Dissolution, Heller Ehrman, Layoffs

Heller Ehrman: Anatomy of a Dissolution

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It’s official: Heller Ehrman is dissolving. We have no desire to pile on, but major firms don’t close their doors everyday.

So, how does the dissolution process work exactly?

The first thing Heller is required to do by law is to give notice to all their employees under the Worker Adjustment and Retraining Notification Act (WARN). Heller complied with this requirement this afternoon:

I regret to inform you that The Firm has adopted a plan of liquidation and will shut down substantially all of its operations on or about November 28, 2008. At the time of the shutdown, the employment of The Firm’s employees will be permanently terminated. Until then, please be aware that The Firm has work for you and expects you to report to work. Employees will be paid full salary and benefits until the shutdown. Where applicable, employees with accrued but unused vacation time may be scheduled for vacation prior to November 28.

You do not have displacement or bumping rights for other positions within The Firm. However, in order to conduct an orderly liquidation, The Firm may continue to employ a very limited number of employees after the date of the shutdown. If you wish to be considered for such work, please notify me by email; The Firm will let you know about past November 28 work within the next few days.

This letter constitutes notice to you pursuant to statute. As a terminated employee, you may be entitled to certain benefits, which will be the subject of a separate communication. The shutdown is being treated as a plant closing under relevant law, and includes the termination of employment of employees employed at 333 Bush Street, San Francisco, California 94104.

In the event you require additional information, please feel free to contact [redacted]

Additional analysis of Heller’s breakup, after the jump.


According to figures provided at Heller Highwater, Heller has $118 million in accounts receivable, against $50 million in loan debt. Assuming that Heller can collect on all or most of these accounts, they should have more than enough money to pay their employees during the 60-day window.

Vacation time poses a slightly different problem. Employees with outstanding vacation days are entitled to be paid for those days. While some of our commenters have asked “why would these people continue to show up for work,” it is in their best interest to do so. As Heller Highwater notes:

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[I]f you have accrued a large amount of vacation time, it is in the shareholders’ best interest to reduce that amount of money to which you are legally entitled and which must be paid upon your termination;

[I]f between now and November 28th there is not enough work for you in your position or your department that is not your problem – you need to make yourself available for work each day and making sure work is available is up to management.

But while associates and support staff begin “Operation Shut Down,” others inside and outside of the firm are trying figure out how this happened to one of the most respected West Coast law firms. One of our readers had an interesting theory:

[D]uring the past 8-10 years, the firm was ultimately converted from a close collection of California attorneys who worked together with the primary goal of practicing law (i.e., a law firm) to a collection of east and west coast attorneys who were more interested in making money (i.e., a business that practiced law) to increase revenues and boost profits. Consequently, over the past 8-10 years, Heller morphed from being a “kinder, gentler, west coast” BigLaw firm to a firm that was trying so hard to move (culturally, financially, etc) to NYC. Apparently, the effort ran out of gas and Heller ended up getting stuck somewhere in the Midwest (metaphorically, that is).

We encourage others to share their opinions and thoughts as Heller goes supernova before our eyes.

WARN Act Notice [Heller Highwater]

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