Meltdown of a Highflier

Shortly after 2 p.m. on Jan. 30, staffers in the New York office of the law firm Brobeck, Phleger & Harrison LLP received an e-mail telling them to "please plan on attending" a firm-wide videoconference in about an hour and a half. Most believed they were being summoned to celebrate a merger with Morgan, Lewis & Bockius LLP--a combination that would have created one of the five largest firms in the U.S. Instead, they were told that talks had broken down and that Brobeck would be folding. Later that day, taps rang out over the office intercom in New York, while lawyers in other outposts sat shell-shocked. "Some people cried, others were pounding the [conference room] table," recalls one Brobeck lawyer.

It was a tragic ending for what had been until quite recently one of the most successful law firms in the country. Founded in 1926, Brobeck had spent decades building a well-balanced practice catering to a diverse group of blue-chip clients, including Wells Fargo Bank (WFC ), Baxter International (BAX ), Owens Corning (OWC ), Gap (GPS ), McKesson (MCK ), and Cisco Systems (CSCO ).