Yesterday we reported that the Bingham McCutchen partnership would dissolve at some point after Morgan Lewis completes its mass hiring of 226 Bingham partners (plus an undetermined number of other lawyers and staff). But as we mentioned, dissolution is not the same thing as bankruptcy (even though the two often go hand in hand). Bankruptcy requires insolvency, and it’s not clear that Bingham currently is or will wind up being insolvent.
In fact, sources say that if all goes as planned with Morgan Lewis, Bingham will not wind up in bankruptcy. Let’s take a deeper dive into the Morgan-Bingham deal and see how that could be the case….
Meet Your New Team: Intuit QuickBooks Unveils The Power Of AI Agents For Business Growth
The future of business is here, and it's powered by QuickBooks.
Law firms (at least here in the U.S.) aren’t public companies, so they aren’t required to reveal all the details of their deals. As we noted earlier, the precise contours of the Morgan-Bingham transaction aren’t perfectly clear. But we have a little more clarity today, thanks to this report by Gina Passarella for The Legal Intelligencer:
The end result [of months of talks with Bingham] was something industry watchers couldn’t give a name to, but one they described as a “hybrid” approach that showed business “savvy” by Morgan Lewis.
Morgan Lewis hired 226 of the 307 partners at Bingham. According to sources close to the firm, Morgan Lewis will assume some of Bingham’s $100 million in liabilities, including certain leases, and some of its assets, such as work in progress and accounts receivable.
Those sources close to the deal said Bingham will no longer operate as a going concern if the deal closes. They said there would not be any attorneys left “holding the bag” for Bingham liabilities. While the sources wouldn’t give specifics as to how much of the liabilities Morgan Lewis is assuming or how it would be done, the sources said all of Bingham’s “debt will be paid and zeroed out by the end of the year.”
That would be great news, for Bingham’s partners and for its creditors. If this all works out, perhaps the Morgan-Bingham deal will serve as a template for future rescues of failing firms. It’s not a full-on merger, so Morgan isn’t taking on all of Bingham’s liabilities, but with Morgan hiring three-quarters of Bingham’s partners — after having made offers to even more, some of whom declined to join MLB due to client conflicts or personal preference — it’s more than selective cherry-picking. Law firm consultant Marcie Borgal Shunk described it to the Legal Intelligencer as a “hybrid” growth strategy, noting that “it is not an acquisition” but more of a “large-scale lateral move.”
Morgan picking up some of Bingham’s assets and some of Bingham’s liabilities raises the possibility of… sketchiness and self-dealing. But if all of Bingham’s debt ends up getting paid and nobody ends up getting stuck with the tab, there shouldn’t be any objection. In fact, if this all works out then creditors should be grateful to Morgan Lewis, since Bingham was contemplating bankruptcy without this transaction.
Law Department Professionals: How Does Your Patent Management Stack Up?
Help us benchmark your organization with this survey and have a chance to win a $250 gift card.
So that’s what is going on at the partner level. We don’t have a clear idea yet about what’s happening to associates, in terms of who will get to join Morgan Lewis and who won’t. If you’re a Bingham associate and can enlighten us, please email us or text us (646-820-8477).
What about staff — especially the staff who work in Bingham’s big back-office facility in Kentucky? Here is what one source told us:
[O]ther than a few voice mails from Bingham big shot Steve Brown, the 175 people in the Lexington office have not heard a SINGLE word about their fate. In fact, no one there has even acknowledged the acquisition by Morgan Lewis. Really a shabby way to treat employees.
That was as of yesterday. Perhaps things have changed since then? Feel free to let us know. Anonymous sources told the Legal Intelligencer that as of now, Morgan Lewis will employ most of the Kentucky crew, but the firm is “reserving an opportunity to review” whether the office makes sense for the long term.
Thanksgiving and Christmas are just around the corner. Let’s hope that Santa Morgan leaves bonuses rather than pink slips in the stockings of former Binghamites.
(Some readers have inquired about whether there is a list of Bingham partners moving over to Morgan Lewis. Flip to the next page for the beginning of such a list. Please email us or text us (646-820-8477) with names of partners to add to the list. We have also asked Morgan Lewis if it would be willing to provide such a list but haven’t heard back yet. Thanks.)