Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.
The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28. Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.
Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.
Of course they don’t admit liability. Still, $20 million is a lot of dough. Who’s on the hook for that?
Obviously, things are not well in Pennsylvania. Ballard Spahr has canceled its 2010 Summer Program. Dechert is laying people off. Drinker Biddle is changing the nature of the Biglaw experience. WolfBlock … does not exist.
So it’s not surprising that people are becoming concerned about another titan of the Philadelphia market, Blank Rome. The firm has cut associate salaries, and it did lay off 79 people back in March.
On Wednesday, multiple rising 2Ls at Penn Law received information that led them to believe that Blank Rome was pulling out of on-campus interviewing at Penn. That made others speculate that Blank Rome’s entire 2010 summer program was in jeopardy.
But sources at the firm — including some partners — contend that the firm is going full steam ahead with its 2010 Summer Program, which will include recruiting at Penn. A firm spokesperson furnished Above the Law with this response:
I can confirm that we are currently scheduled to recruit at Penn and that we will be continuing our summer program.
How did so many Penn students get spooked about the Blank Rome recruiting situation? We investigate after the jump.
It’s almost Independence Day! And the invisible hand that guides our robust, capitalistic system continues to exert significant downward pressure on the salaries of law firm associates. The crushing economic logic opined by some Brit — who would have gotten his butt whupped at Yorktown with all the rest of them — named Adam Smith inexorably leads to today’s announcement by Blank Rome:
The legal industry continues to evolve in the midst of challenging economic conditions. As we work to continue to position Blank Rome strongly for the future, we have reviewed and decided to reset compensation for our associates, with particular emphasis on the first few classes.
Uh oh. I think the redcoats are coming:
Effective July 17, 2009, pay will reflect a starting salary for new associates being reduced from $160,000 to $145,000 in New York; from $145,000 to $130,000 in Philadelphia and Princeton; and from $150,000 to $135,000 in Washington, DC and Wilmington.
This news annoyed our Washington D.C. tipsters most. Back in 2007, we reported that Blank Rome did not raise Washington D.C. associates to $160K. But the firm is scaling D.C. down today. A D.C. tipster tells us:
Wait. The firm didn’t raise us up during the good times, but is all too eager to push us down in the bad times. I’m so outraged I will …
Whatever, what I am going to do?
Come on, what would the founders say to that? You could at least dump some firm stationery into the Potomac.
After the jump, Blank Rome explains that that it was just following what the market would bear.
The National Law Journal reports that eight firms have opened up offices in Los Angeles during the recession. Is this really going to work? We’ve already established that the San Francisco legal market is about as relevant as an aging hippie. Are we sure that L.A. is the promised land?
According to the NLJ, firms have been capitalizing on the glut of available lawyers in California:
To do so, many firms, such as Snell & Wilmer, Atlanta’s Alston & Bird, Philadelphia’s Blank Rome and Lathrop & Gage of Kansas City, Mo., took the opportunity to snag lawyers who recently became available, largely due to dissolutions and economic conditions.
It’s one of those days. We told you that we expected Blank Rome layoffs to come today. And here they come.
Blank Rome just confirmed that it has laid off 79 people: 27 associates, 52 staff.
And that’s not all. The firm is pushing back start dates for incoming first year associates until “at least” January 2010. No word on whether there will be any kind of extra money for those not-quite-yet first years.
But wait, there’s more. Blank Rome will also be scaling back its 2009 summer program from ten weeks to six.
I know that Friday the 13th is supposed to be a bad luck day, but honestly somebody needs to make a Saw-style movie about Thursday the 12th.
Now that K&L Gates finally announced its layoffs, it’s time to adopt a menacing flight pattern over another firm. We are hearing that Blank Rome is preparing to announce layoffs.
Our sources are telling us that 25 – 50 attorneys will be let go from Blank Rome late this week or early next week. We don’t have a conference room schedule handy to pinpoint the date, but the firm is buzzing that Thursday, March 12th is the most likely day.
The firm has not responded to Above the Law’s multiple requests for comment.
This would be the second round of layoffs at Blank Rome. Back in January, the firm laid off a number of associates and staff. As we saw yesterday, a lot of firms that have already made cuts are going back for seconds.
This round of layoffs is expected to focus on associates. According to some tipsters, that is very different than the last round.
As we noted in yesterday’s Morning Docket, even the New York Times has taken note of the salary freeze trend at law firms. The Times reached out to Above The Law’s own David Lat for the story:
Although many associates are angry about the freezes, others are relieved, said David Lat, founding editor of AboveTheLaw.com, a blog about law firms and the profession.
“There is this sense that firms didn’t act prudently during the boom and now they are getting religion, and that it’s better late than never,” Mr. Lat said. “Many associates we have spoken to think the freeze probably saved jobs.”
At the beginning of the month, we did a round-up of firms that have frozen 2009 salary rates at 2008 levels. That list was 16 firms long. Since then, quite a few other firms have announced freezes. Due to frequent requests, we’re updating the round-up list since the number of firms with freezes (that we know of) has more than doubled, to 33 32. Check out the as-comprehensive-as-we-can-make-it list, after the jump.
Last night and this morning, tipsters informed us that significant layoffs were taking place at Blank Rome. A firm spokesperson is now able to confirm the news:
As we continue to focus on helping our clients manage through these challenging economic times, and in order to position the Firm for continued success in 2009, it is important that we take the necessary steps to adjust our attorney and staff complements in the context of our clients’ current and anticipated needs. These are purely economic decisions – this is a group of talented attorneys and staff who have made valuable contributions to our Firm.
Our tipsters report that at least 12 associates and staff have been let go so far. But:
Also, there is an unconfirmed report that when this ends the total of layoffs will be 50. Good lord.
The firm could not provide us with official numbers of how many people will be let go by the end of the day.
But we do understand that the layoffs will affect all departments and class years — we know some non-equity partners have already been shown the door. Blank Rome’s Philadelphia office was hardest it, but layoffs happened in New York as well.
Maybe if Mos Def would pay his bills, this wouldn’t be happening.
We’ve previously reported on law firms having difficulty getting clients to pay their bills. It’s not just happening to firms working on deals that go bust; it has also happened to a firm representing a celeb after his marriage went bust. From Am Law Daily:
Blank Rome is suing rapper/actor/activist Mos Def for over $60,000 in unpaid legal bills stemming from his 2006 divorce from Maria Yepes.
The couple ended their 10-year marriage that year in a Brooklyn court, with Judge Sarah Krauss pleading with them to settle their differences outside her courtroom.
Reports say that the Brooklyn-born Mos Def (real name: Dante Smith) owes the money to Blank Rome in the form of unpaid fees and retainers. The Emmy, Golden Globe, and Grammy award-nominated entertainer retained lawyers from the firm’s well-regarded matrimonial practice, which advises high-end clients on divorce, mediation, property distribution, paternity, visitation rights, and trusts and estates.
This is Mos Def’s second month in a row of legal troubles. In November, Las Vegas police issued an arrest warrant after Mos got in a scuffle with a photographer. In more bad news, his portrayal of Chuck Berry in the recently released music biopic extravaganza Cadillac Records was panned by the Los Angeles Times.
We wonder if this will make him rethink the title of his upcoming album, rumored to be titled Ecstatic.
Our continuing coverage of no offers suggests that a 90% offer rate is actually outstanding. Today we have news from two more firms that fell short of 90% but still made offers to the majority of their 2008 summer associates.
Our tipsters were right on the money with the information that Blank Rome no offered 4 summer associates out of a class size in the mid-20s. According to Blank Rome spokesperson Topper Ray:
Our 2008 summer associate class was comprised of 28 summer associates -24 2L’s and 4 1L’s. 20 out of 24 2L’s received offers.
Ray also confirmed that the 4 1Ls received invitations to summer with the firm next year.
In this market an 83% offer rate isn’t terrible, even though Blank Rome was able to extend offers to all of their 2007 summer associates. The news was a little worse at another Philadelphia powerhouse, Pepper Hamilton. According to Pepper Hamilton spokesperson Polly Coxe:
In 2008, Pepper Hamilton extended offers to 20 of 27 summer associates in Philadelphia (two students withdrew from consideration before we made offer decisions). Firm-wide, we made offers to 30 of 38 summer associates. This is approximately the same number of offers we extended the past two years.
More from the streets of Philadelphia after the jump.
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months (Robert Kinney and Evan Jowers will be in Hong Kong again March 15 to 23), and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.
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