client Files requires that the Trustee immediately take affirmative steps to ensure that the estate 7 no longer has any obligations with respect to the continued storage andlor preservation of the Client 8 Piles. The Trustee submits that abandonment of the Client Files pursuant to section 554 of the 9 Bankruptcy Code is reasonable and appropriate under the circumstances There is no question that the Client Files are burdensome to the estate. The best 11 evidence for this is the demand, which the Trustee disputes, that the Brobeck estate pay literally 12 hundreds ofthousands ofdollars in storage fees alleged to be owed under pre-dissolution contracts 13 between the companies and Brobeck.J The cost ofdefending such claims above will create an undue 14 burden with no corresponding benefit to the estate or its creditors Moreover, the Client Files have no value, or have only inoonsequential value, to the 16 banlauptcy estate. The estate is not engaged in the practice of law, and has no need for the files as a 17 business matter. Based on conversations FI'I personnel have had with the storage firm's 18 representatives, and other research, any scrap value of the Client Files as recycled matter would be 19 inconsequential compared to the cost of removing such files from the existing location and 20 delivering same to a recycler. 21 B. Transmission'ofthe Abandonment Notice is a Reasonable Means of InformingFormer 22 Brobeek CUents of the AbandoDment of the Client Files As this Court is aware, the Trustee has had concerns since the outset ofthe case that 24 the Liquidation Commjttees program for the tum ofclient Files should run its course. While the 2S As set forth in the Objection to the application for payment for administrative expenses, 26 neither of the storage companies have produced express contract supporting their claim to payment. In any event, any such contract was long ago rejected by operation of 27 section 36S{d)(l) of the Bankruptcy Code \v NOTICE. OF MOTION AND MOTION FOR ORDER (A) AunIORlZlNO AND DlRECI'ING THE ABANDONMENT OF FILBS AND OTHBR MATBRIALS OF FORMBR. BROBECK CLlENTS; (B) AlJTHORlZlNG AND DIRECTING nm 'frustes TO TRANSMIT NonCE Of ABANDONMENT ca:p8#?j1«trm/ft21f6ase':i8-'11(fm7

46 1 Trustee did not believe that he had any obligation to do so as a legal matter, the TlUStee delayed 2 seeking immediate authority to abandon any interest to the Client Files so that fonner clients would 3 have an ample opportunity to take advantage ofthe program With the passage of time, however, requests for the return of Client Files have 5 diminished and few, if any, have been received in recent months. Accordingly. the Trustee no 6 longer has a strong concern that possible destruction of the Client Files after abandonment would 7 prejudice any former clients of Brobeck. 2 To be swe, however, the Trustee proposes that the Court 8 authorize the transmission of the Abandonment Notice, via United States mail. postage prepaid, to 9 those fonner Brobeck clients that wen: sent notice of the Brobeck Liquidation Committee'ls 10 document retrieval program in June and August Among other things, the Abandonment Notice will inform former Brobeck clients: 12 a. Of the contact infonnation for the entity believed to have or have 13 had possession of Client Files; 14 b. Of the former client's opportunity to examine and retrieve the 15 contents ofits CJient Files from those in possession; and 16 c. Of the Trustee's abandonment of the estates interest, if anyr in the '17 Client Files and the likely destruction of the Client Files by third parties 18 absent contrary instructions from a fonner client The Trustee submits that the transmission of the Abandonment Notice is a reasonable 20 means of locating fonner Brobeck clients and is appropriate under the circumstances. Further, 21 providing a Ufinal call" to the fonner clients would be a good practie so that all concerned can have 22 greater assurance that Client Files needed by fonner clients will not be inadvertently destroyed. 23 Obviously, any former client receiving the Abandonment Notice will need to deal separately with 24 the document storage finn or other entity in possession of the Client Files. To this end, the Trustee The Tmstee believes that any obligations of former Brobeck attorneys to -fanner Brobeck 27 clients under tq the Rules of Professional Conduct have been satisfied by the actions taken by the Liquidation Committee in accordance with its document retrieval program \v NonCE OF MonON AND ManON FOR ORDER CA) AUmORJZING AND DIRBCl1NO TIm ABANDONMENT OF FILES AND OI"HBR MATERIALS OP FORMER BROBECK CUBNTS; (8) AunlOIUZINO AND DIRECTING THE TRUSl'BB TO TRANSMIT Nonca OF ABANDONMENT TO PORMER CLJBN"l'S; AND (C) ORANTlNO RELATED RBLIBP - CASB NO S-DM7 Case: Doc #: 1016 Filed: 02/14/2005 Page 8 of 9

47 s has agreed to assist former clients in identifying the proper third party to contact in this regard. However, in light of the lack of benefit to the estate or its creditors, the Trustee requests that th' estate should not be required to bear any cost associated with the disposition of the Client Files, whether or not sought by fonner Brobeck clients. NO PRIOR REQUEST 22. No previous request for the relief sought herein has been made to this or any other Court. CONCLUSION WHEREFORE, for the foregoing reasons, the Trustee respectfully requests that the Court enter an order, substantially in th fonn attached hereto as Exhibit A, granting the relief requested herein and such other and further relief as the Court deems just and proper DATED: February rl 2005 HENNIGAN, BENNETT & DORMAN ILP 601 South Figueroa Street, Suite 3300 Los Angeles, California DA. BY:== Bennett J. Murphy Counsel for Ronald F. Greenspan. Chapter 7 Trustee for Brobeck, Phleger & Hamson LLP \v2 8 N011CB OF MOTION AND MOTION FOR ORDER (A) AU11fOlUZING AND DIROCTING nm ABANDONMENT Of filbs AND OTHER MATERIALS OF FORMER BROBECK CLIBNTS; (8) AU11IORlZlNG AND DIRBCTINO nmtrustee TO TRANSMIT NOTICE OF ABANOONMBNT Ca19:D#:cmpW'B2}e6fASE 92brgDM7

48 PAC,ULSKI Entered on Docket April OS, 2005 GLORIA L. FRANKLIN. CLERk u.s BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA I 61'J, BENNEIT & DORMAN LLP - Hennett-1-Murphy (SBN ) Signed and Filed' Ik April (SBN )., -60-l-Seuth-Figueroa Street, Suite 3300 emclq){.{ghnston 3 If.e.NiDJis, California J,, J.. _-telephone;-(213) JlY 4 ofacsimile: (213) DENNIS MONTALI LAW F FTC E S U.S. Bankruptcy Judge 1.\tn:ElS[.l l8umel\f Ronald F. Greenspan, ; I m{er'7'trustee for Brobeck, Phleger & Harrison LLP wii. II'k;TO:'\. DE l"c\-\' Y JIU<. y 150 cain cl)r:'ilja STREET 15th floc SAN FA' JSc.:o CALIfOR ra UNITED STATES BANKRUPTCY COURT TELE!'.9IN. 415/ NORTHERN DISTRICT OF CALIFORNIA.'.o\CSIMILE 15/ SAN FRANCISCO DIVISION 11 In re ) Case No S DM7 ) 12 BROBECK, PHLEGER & HARRISON LLP ) Chapter 7 ) 13 Debtor. ) ORDER (A) AUTHORIZING AND ) DIRECTlNG THE ABANDONMENT OF 14 ) FILES AND OTHER MATERIALS OF ) FORMER BROBECK CLIENTS; 15 ) (B) AUTHORIZING AND DIRECTING THE ) TRUSTEE TO TRANSMIT NOTICE OF 16 ) ABANDONMENT TO FORMER CLmNTS; ) AND (C) GRANTING RELATED RELIEF losal\'cf,s 1Ul001N' MONICI'III.\'O. ) 11th FLOC' LOS J1'8:E. :5 ) ) Hearing C,\UFORN, } Date: March 21,2005 TELEI'\2r-:: 310/ ) Time: 9:30 a.m. ) Place: Hon. Dennis Montali I'ACSIMILI! \10/ ) Courtroom 22 DlAl An ) 235 Pine Street 919 N3aTfi ",\KTSTREEr ) San Francisco, CA th FLOO:.l. ), L PD'B118" f WILMING N DEl,\WA]{ /l705 ThO. be h C th "M' &'. 0 d A h.. T ICllur3lp. d.' I",nrl IS matter commg..ore t e ourt on e onon lor r er ut OTJzmg rustee to rf.t.f.'2:-: I FAcstih h QM Closed Client Files Pursuant To Section 554 ofthe Bankruptcy Coden (the "Motion U ),?oil\" NEW""rdRI filed by Ronald F. Greenspan, the chapter 7 trustee herein (the "Trustee"'); the Court having 36th 780 TJ;'D 80J 'J:U review ed th e MOth otion, e recar d' In tho IS case, an d t h e Or eenspan D ec 1 aratlon;. t he C ourt fl m d' 109 that NEW VORl< "EWJR" Tf.I.F.1f': P,\CSIMIl. IOO17 2U2.., "'561 "'101! 12/ ORDER APPROVING THE SALE OF BROBECKtS LIMITED PARTNERSIDP INTERESTS IN (A) ENTERPRISE PARTNERS V, LP, TO BOULDER TELCOM PARTNERS IV; AND (B) ENTERPRlSE -n.rtners VI, LP t TO BOULDER TELCOM PARTNERS V FREE AND CLEAR OF LIENS, CLAIMS \\'r.: ww '.pszjlaw.c0}{noencumbrances PURSUANT TO 11 U.S.C. 363(B) AND (F)- CASE NO S-DM7

49 (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2), (c) notice ofthe Motion was reasonable and appropriate under the circumstances, (d) the reliefrequested in the Motion is in the best interest of the bankruptcy estate and within the sound business judgment ofthe Trustee; and (e) the transmission ofthe Abandonment Notice is a reasonable means of locating former clients in an effort to advise such fonner clients of(i) the contact information for the entity believed to have or have had possession ofclient Files; (ii) the former client's opportunity to examine and retrieve the contents of its Client Files from those in possession; and (iii) the Trustee's abandonment ofthe estates interest, ifany, in the Client Files and the likely destruction ofthe Client FlIes by third parties absent contrary instructions from a fanner client; and the Court having detennined that the legal and factual bases set forth in the Motion establish just cause for the reliefgranted herein; IT HEREBY IS ORDERED THAT: 1. The Motion is GRANTED. 2. The Trustee is hereby authorized, effective as ofthe Abandonment Effective Date: (i) to abandon any interest ofthe estate in and to the Client Files under Section 554 ofthe Bankruptcy Code; and (ii) to disclaim any claim to a right to possession ofthe Client Files. "Abandonment Effective Date" shaij mean the first business day which is twenty (20) days fanowing completion of the mailing ofthe Abandonment Notice by the Trustee. 3. The Trustee is hereby further authorized to transmit the Abandonment Notice, the fonn ofwbich is attached hereto as Exhibit A and is hereby approved, via United States mail, postage prepaid, to those fonner Brobeck clients that were sent notice ofthe Brobeck Liquidation Committee's document retrieval program in August The Trustee shall provide notice ofthe completion ofthe mailing ofthe Abandonment Notice to those third parties believed by the Trustee to be in possession ofthe Client Files (the "Custodians'') at the address known to the Trustee, or to their counsel ofrecord in this case All capitalized tenns not otherwise defined herein shall have the meaning ascribed to them in \y2-2 ORDER APPROVING THE SALE OF BROBECK'S LlMlTED PARTNERSHIP INTERESTS IN (A) ENTERPRISE PARTNERS V. LP, TO BOULDER TELCOM PAR'fNERS IV; AND (B) ENTERPRISE PARTNERS VI, LP. TO BOULDER TELeOM PARTNERS V. FREE AND CLEAR OF UENSt CLAIMS AND ENCUMBRANCES PURSUANT TO II U.S.c. II 363(8) AND (F) CASE NO S DM7

50 The Custodians are hereby granted immediate relieffrom the automatic stay to provide notice or take such other actions as may be necessary or appropriate under non-bankruptcy law regarding disposition ofthe Client Files as abandoned property. **END OF ORDER* the Motion \y2 ORDER APPROVING THE SALE OF BROBECK'S LIMITED PARTNERSHIP INTERESTS IN (A) ENTERPRISE PARTNERS V, LP, TO BOULDER TELCOM PARTNERS IV; AND (B) ENTERPRISE PARTNERS VI, LP, TO BOULDER TELCOM PARTNERS V, FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES PURSUANT TO 11 U.S.C. 363(B) AND (F) - CASE NO DM7

51 Klestadt & Winters, LLP Hearing Date: December 20,2006 at 10:00 a.m. Tracy L. Klestadt (TK-3591) Objections Due: December 15,2006 by 4:00 p.m. Sean C. Southard (SS-2825) Patrick J. Orr (PO-7617) Attorneys for Coudert Brothers LLP Debtor and Debtor in Possession 292 Madison Avenue, 17 th Floor New York, NY (212) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRlCT OF NEW YORK In re: Chapter 11 COUDERT BROTHERS LLP, Case No (RDD) Debtor. APPLICATION FOR ORDER APPROVING AND AUTHORIZING IMPLEMENTATION OF PROCEDURES FOR DISPOSmON OF CERTAIN RETAINED CLIENT FILES TO: THE HONORABLE ROBERT D. DRAIN, UNITED STATES BANKRUPTCY JUDGE: Coudert Brothers LLP, debtor and debtor in possession in the above captioned bankruptcy case ("Coudert" or "Debtor"), by and through its counsel, Klestadt & Winters, LLP, as and for its application ("Motion") for an order pursuant to sections 105(a), 363(b), 541 and 554 oftitle 11 ofthe United State Code, 11 U.S.C. 101 et. (the "Bankruptcy Code") and Rules 6004 and 6007 ofthe Federal Rules ofbankruptcy Procedure ("Bankruptcy Rules") authorizing and approving the Debtor's proposed procedures for disposing ofcertain of its client files (the "Client File Procedures"), respectfully sets forth as follows: - 1

52 JURISDICTION AND VENUE 1. This Court has jurisdiction over this proceeding pursuant to the provisions of28 U.S.C. 1334(a) and (b) and the General Referral Order of the United States District Court for the Southern District ofnew York, dated July 10, Venue is proper in this Court pursuant to the provisions of28 U.S.C. 1409(a). 3. This proceeding is a core proceeding as described and defined under and pursuant to the provisions of28 U.S.C. 157(b) (2) (A) and (M). BACKGROUND 4. Coudert was an international law firm founded in the 1850s. Since 2000, it had as many as 28 offices in 15 countries, with its headquarters in New York City. 5. On September 22, 2006 (the "Petition Date"), Coudert commenced the instant case (the "Bankruptcy Case") by filing a voluntary petition in this Court for relief under chapter 11 ofthe Bankruptcy Code and an order for reliefwas simultaneously entered. 6. While no longer engaged in the practice of law, as a debtor in possession, Coudert continues in control of its remaining operations and management of its property pursuant to sections 1107(a) and 1108 ofthe Bankruptcy Code. No trustee or examiner has been appointed in the Debtor's case. 7. On October 10, 2006, the United States Trustee appointed an Official Committee of Unsecured Creditors (the "Committee"). The Committee has retained the law firm of McCarter & English, LLP as its counsel. 8. At a meeting of the equity partners ofcoudert held on August 16, 2005, a special authorization was enacted by which Coudert determined to commence the process of winding -2

53 down its business operations in an orderly fashion (the "Wind-Down"). 9. The objectives of the Wind-Down included (a) selling all or substantially all of the assets of any or all of the offices of the firm to other firms or service providers, in order to maximize the value ofthe firm's assets and business; (b) ensuring that all work on Coudert client matters continued uninterrupted prior to, during and after each transfer out of the firm's control, (c) to the extent possible, placing all firm personnel with other organizations without interruption of their compensation and benefits, and (d) preserving and protecting the firm's assets for the benefit of its creditors in the first instance and, thereafter, the partners of the firm as their interests may appear. 10. As a result of the Wind-Down, substantially all of Coudert's attorneys became affiliated with other law firms. In a number of instances, Coudert was able to negotiate and consummate the sale of its practice groups and/or office locations. 11. In most cases, as each former Coudert attorney transferred to other firms, that attorney's open client files were transferred as well. However, during the ISO-plus year history of Coudert, innumerable client files have been retained and stored by the Debtor, in some manner, for various reasons, including the compliance with applicable rules of professional responsibility. The Debtor remains in control of the retained client files of Coudert, though many files are not in the physical possession ofthe firm. 12. While the retained client files are located throughout the world, in various offices and/or storage facilities, their locations can be separated into three general groups, the New York Files, the Storage Files and the Miscellaneous Files (all defined below). 13. As ofthe Petition Date, the Debtor's principal place ofbusiness was 1114 Avenue of the Americas, 41st floor, New York, New York (the "New York Office"). The Debtor intends - 3

54 to move to smaller quarters in January, While the Debtor has completed the sale of its New York operations to Baker & McKenzie LLP, the New York Office still houses many ofcoudert's closed client files. This group of files constitutes the first group ofretained client files (the "New York Files"). 15. The second group consists oftens ofthousands ofboxes ofclient files stored at offsite, third-party storage facilities at various locations for which monthly maintenance fees continue to accrue (the "Storage Files"). 16. Finally, given the worldwide breadth of Coudert's operations, the Debtor believes that client files may exist at locations throughout the world, whether in successor law firms, or otherwise, for which it is simply impossible for the Debtor to identify the specific location of each without expending significant resources (the "Miscellaneous Files" and, collectively with the New York Files and the Storage Files, the "Retained Client Files"). RELIEF REQUESTED 17. As a result ofthe foregoing, the Debtor is seeking approval of, and authority to implement, certain procedures whereby the Debtor may begin to dispose ofcertain ofthe Retained Client Files, the maintenance ofwhich has become burdensome to the estate. 18. Specifically, the Debtor is seeking a finding by this Court that the File Disposition Procedures, as defined and set forth below, are fair and equitable and, under the circumstances, necessary for the Debtor to carry out its mandate as a debtor under chapter 11. The Debtor also seeks a finding that the File Disposition Procedures strike an appropriate balance between the Debtor's fiduciary duties to its creditors and any alleged ethical or professional obligation ofthe Debtor to Coudert's fonner clients. Finally, the Debtor seeks the authority to immediately implement the File Disposition Procedures, as set forth herein. -4

55 BASIS FOR RELIEF (i) Abandonment of Client Files is in Best Interests of Estate 19. The Retained Client Files constitute property of the Debtor's estate pursuant to section 541 ofthe Bankruptcy Code, since the Debtor maintains an interest in certain ofthe information contained in the Retained Client Files. Most ofthe Retained Client Files are not only unnecessary for the Debtor's chapter 11 process, but their maintenance imposes a significant ongoing burden to the estate's effective administration. 20. Section 554 ofthe Bankruptcy Code provides bankruptcy debtors with a vehicle by which property deemed "burdensome" or of"inconsequential value and benefit" to the estate, may be abandoned. Under different circumstances, this often utilized provision would be ideal for disposing ofmost ofthe Retained Client Files, which, have no value or benefit to the Debtor. 21. However, in consideration ofthe potential ethical and fiduciary responsibilities applicable to law firms such as Coudert if liquidated outside of the bankruptcy context, the Debtor has chosen to proceed in an abundance of caution before moving solely under section 554. (ii) Intersection with Applicable Ethical and Professional Considerations 22. Domestically, the Retained Client Files are located in jurisdictions that apply one of three sets of ethical rules, which address a law firm's handing of closed client files. They are (a) New York, which has adopted the Model Code of Professional Responsibility; (b) California, which has its own Rules of Professional Conduct; and (c) any other state in which the Debtor practiced law), which have adopted the ABA Model Rules ofprofessional Conduct. The ethical 1 The only other state that has not adopted the ABA Model Rules ofprofessional Conduct is Maine, which, like California, has adopted its own Rules ofprofessional Responsibility. However, the Debtor has never maintained an office for the practice of law in Maine and does not believe that any Retained Client Files exist there at this time. - 5

56 rules of these three domestic jurisdictions are referred to collectively herein as the "Ethical Rules." 23. While the Debtor is not currently a lawyer or a law finn engaged in the practice of law and thus subject to the ethical rules ofany ofthe jurisdictions 2 where the Retained Client Files may be located, the Debtor is sensitive to the aspirational nature of these rules and their suggested applicability to all matters concerning the practice of law. Therefore, in establishing procedures for the disposition of the Retained Client Files, the Debtor has looked to these Ethical Rules for guidance while balancing the presently existing, and, therefore, prevailing, fiduciary duties to its creditors and the estate. 24. With respect to the various international jurisdictions where Coudert practiced, it is simply too large a task to analyze and apply the ethical rules affecting the disposition of Retained Client Files in each such locale. The Debtor submits that, by using the domestic Ethical Rules as a guide, in combination with the various notice efforts set forth below, the interests ofcoudert's fonner international clients are adequately protected. (a) New York Model Code of Professional Responsibility 25. The New York Model Code of Professional Responsibility does not specifically address the disposition ofclient files in the context ofthe dissolution ofa law finn. However, certain provisions, when taken together, are instructive. 2 The New York Lawyer's Code ofprofessional Responsibility defines "law firm" as including, but not limited to, "a professional legal corporation, a limited liability company or partnership engaged in the practice of law, the legal department ofa corporation or other organization and a qualified legal assistance organization." The California Rules ofprofessional Conduct define "Law Firm" as: "(a) two or more lawyers whose activities constitute the practice oflaw, and who share its profits, expenses, and liabilities; or (b) a law corporation which employs more than one lawyer; or(c) a division, department, office, or group within a business entity, which includes more than one lawyer who performs legal services for the business entity; or (d) a publicly funded entity which employs more than one lawyer to perform legal services." The ABA Model Rules ofprofessional Conduct defines "firm ll or ulaw firm u as "a lawyer or lawyers in a law partnership, professional corporation, sole proprietorship or other association authorized to practice law; or lawyers employed in a legal services organization or the legal department of a corporation or other organization." - 6

57 26. Disciplinary Rule DR [ a] ofthe New York Model Code of Professional Responsibility, which deals with the sale ofa law practice, provides, in relevant part: C. Written notice of the sale shall be given jointly by the seller and the buyer to each of the seller's clients and shall include information regarding: 1. The client's right to retain other counselor to take possession of the file; 2. The fact that the client's consent to the transfer of the client's file or matter to the buyer will be presumed if the client does not take any action or otherwise object within 90 days of the sending of the notice, subject to any court rule or statute requiring express approval by the client or a court; 27. Disciplinary Rule [ ] ofthe New York Model Code ofprofessional Responsibility provides, in relevant part: D. Required Bookkeeping Records. A lawyer shall maintain for seven years after the events which they record: 1. The records of all deposits in and withdrawals from the accounts specified in DR [ ] (B) and of any other bank account which concerns or affects the lawyer's practice of law. These records shall specifically identify the date, source and description of each item deposited, as well as the date, payee and purpose of each withdrawal or disbursement. 2. A record for special accounts, showing the source of all funds deposited in such accounts, the names of all persons for whom the funds are or were held, the amount ofsuch funds, the description and amounts, and the names ofall persons to whom such funds were disbursed. 3. Copies of all retainer and compensation agreements with clients. 4. Copies of all statements to clients or other persons showing the disbursement of funds to them or on their behalf. 5. Copies of all bills rendered to clients

58 6. Copies of all records showing payments to lawyers, investigators or other persons, not in the lawyer's regular employ, for services rendered or performed. 7. Copies of all retainer and closing statements filed with the Office of Court Administration. 8. All checkbooks and check stubs, bank statements, prenumbered canceled checks and duplicated deposit slips with respect to the special accounts specified in DR 9-102(B) and any other bank account which records the operations of the lawyer's practice of law. 9. Lawyers shall make accurate entries of all financial transactions in their records of receipts and disbursements, in their special accounts, in their ledger books or similar records, and in any other books of account kept by them in the regular course of their practice, which entries shall be made at or near the time of the act, condition or event recorded. 10. For purposes of DR [ ] (D), a lawyer may satisfy the requirements of maintaining "copies" by maintaining any of the following items: original records, photocopies, microfilm, optical imaging, and any other medium that preserves an image of the document that cannot be altered without detection. H. Dissolution of a Firm. Upon the dissolution of any firm of lawyers, the former partners or members shall make appropriate arrangements for the maintenance by one of them or by a successor firm of the records specified in DR [ ] (D). In the absence of agreement on such arrangements, any partner or former partner or member of a firm in dissolution may apply to the Appellate Division in which the principal office of the law firm is located or its designee for direction and such direction shall be binding upon all partners, former partners or mem bers. 28. Effectively, when taken in total, the above provisions would require attorneys to retain certain files for a period ofseven years after the closing ofa file or, in the instance ofa sale ofthe law practice, to provide a written notice to the client that the file will be transferred or otherwise disposed ofwithin ninety (90) days ofthe sending ofsuch notice. The client's consent will be presumed ifno alternative disposition request is received from the client within that time. - 8

59 (b) California Rules of Professional Conduct 29. The California Rules ofprofessional Conduct are equally silent on this discrete issue, but do also set forth similar requirements for the tennination of employment and/or the sale or transfer of a law practice which are equally instructive. 30. Rule 2-300, which relates to the sale or transfer of a law practice, requires the attorney to provide ninety (90) days written notice to the client that such a transfer is proposed and that the client may take possession ofthe client file or retain other counsel ifit so chooses. If no response is received within 90 days, then the client's consent to the proposed transfer is presumed. 31. Rule also provides, in relevant part that, upon the termination of the attorney's employment, said attorney shall "promptly release to the client, at the request ofthe client, all the client papers and property. 'Client papers and property' includes correspondence, pleadings, deposition transcripts, exhibits, physical evidence, expert's reports, and other items reasonably necessary to the client's representation, whether the client has paid for them or not..." (c) ABA Model Rules ofprofessional Conduct 32. The ABA Model Rules of Professional Conduct articulate three rules which are informative to the handling of client files in similar but not directly applicable situations. 33. Rule Safekeeping Property sets forth in relevant part as follows: (a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of [five years] after termination of the representation. - 9

60 follows: 34. Rule Declining or Tenninating Representation sets forth in relevant part as (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred. The lawyer may retain papers relating to the client to the extent permitted by other law. 35. Finally, Rule Sale ofpractice oflaw sets forth in relevant part as follows: A lawyer or a law firm may sell or purchase a law practice, or an area of law practice, including good will, if the following conditions are satisfied: (c) The seller gives written notice to each of the seller's clients regarding: (1) the proposed sale; (2) the client's right to retain other counselor to take possession ofthe file; and (3) the fact that the client's consent to the transfer of the client's files will be presumed ifthe client does not take any action or does not otherwise object within ninety (90) days of receipt of the notice. Ifa client cannot be given notice, the representation of that client may be transferred to the purchaser only upon entry of an order so authorizing by a court having jurisdiction. The seller may disclose to the court in camera information relating to the representation only to the extent necessary to obtain an order authorizing the transfer ofa file. 36. A review ofall three sets ofthe applicable Ethics Rules indicates a focus on the provision of"reasonable notice" to the client before transferring or otherwise disposing ofclient files. The benchmark notice period is unequivocally and consistently 90 days. While each ofthe Ethics Rules contain a requirement ofthe preserving ofcopies ofa client file for a period of5-7 years after the termination ofrepresentation, none ofthese rules appears to have contemplated - 10

61 the complete dissolution ofa law firm. (d) Similar ReliefGranted in Other Cases and Bar Association Opinions 37. While, to date, no court has issued an opinion discussing the specific intersecting issues currently before the Debtor, relief similar to that requested herein has been sought and routinely granted in cases involving the liquidation/restructuring ofa law firm See In re: Brobeck, Phleger & Harrison LLP, No DM7 (Bankr. N.D.Ca. May 7, 2004)(granting chapter 7 trustee's motion to release law firm's client files in accordance with far less cautious procedures than those proposed by the Debtor); see also In re: The McCabe Group, No WCH (Bankr. E.D.Ma. 2005)(authorizing chapter 7 trustee's abandonment of law firm's client files after lone objector failed to appear at hearingi. The Debtor believes that the File Disposition Procedures are far more protective than those proposed and deemed appropriate by courts in the vast majority ofthe cases where such reliefhas been granted in the past. FILE DISPOSITION PROCEDURES 38. In order to address this discrete issue as it applies to the Debtor's case, the Debtor has prepared a set ofprocedures, which it believes adequately addresses the underlying public policy at the core ofthe Ethical Rules while allowing it to rid itself ofthe burdensome Client Files which continue to impair the effective administration of its estate. 39. These proposed procedures (the "File Disposition Procedures") and a brief explanation ofthe rationale behind each, to the extent, required, are set forth as follows: No Upon the entry ofan order approving the File Disposition Procedures, substantially in the form annexed hereto, the Debtor and/or its claims agent, shall send a copy of the "Notice of Intent to Dispose of Client Files", substantially in the form attached hereto as Exhibit A, to all current and former partners of Coudert via regular mail. Note: While the Debtor is not subject to the Ethical Rules, the Debtor is not seeking a J Copies ofthese unreported orders as well as the corresponding applications are attached hereto as Exhibit B. - 11

62 ruling with respect to the e.thical obligations ofthe individual partners who mayor may J not be responsible for each particular Retained Client File. By putting each fonner partner on notice ofthe File Disposition Procedures, each attorney may make his/her own determination as to what ethical obligations, if any, may apply. No.2. - The Debtor and/or its claims agent shall make reasonable efforts to send a copy of the "Notice ofintent to Dispose of Client Files" via regular mail to those former clients whose files may be included in the Retained Client Files and for whom the Debtor has current contact information. Note: Given the remarkable scope ofcoudert's operations, both in tenns oflongevity and geography, the Debtor is simply uncertain as to the exact location ofall ofthe finn's files as well as the identification and address of each fonner client. However, the Debtor is able to identify names and addresses related to Retained Client Files that were created as new matters beginning in 1993 through the Petition Date. The Debtor is unclear whether such names and addresses remain valid as of the date ofthis Motion, but such infonnation represents the best available to the Debtor. No.3. - The Debtor shall publish the "Notice ofintent to Dispose ofclient Files" in the global edition ofthe Wall Street Journal. Note: The Debtor believes that by publishing notice in the referenced publication, which has a combined readership ofwell over two million, the Debtor will provide adequate notice of the File Disposition Procedure"s and any other approach would simply be impracticable. No.4. - The "Notice ofintent to Dispose of Client Files" shall advise that the Debtor may be currently in possession ofcertain client files, which it intends to dispose of in the administration of its chapter 11 bankruptcy case. No.5. - To claim and retrieve a client file, an interested party shall complete and return a File Retrieval Form which can be found at or by contacting the Debtor's counsel at: Klestadt & Winters, LLP 292 Madison Avenue, 17 th Floor New York, New York, Tel: (212) Fax: (212) Note: The File Retrieval Form shall require the applicant to provide information sufficient for the File Administrator to (i) initiate a search for the file and (ii) verify, at least initially, the identification ofthe party seeking the file. No days after the last date of publication or mailing of the "Notice of Intent to Dispose of Client Files", whichever is later, those Retained Client Files for which - 12

63 no File Retrieval Form has been received shall be deemed abandoned by the former client. Note: The 90 day notice period is tailored to mirror the requirement of the Ethical Rules that such notice period be provided to a client in the event ofa transfer of a file or the termination ofemployment. While none ofthe Ethical Rules address the Debtor's specific situation, the Debtor believes that such notice period is reasonable and adequate under the circumstances. No.7. - Furthermore, ninety (90) days after the last date of publication or mailing of the "Notice of Intent to Dispose of Client Files", whichever is later, those Retained Client Files for which no File Retrieval Form has been received shall be deemed abandoned by the Debtor without the need for further order of this Court. As such the Debtor will be permitted to dispose of the Client Files in the manner it deems fit. Note: The Debtor seeks authorization ofthis provision in accordance with the Court's equitable powers and its powers under section 105(a) ofthe Bankruptcy Code. Specifically, the Debtor is seeking the kind of order contemplated by Rule 1.17(c)(3) of the ABA Model Rules of Professional Conduct, which allow a court with jurisdiction to permit the transfer ofa file ifnotice to the client is otherwise impossible. In addition, the Proposed Order includes a finding that the File Disposition Procedures do not violate any ethical or professional rules that would otherwise require a law firm outside ofthe bankruptcy context to retain copies offiles for a set number ofyears after the closing of the file. No.8. - To the extent a File Retrieval Form is timely received and to the extent the claimed file is a Retained Claim File that may be located by the Debtor, all information concerning the location of the file will be made available and such former client or attorney will be provided an opportunity to obtain the file and the same will not be disposed of or abandoned by the Debtor if adequate arrangements are made with the Debtor or the possessor of the file within sixty (60) days following timely receipt of the File Retrieval Form. Note: The efforts to retrieve a file for a former client upon request will result in a cost to the estate. The Debtor does not anticipate charging a fee for the retrieval ofa Retained Client File within its possession, but does reserve the right to withhold the Retained Client File ifthe Debtor maintains a claim against the former client for counsel. The Debtor will also charge a shipping and handling fee to deliver Retained Client Files in its possession. However, the Debtor is not in physical possession ofall Retained Client Files and certain storage facilities where Retained Client Files are located may charge retrieval fees in order for the former client or attorney to retrieve the same. The Debtor will not pay any retrieval fee to a storage facility or any other third party fee to deliver or facilitate the Retained Client File to a party. No.9. - Notwithstanding the authority granted to the Debtor to abandon a Retained Client File and/or the timely receipt of a File Retrieval Form, the Debtor, in consultation with the Committee and their respective professionals, are authorized to make - 13