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Belli's downward spiral began with two very costly breakups.
The first, in 1988, came in the form of a divorce that ended the marriage between Belli and his fifth wife, Lia, and drained Belli's personal income. The second, in 1993, ended the law partnership of Belli, Belli, Brown, Monzione, Fabbro & Zakaria. It was nearly as messy as the marriage breakup, with partners accusing one another of stealing clients and various other evil deeds. Before they were finished, the lawyers had spent nearly $2 million in legal fees. A settlement finally divided the multitude of legal cases under way at the firm, ending the war.
Belli's problems snowballed when the financial prize of a big case was held up in court. And, the firm began to have problems with angry clients who had wanted the name Melvin Belli on their court cases, but were not happy with what they got.
Finally, the great lawyer filed for Chapter 11 bankruptcy, with the intent of reorganizing his law firm and getting back on his feet. After the breakup of Belli, Belli, Brown, Monzione, Fabbro & Zakaria, Belli and his son Caesar became the Law Offices of Melvin Belli. But the firm was never formally organized as a business entity, so Belli and the Law Offices were financially one and the same, which meant that both went into bankruptcy together.
One of the firm's biggest assets -- a $200 million settlement Belli had won for victims of faulty breast implants made by Dow Corning Corp. -- was held up when Dow Corning filed bankruptcy, and therefore, so were the law firm's profits. Belli owed hundreds of thousands of dollars in back taxes, part of which stemmed from the Belli Building. The IRS had successfully sued Belli for gift taxes stemming from his transfer of the Belli Building into the names of two of his children. (Belli had contended that the transfer was a sale, completed at a date later than what the IRS found.)
By the time of the bankruptcy, the firm had more than 30 lawsuits filed against it, including one that resulted in a $3 million claim now pending in bankruptcy court. (The Belli firm had defended Joanna Moore, a Fremont teenager convicted of murdering her younger sister. The girl was later exonerated in a second trial, ordered because of negligence in the Belli firm's defense.) And, that's not to mention several former employees, including San Francisco Supervisor Alicia Becerril, who were banging on the door for their wages. A Sacramento lawyer won a $42,000 judgment against Belli for back wages and threatened to take his Rolls-Royce.
In public, the barrister played his bankruptcy as a temporary setback -- the firm was still owed income from some of its bigger legal cases -- but there was nothing temporary about it. Belli was ill with cancer of the pancreas and brain, and within months a federal judge declared the legal giant incapable of handling even his own law practice. Belli married for a sixth and final time in 1996 to longtime friend Nancy Ho, who'd once worked for him, and died 15 weeks later.
The profit from Belli's unfinished cases is nearly impossible to pin down but, despite Belli's empty pockets, could be as much as several million dollars, which was evident by the battle the cases sparked among lawyers.
When a law firm closes or files bankruptcy, its outstanding cases are taken over by other attorneys. But lawyers don't actually own clients, so they can't be bought and sold like so many heads of cattle. Instead, the outgoing firm notifies clients that another lawyer is available to take over, and clients generally take the recommendation.
Many of the big Belli law firm cases had already been split up once, when the partners of his longtime law firm separated. When the bankruptcy court parceled out Belli's share of those cases, Robert Lieff, and his firm, Lieff, Cabraser, Heimann & Bernstein, was the big winner. The firm took 350 breast implant cases -- Lieff had represented plaintiffs in the case, along with Belli -- as well as those cases involving victims of the Exxon Valdez oil tanker spill, which is awaiting appeal, and victims of the crash of Korean Airlines Flight 007, which was shot down by Soviet fighters in 1993. The firm also received Belli's pending tobacco cases and a judgment against the estate of the late Philippine President Ferdinand Marcos, in which Belli had sued on behalf of torture victims and won. A court in Hawaii has yet to divide the former president's assets, including a Swiss bank account, among the torture victims, the Philippine government, and Marcos' widow, Imelda. When that division is made, Lieff, Cabraser is expected to pay 50 to 90 percent of the legal fees owed back to the Belli estate.
Numerous other personal injury cases were given to attorney John Hill, a longtime Belli friend and former employee, for a similar fee-remittance arrangement.
These case-assignment arrangements were hotly contested by Caesar Belli and attorney Kevin McLean, who claimed, among other things, that they were partners in the Belli firm, and so some of the clients were theirs. Belli had maintained that Caesar and McLean were not partners, and the bankruptcy court has agreed. And David Bradlow, the bankruptcy examiner for Belli's estate, has in turn accused Caesar and McLean of interfering with the transition of clients.