After yesterday’s news that Thelen Chairman Stephen O’Neal was in talks to move to Howrey, the Thelen partnership met today.
That meeting is still ongoing, but early reports are that a partnership committee recommended dissolution to the full partnership.
The firm has been maintaining that they had a plan that would avoid dissolution ever since their proposed merger with Nixon Peabody fell through.
Update (5:05): As we understand it, Thelen has two different options from this point.
Option 1 is the plan they have arguably been pursuing: breaking up the firm practice group by practice group to interested parties. As we reported yesterday, this is the best option to save associate jobs. However, that plan is dependent on Thelen’s banks signing-off on the plan and maintaining their line of credit. Did Stephen O’Neal’s aggressive and ultimately public pursuit of his own lifeboat at Howrey scuttle that option? Once everybody is told that the managing partner could be leaving in ten days, why would other potential suitors compete for full Thelen practice groups? Instead, it’s easier to wait for an official dissolution and cherry-pick the rainmakers. This is what happened to Heller.
Option 2 is essentially what happened to Heller. If the full partnership accepts the recommendation and dissolves, this would likely trigger the WARN Act. As we know from the Heller situation, employees are entitled to 60 days notice. Many people predicted that Thelen would move to dissolve this week, last week one tipster told us that Thelen wanted to wrap up their operations before the end of the year. If true, that all but necessitates an official dissolution announcement this week. But, as Heller teaches us, just because you get 60-days warning doesn’t mean you get 60-days pay. We know that various Thelen associates were told that this type of dissolution was not going to happen. But … it appears to be happening.
We’ve spent the day collecting our Thelen rumors. This morning The Recorder reported that Thelen chairman Stephen O’Neal has been in talks to move to the D.C. firm Howrey. Apparently, he’s poised to take 30 attorneys with him.
The firm is set to hold an all partner meeting on Tuesday to discuss their options:
A much anticipated all-partner meeting is being held Tuesday, according to a Thelen partner, although the agenda hasn’t been made available to rank-and-file partners. The meeting had been set for last Thursday, but was rescheduled at the last minute.
“It’s certainly clear to us as industry observers that Thelen has reached a tipping point,” said William Nason, a recruiter with San Diego-based Watanabe Nason Schwartz & Lippman. “It’s amazing to us how quickly firms dissolve when they get to that point.”
Distinguishing Thelen from other dissolution targets after the jump.
The named plaintiffs are Laura Werth, a technology assistant in San Francisco who joined the firm in September 1996; Carl Goodman, a senior manager of business development in Seattle who joined the firm in September 2005; and Anna Scarpa, a manager of professional services who joined the firm in October 2006. Werth and Goodman were laid off on Oct. 10, while Scarpa was laid off Oct. 17.
Matthew Helland, the Nichols Kaster attorney representing the employees, could ask for $5 million in damages.
Heller management must have seen this coming, but that doesn’t mean they will prevail.
It is with a great deal of regret that we write to inform you that we will not be able to pay you for work performed after today, Friday October 10 and, as a result, that your employment with the firm will be terminated today. We also expect that we will need to inform other employees over the following two weeks that we are unable to pay them any further and will need to terminate their employment. We do expect that we will be able to continue to pay some people for a longer period of time. Regular paychecks will be provided today but because of the volume of final paychecks we will need to prepare, it may take a few days to get your final paycheck to you. We know this is important to you but please be assured your colleagues in the Payroll Department will be working as hard and as quickly as they can to get you your paycheck.
These actions have been forced upon us by the two banks — Citibank and Bank of America — that control our ability to make any payments. Generally, they have refused to pay employees who we cannot convince them are necessary (as they define it) for the wind down efforts. We understand how upsetting this news is. You should continue your activities to serve clients, including, where applicable, to bill your time. Time billing and client service are two of the criteria the banks are examining in our continuing negotiations with them to maintain an orderly transition.
We want to thank you for your professionalism and forbearance to date and ask you to continue to proceed with the same degree of professionalism you have demonstrated during your valuable service to the firm and to its clients.
When Heller Ehrman dissolved in late September, associates and employees were informed via a firm-wide email.
Since then, Heller management has had email communication with employees, but (to our knowledge) they have not revealed their official dissolution plan.
We got our hands on the 43-page operating document. In addition to a detailed discussion of the firm’s balance sheet, the plan lists the firm’s priorities during the dissolution. One priority is to preserve and protect the firm’s assets “for the benefit of, first, the creditors, … and thereafter the Shareholders of the firm and the former Shareholders of the firm.”
The full dissolution plan can be downloaded below. Check it out and see what interesting nuggets you find.
If any Heller Ehrman attorneys were hoping that a major firm would sweep in and hire a whole bunch of Hellerites, the Dissolution Committee is warning you not to hold your breath. The Recorder reports:
On Tuesday, Peter Benvenutti, the chairman of the dissolution committee now controlling the firm, confirmed whispers that Baker & McKenzie and Winston & Strawn, both one-time merger candidates, had withdrawn proposals to pick up large groups of lawyers and their expensive real estate. While Benvenutti would not say whether deals on this scale are being discussed with any other firms, he did say there’s interest in taking over certain of the firm’s leases, and “we expect to have clarity in a day or two.”
At this point, why would Baker or Winston Strawn take on expensive lawyers when they can just sit back and cherry pick the superstars they want? We haven’t heard any story of a Heller rainmaker saying “If I come, these 30 people are coming with me.”
Heller Ehrman continues to stave off involuntary bankruptcy, despite not being able to pay employees their accrued vacation time. But Heller’s breakup continues to take weird twists.
The latest bizarre news comes from Seattle, where some associates have wondered whether they are about to be evicted from their offices. Tension was so high that Heller management had to send around a clarification email:
TO ALL HANDS (SEATTLE):
I have heard various rumors in the hallways to the effect that the Seattle office will close imminently and therefore that everyone needs to move out pronto. To clarify, here is the status.
The landlord has not issued a notice to vacate. If such a notice were issued, the notice period would be ten days. For reasons too long to explain, we overpaid rent throughout 2008. When those overpayments came to our attention, the firm asked that they be applied to cover (completely) the October rent obligation. The landlord has since asserted that the overpayments instead should be applied toward a fee that was due in connection with our give-back of space on 58. The Dissolution Committee is working with our outside counsel and communicating with the landlord to hopefully resolve this issue, and to clarify with the landlord any issues relating to removal of property from our space. To the best of my knowledge, closure of this office is not imminent and the date of closure remains to be determined, based on the pace of collections versus ongoing costs and also based on the banks’ decisions about what spending they will approve.
A law firm on the edge of solvency “overpaid” their rent? We hope that the explanation for this oversight is too long and difficult to get into, but we wonder if it is just too embarrassing.
Associates that we are speaking to say that it is just starting to sink in that they will be out of a job soon. Hopefully the Seattle associates will get as much time as possible to come to grips with this reality, instead of showing up at the office one day only to find locks on the door.
Update: The Blog of the LegalTimes reports that Arnold & Porter has picked up the latest Heller refugees. The big fish is Kenneth Chernof, Heller’s managing partner in the D.C. office. Any associates coming along for the ride?
This won’t come as a galloping shock to the pessimists out there, but Heller Ehrman is not going to pay out the accrued vacation time of their associates and staff. The disappointed employees were told today via a firm-wide email:
On behalf of the Dissolution Committee:
To Our Employees:
The Dissolution Committee is sending this message to keep interested employees as informed as possible of relevant developments. A number of people have raised questions about accrued vacation pay payable upon termination. We regret to inform you that the banks’ which now control our ability to write checks — Bank of America and Citibank — have informed us that we may not pay terminating employees for accrued vacation. This decision was made despite our strenuous, repeated efforts to convince the banks otherwise.
We will continue to seek the banks’ permission to pay these amounts as soon as possible. The Dissolution Committee did obtain the banks oral permission to fund the payroll due next Friday in all other respects. We are now awaiting their written confirmation, which we expect to receive later today.
We sincerely regret that the banks are preventing us from paying our terminating employees the full amount to which they are entitled at this time. We wish it were otherwise, and we will continue to press the banks to change their position.
The Dissolution Committee
As we’ve discussed before, the banks really do have the ultimate authority when it comes to these situations. However, Heller made many protestations in the immediate aftermath of the dissolution that associates and staff would be paid all that they were owed.
Is “orderly dissolution” a thing of the past? Hellerites weigh in after the jump.
While law firms try to cherry pick Heller Ehrman’s departing attorneys, some companies are also trying to pick up Heller Ehrman’s business.
But there is a way to be decent about these things. The people at VentureSource might need to brush up on their etiquette. The venture capital resource group sent out the following email to many of their subscribers, including some people who are still affiliated with Heller Ehrman:
Heller Erman[sic] dissolved its practice last week. This week, dozens of venture capital firms and portfolio companies may be in search of new legal representation.
See all the clients–including their financial details and key contacts–available in VentureSource. You can also use the database to spot other potential clients in every industry and region in the U.S., Canada, Europe, Israel and China.
Don’t wait: Call me at [redacted] or send me an e-mail to subscribe to VentureSource or set up a personal demonstration.
Position Your Business to Benefit from the Fall of Heller (& Others)
Verily, the funeral baked meats did coldly furnish forth the marriage table.
Cooley Godward Kronish LLP announced today that 15 partners from Heller Ehrman will join the Firm. Ten partners will join Cooley in Silicon Valley, four in Seattle, where Cooley will open an office, and one in Washington, DC. In addition to comprising the core of Heller’s Venture Law Group (VLG) in these offices, the partners joining Cooley include the heads of Heller’s firm-wide business and intellectual property transactions practices, the co-heads of its energy and clean technology practice, the co-chair of its life sciences practice and two VLG co-founders.
Heller receives an apology from VentureSource after the jump.
So you spent a considerable amount of time courting, selling and maybe even doing some friendly stalking of that attractive lateral partner candidate with a sizable book. After he or she ignored your emails and didn’t return your calls, a few weeks go by and you read a press release in the legal media announcing the recent move to a competing firm.
Rats. Another one got away from you. You cringe when you consider how much time was spent in meetings that did not bear fruit. Your heart aches when recall how you were led to believe this was a marriage made in heaven.
You have been rejected.
The sting of rejection is painful, even for fancy law firms. But you need to find a way that you can turn this disappointment into a legitimate learning experience.
No, this isn’t a pre-party before we come back next fall for the real thing. This IS the real thing. Quinn Emanuel is pushing the envelope on recruiting. The party is now. This is when you meet the partners and associates face to face. This is when we begin the dance that could land you an offer for your second summer BEFORE school starts in the fall.
First: You come to the party. Second: If you like us, you send your resume after June 1, 2014. Third: If we like each other, you get an offer.
We’re not waiting for fall. We’re not doing the twenty minute thing. This party is the real thing!
We hope you’ll join us, and look forward to meeting you.
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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