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   Rick Colosimo, 31 Jan 2003 @ 2:30pm

   
   

   Real estate risks didn't help

   During the boom, Brobeck made plans to move into new offices in several areas. In some cases, the old leases were not near expiry, and subtenants weren't found at the time. Once the boom subsided and the available office space in the Bay Area exploded, the firm was unfortunately saddled with two properties where it needed only one. It seems as though the firm was unable to mitigate (or even discounted) the real estate risk it assumed by doing an open-ended deal.
   That said, there's a fundamental difference between a dissolution of a law firm (indeed, most professional services firms) and a manufacturing firm. At the end of the day, there are very few assets that can be transferred to creditors; most of the value of the firm is in its people - and they can start working the next day somewhere else, even for the same partners. With a factory, the shareholders and the management can't open up the next day without going through the creditor who owns the factory.
   Disclosure: I feel bad for my former colleagues at Brobeck in Palo Alto, where I worked from 1999-2001.

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