What Is Going To Happen To Sedgwick? UPDATE: The Firm Is Closing!

Update: The firm speaks out!

UPDATE 11/21/17 2:00 p.m.: The worst fears of Sedgwick employees has been confirmed. Law360 is now reporting the firm will be closing by the end of the year:

Sedgwick LLP told its employees on Monday morning that the firm would close at the end of December, a current firm employee confirmed to Law360 on Tuesday, capping off a year of defections and office closures that rocked the San Francisco-based firm.

It is unclear, at this point, what will happen to the firm’s attorneys and staff.

Despite numerous attempts by Above the Law to confirm the story with firm management, they have not responded.

UPDATE #2 11/21/17 4:01 p.m.: Law.com reports that a “large number” of attorneys and staff will be hired by Clyde & Co, who was, at one point, a potential merger partner for Sedgwick. Specifics on who will be hired and when has yet to be hammered out.

The firm also issued a statement:

“We have concluded that the best way to allow our lawyers to continue providing great service to our clients is by ceasing operations and moving to other excellent law firms,” said the firm in a statement. “We are pleased that most of our lawyers and staff have opportunities with very fine firms.”

….

“While this news deeply saddens all of us, we are very proud and appreciative of all those who helped make Sedgwick the great firm it has been since 1933,” the firm said. “From the bottom of our hearts, we thank our clients, attorneys and staff for everything you have done for us for decades, and we wish anyone who has ever crossed paths with this wonderful law firm the best and brightest future.”

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Earlier: As a quick primer for those out of the loop regarding the Biglaw firm of Sedgwick, they haven’t been having a terrific 2017. Almost right from the start of the year, they began shedding partners and other senior attorneys. But the departures didn’t stop there. Last month we noted that a startling number of partners — including those involved with firm management — had left for greener pastures. Then an entire office was scooped up by U.K. firm Kennedys. The firm’s headcount dropped by a whopping 35 percent this year, which includes the loss of over 45 partners.

Then began the rumors that Sedgwick had found a white knight to save them in the form of a potential merger with U.K.-based Clyde & Co. But according to a report from Law.com, the picked-over carcass of a firm began to look less appealing to Clyde, particularly when so much money is still owed to the dearly departed (for other jobs):

“Clyde & Co clearly is losing the crown jewels they would want as part of a merger,” a source with knowledge of Sedgwick said.

One aspect of acquiring Sedgwick that could make a deal difficult is the mounting burden of capital it owes partners who have left the firm. Sedgwick typically requires that its partners carry a capital account equal to about 55 percent of the partners’ yearly compensation, said a former partner at the firm. The capital payments to departed equity partners are paid out in 36 monthly installments.

So if their white knight has gotten cold feet, what will happen to the firm? Are they looking for a new suitor, or is there something more dire in the firm’s future?

The buzzing of ATL’s network of tipsters has reached a fevered pitch over the last few days. While the future of the firm remains unclear, there are rumors flying around a plenty. Perhaps Clyde is only really interested in a particular group of Sedgwick partners now. One source claims management is saying whatever to “avoid even a further exodus.” Another says, “[T]here is a lot of confusion and non information to partners, which doesn’t help matters. No one has a sense of what is going on among younger partners.”

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We’ve reached out to the firm, but they haven’t responded to our request for comment.

While the powers that be contemplate the next move for the firm, the rank and file are left wondering just how secure their jobs really are.


headshotKathryn Rubino is an editor at Above the Law. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).