DOCSLIB.ORG

Are Large Law Firm Mergers Successful?

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Are Large Law Firm Mergers Successful? EDITOR September 2003 James Wilber Principal Report to Volume 30, Number 12 Altman Weil CONTRIBUTING EDITORS Ward Bower Principal Legal Management OUR 29TH YEAR Altman Weil William F. Brennan Consultant Are Large Law Altman Weil David G. Briscoe Firm Mergers Senior Consultant Altman Weil Successful? Thomas S. Clay Principal By Ward Bower Altman Weil assisted by Debra L. Rhodunda Ward Bower James D. Cotterman t a recent meeting of the executive Þrm data here to protect the conÞdentiality Principal Altman Weil committee of an AmLaw 100 Þrm of those Þgures provided to us by our law A discussing merger as a strategy, Þrm clients. Daniel J. DiLucchio, Jr. one member challenged me to Òname one We selected 17 law Þrm mergers involving Principal Altman Weil successful merger of large law firms,Ó 300 or more lawyers over the last ten years. and then went on to say, ÒI am not aware of The 17 selected mergers involved 33 Þrms Virginia Grant Consultant a single success.Ó Taken aback, I cautiously (one firm was involved in two of the Altman Weil responded that it was my impression that mergers). The average size of the ÒleadÓ Marci M. Krufka most major law firm mergers would Þrm (larger of the two) was 441 lawyers at Consultant be considered successful, at least in the time of merger. The average ÒacquireeÓ Altman Weil financial terms. was 169 lawyers, for an average total Charles A. Maddock That question resonated with me over merged Þrm size of 610. The largest merger, Principal subsequent weeks and inspired me to team measured by total numbers of lawyers Altman Weil with Altman Weil consultant Debbie involved, was Clifford Chance/Rogers and Alan R. Olson Rhodunda to analyze recent large law Þrm Wells. The smallest was Blackwell Principal mergers in terms of the primary objective Sanders/Peper Martin (Kansas City and St. Altman Weil measure of success, that of proÞtability Louis) in 1998. Table 1 on page 12 lists the Richard C. Reed as measured by proÞts per partner. Most Þrms involved in the mergers studied. Senior Advisor mergers contemplate increasing proÞts per Altman Weil partner, at least over the long term. Few Short Term Success Debra L. Rhodunda Þrms would enter a merger that promised to As a baseline, we used the proÞts per Consultant decrease partner incomes. partner of the larger or Òlead ÞrmÓ in the Altman Weil Our analysis of changes in proÞts per year pre-merger. We compared that number Larry R. Richard partner is based mostly on AmLaw 100/200 to the proÞts per partner of the merged Þrm Principal Þgures published by American Lawyer in each of the Þrst two years, post-merger Altman Weil Media, partly on Þgures from Legal Business (for one recent merger, only the Þrst post- and The Lawyer in London, and partly on our merger year Þgure was available). We did MANAGING EDITOR direct knowledge of some of the ÞrmsÕ continued on page 7 Susan D. Sjostrom performances as a result of our work with Inside This Issue them as clients. In the few instances of Successfully Dealing with the HR discrepancy between published Þgures and Department In Setting Lawyer Compensation . .2 those provided to us by the Þrms via Online Continuing Education: Anytime, Anywhere Learning . .4 their Þnancial statements in the course of Fundamentals of Practice Group Marketing Plans . .8 consulting engagements, we opted to use the News from Altman Weil . .11 latter. We have not presented any individual Mergers … continued from cover Second year proÞts per partner existing or new location with signiÞ- this short term analysis because compared to starting or ÒleadÓ Þrm cant strengthening of one ore more conventional wisdom suggests that proÞts per partner: existing practice areas. We have not transaction and integration costs identiÞed which mergers fall into ¥ was the same in two Þrms; and would be expected to reduce PPP in these categories, as some are so small the Þrst year or two, whereas longer ¥ increased in 14 Þrms. that it could compromise conÞdential term PPP would be expected to grow. Altman Weil client information. The results were revealing. We Figure 3 The following chart indicates year found that in the Þrst post-merger Pre-Merger “Lead” Firm to Year 2 one, year two and cumulative year: Decreased PPP Same PPP growth in proÞts per partner orga- 0% 12% nized by type of merger. ¥ Three Þrms experienced reduced Primary Year Year Two Year proÞts per partner. Strategy One Two Cumulative Scale -2% +10% +8% ¥ Three ÞrmsÕ proÞts per partner Increased PPP 88% were the same as pre-merger. Scope +9% +11% +22% Scope/Scale +13% +7% +21% ¥ Eleven Þrms experienced increased The results seem to disprove the All Firms +9% +8% +18% proÞts per partner. conventional wisdom that PPP Figure 4 should not be expected to increase in Short Term (Two Year) PPP Figure 1 early post-merger years. by Type of Merger Short Term PPP, Post Merger — Year 1 Increased PPP Decreased PPP Scope or Scale Ñ Does it Matter? Scale 64% 18% Merger is a strategy, not in itself a Scope goal. It is a means to achieve any number of strategic goals, including Scope/Scale diversiÞcation, geographic growth, All Firms Same PPP increasing market share, building 18% 0% 5% 10% 15% 20% 25% depth or critical mass, among other % Two Year Increase, PPP possible objectives. Generally, mergers In the second post-merger year: intended to build depth are termed Thus it appears that scope or mergers of scale, while those intended combined scope and scale mergers ¥ Zero Þrms reported a reduction to expand product lines or services or generally produced greater short-term from Þrst year proÞts per partner. to access new geographic markets are economic improvement in proÞtability referred to as mergers of scope. than pure scale mergers. In a sense, ¥ Two Þrms reported the same prof- We further examined the 17 that is understandable, as scale its per partner as in the Þrst year, major law Þrm mergers and con- mergers require greater integration and cluded that although most could be of cultures earlier, and thereby could considered as some combination of be expected to be more disruptive. ¥ Fourteen Þrms reported an scale and scope, the primary objective Scope merger successes were increase in proÞts per partner of three of the mergers was scale, as comparable whether the objective was from the Þrst year. they were basically expanding in either geographic or practice area existing geographic markets in expansion, but less so where the objec- Figure 2 existing practice areas or specialties. tive appeared to be both geographic Year 1 to Year 2 Nine of the mergers appeared to be and practice area expansion. Strategic Decreased PPP Same PPP primarily mergers of scope to pur- focus thus appears to add value. 0% 12% sue geographical expansion (Þve), Scope Merger Year Year Two Year practice area expansion (two) or a Purpose One Two Cumulative combination of geographic and Geographic +10% +13% +26% practice area growth (two). The Practice Area +14% +11% +24% Increased PPP remaining Þve mergers appear to be 88% Both Geographic 0% +8% +9% equally both of scale and scope, and Practice Area involving substantial growth in an continued on page 12 Report to Legal Management September 2003 7 Mergers … continued from page 7 Figure 5 Figure 6 Long-Term Experience Short Term Scope Merger PPP, Long Term PPP Growth Finally we looked at those seven by Purpose Since 1999 mergers that occurred over four years ago (1999 or before). Since 1999, PPP Geographic Pre-1999 has increased 21% in those Þrms, on Mergers average. The AmLaw 100 PPP Þgures Practice Area since 1999 have increased 13%. (See AmLaw 100 Figure 6) By this standard, large law Both Average Þrm mergers seem to have achieved 0% 10% 20% 30% 0% 5% 10% 15% 20% 25% their Þnancial objective over the % Two Year Increase, PPP % Increase, PPP Since 1999 longer term, as well. Table 1: The Mergers Studied Conclusion Baker Botts/Brumbaugh, Graves, Donohue & Raymond 1997 Who says large law Þrm mergers Bingham Dana/McCutcheon, Doyle, Brown & Enersen 2002 donÕt work? From a proÞt perspective, Blackwell Sanders Matheny Weary & Lombardi/Peper, it appears they generally do, both in Martin, Jensen, Maichel and Hetlage 1998 the short and longer term. It also Blank Rome Comisky & McCauley /Tenzer Greenblatt 2000 appears that scope mergers pay off Clifford Chance/Rogers Wells 2000 better and sooner than scale mergers Dibb Lupton Broomhead/Alsop Wilkinson (UK) 1996 and furthermore that either geo- Foley & Lardner/Hopkins & Sutter 2001 graphic or practice area scope mergers Holland & Knight/Dunnells & Duvall 1994 are initially more successful than Holland & Knight/Haight, Gardner, Poor & Havens 1997 those intended to achieve both. ◆ Howrey & Simon/Arnold White & Durkee 2000 Nixon, Hargrave, Devans & Doyle/Peabody & Brown 1999 Ward Bower is a principal and Debra Paul, Hastings, Janofsky & Walker /Battle Fowler 2000 Rhodunda is a consultant with Altman Pillsbury, Madison & Sutro/ Winthrop, Stimson, Putnam & Roberts 2001 Weil, Inc. Both work out of the ÞrmÕs ofÞces in Newtown Square, Pennsylvania Piper & Marbury/Rudnick & Wolfe 1999 (610/886-2000). WardÕs email address is Sidley & Austin/Brown & Wood 2001 [email protected] and DebraÕs Swidler & Berlin/Shereff, Friedman, Hoffman & Goodman 1998 is [email protected]. Thelen, Marrin, Johnson & Bridges/Reid & Priest 1998 12 September 2003 Report to Legal Management.
Load more

Recommended publications
  • Lessons Learned from Law Firm Failures
    ALA San Francisco Chapter Lessons Learned from Law Firm Failures Kristin Stark Principal, Fairfax Associates July 2016 Page 0 About Fairfax Fairfax Associates provides strategy and management consulting to law firms Strategy & Performance & Governance & Merger Direction Compensation Management Strategy Development and Partner Performance and Governance and Merger Strategy Implementation Compensation Management Firm Performance and Operational Structures & Practice Strategy Merger Search Profitability Improvement Reviews Market and Sector Merger Negotiation and Pricing Partnership Structure Research Structure Client Research and Key Process Improvement Alternative Business Models Client Development Merger Integration Page 1 1 Topics for Discussion • Disruptive Change • Dissolution Trends • Symptoms of Struggle: What Causes Law Firms to Fail? • What Keeps Firms From Changing? • Managing for Stability Page 2 How Rapidly is the Legal Industry Changing? Today 10 Years 2004 Ago Number of US firms at $1 billion or 2327 4 more in revenue: Average gross revenue for Am Law $482$510 million $271 million 200: Median gross revenue for Am Law $310$328 million $193 million 200: NLJ 250 firms with single office 4 11 operations: Number of Am Law 200 lawyers 25,000 10,000 based outside US: Page 4 2 How Rapidly is the Legal Industry Changing? Changes to the Law Firm Business Model Underway • Convergence • Dramatic reduction • Disaggregation in costs • Increasing • Process Client commoditization Overhead improvement • New pricing Model efforts models • Outsourcing
    [Show full text]
  • Rethinking the Law Firm Organizational Form and Capitalization Structure
    Scholarship Repository University of Minnesota Law School Articles Faculty Scholarship 2013 Rethinking the Law Firm Organizational Form and Capitalization Structure Edward S. Adams University of Minnesota Law School, [email protected] Follow this and additional works at: https://scholarship.law.umn.edu/faculty_articles Part of the Law Commons Recommended Citation Edward S. Adams, Rethinking the Law Firm Organizational Form and Capitalization Structure, 78 MO. L. REV. 777 (2013), available at https://scholarship.law.umn.edu/faculty_articles/90. This Article is brought to you for free and open access by the University of Minnesota Law School. It has been accepted for inclusion in the Faculty Scholarship collection by an authorized administrator of the Scholarship Repository. For more information, please contact [email protected]. Rethinking the Law Firm Organizational Form and Capitalization Structure EdwardS. Adams 1. INTRODUCTION The recent bankruptcy of large law firms has energized the debate over the viability of the traditional partnership model. Dewey & LeBeouf filed for bankruptcy in May 2012, becoming the largest law firm bankruptcy in U.S. history.' At its peak, Dewey employed 1,400 lawyers in several offices across the globe, causing some to ask whether Dewey's collapse was an iso- lated product of poor management or a symptom of greater systemic prob- lems. 2 But Dewey's bankruptcy was not the first to result in the dissolution of a large firm. The financial downturn of 2008 deeply affected the legal profession, and several firms went under. Many have already questioned the traditional business structure of the law firm in light of these bankruptcies and the manner in which they oc- curred.4 Partner defections and limited capital place criticism squarely on the partnership model as a major factor in these bankruptcies.
    [Show full text]
  • LA Office Pivotal to Jenner's Steady Growth
    LOS ANGELES www.dailyjournal.com WEDNESDAY, APRIL 11, 2012 LAW FIRM BUSINESS LA office pivotal to Jenner’s steady growth By Casey Sullivan River,” said Jenner’s firm wide managing “Many firms profess to have ‘synergy’ Daily Journal Staff Writer partner Susan Levy of the office’s impor- with laterals but when put to the test tance. “Opening in Los Angeles really of tracking import/export of work, fall ince setting its stake in Los Ange- solved those problems and assisted us with short. Jenner has a remarkable track re- les three years ago with a pair of existing client relationships.” cord of lawyers in L.A. exporting work Slateral hires from Kirkland & Ellis In 2011, the firm picked up insurance to other offices.” LLP, Chicago litigation shop Jenner & practice leaders Jerry Oshinsky and Linda Los Angeles managing partner Rick Block LLP has built a venerable platform Kornfeld from Dickstein Shapiro LLP and Richmond refuses to rest on his laurels, around the city’s middle market with an Mary Calkins from Howrey LLP. Later however, and is looking at further lateral aggressive expansion strategy, industry that year, it raided Hogan & Lovells US prospects. He has reached out to various experts say. LLP’s Los Angeles office, which saw its headhunters throughout the city with Lawyers at the firm’s Los Angeles office headcount slashed in half, for a group hopes of attaining litigators in several will raise their glasses on Thursday night of litigators led by entertainment heavy- practices. to celebrate its growth in the region at its weight Rick Stone.
    [Show full text]
  • Tier 1 Law Firms Tier 2 Law Firms
    U.S. News & World Report – Best Lawyers in America 2011-12 listed more than 160 law firms in its ranking of Intellectual Property Litigation Firms. Edwards Wildman Palmer LLP is proud to have been ranked a Tier 1 Firm. The following lists all firms named, and the Tier under which each is listed. TIER 1 LAW FIRMS Covington & Burling LLP Winston & Strawn LLP Fenwick & West LLP Alston + Bird LLP Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Chaz De La Garza & Assoc., LLC Fish & Richardson P.C. Cravath, Swaine & Moore LLP Foley & Lardner LLP Debevoise & Plimpton LLP K&L Gates LLP DLA Piper LLP Kenyon & Kenyon LLP Edwards Wildman Palmer LLP McDermott Will & Emery LLP Greenberg Traurig LLP Morrison & Foerster LLP Holland & Knight, LLP Patterson Belknap Webb & Tyler LLP Howrey LLP Perkins Coie LLP Jones Day Sidley Austin LLP Kirkland & Ellis LLP Skadden, Arps, Slate, Meagher & Flom LLP Quinn Emanuel Urquhart & Sullivan, LLP Squire, Sanders & Dempsey, L.L.P. Simpson Thacher & Bartlett LLP Sullivan & Cromwell LLP Susman Godfrey LLP WilmerHale Weil, Gotshal & Manges LLP TIER 2 LAW FIRMS Akerman Senterfitt LLP Orrick, Herrington & Sutcliffe LLP Bingham McCutchen LLP Panitch Schwarze Belisario & Nadel LLP Cowan Liebowitz & Latman, P.C. Paul, Weiss, Rifkind, Wharton & Garrison LLP Davis Polk & Wardwell LLP Proskauer Rose LLP Davis Wright Tremaine LLP Ropes & Gray LLP Dechert LLP Vinson & Elkins LLP Faegre & Benson LLP Woodcock Washburn LLP Fitzpatrick, Cella, Harper & Scinto Abelman Frayne & Schwab Gibson, Dunn & Crutcher LLP Akin Gump Strauss Hauer & Feld LLP Goodwin Procter LLP Allen, Dyer, Doppelt, Milbrath & Gilchrist, P.A. Holland & Hart LLP Arnold & Porter LLP Kaye Scholer LLP Baker & McKenzie LLP Keker & Van Nest LLP Baker Botts L.L.P.
    [Show full text]
  • The Uncertain Future of the Unfinished Business Doctrine Dan
    The Uncertain Future of the Unfinished Business Doctrine 2015 Volume VII No. 26 The Uncertain Future of the Unfinished Business Doctrine Dan Teplin, J.D. Candidate 2015 Cite as: The Uncertain Future of the Unfinished Business Doctrine, 7 ST. JOHN’S BANKR. RESEARCH LIBR. NO. 26 (2015). Introduction It is no secret that the legal industry has experience financial difficulty following the great recession. Many law firms have been less profitable, and in some extreme circumstances, have filed for bankruptcy. The worlds largest law firms are of no exception to this recent phenomenon. The collapses of the mega-firms Dewey & LeBoeuf,1 Coudert Brothers LLP,2 Heller Ehrman LLP,3 Howrey LLP,4 Thacher Proffitt & Wood LLP,5 and Thelen LLP6 are prime examples. Since most law firms, especially large firms, do not reorganize in bankruptcy, a bankruptcy trustee will often be appointed to administer the firm’s estate. In order to maximize 1 The End of an Era: Why Dewey & LeBoeuf Went Under, FORTUNE (May 29, 2012) http://fortune.com/2012/05/29/the-end-of-an-era-why-dewey-leboeuf-went-under/. 2 Jones Day Prevails in Coudert Brothers “Unfinished Business” case in unanimous New York Court of Appeals Ruling, (July 2014) http://www.jonesday.com/jones-day-prevails-in-coudert-brothers-unfinished-business-case-in- unanimous-new-york-court-of-appeals-ruling/. 3 Recession Batters Law Firms, Triggering Layoffs, Closings, THE WALL STREET JOURNAL (Jan. 26, 2009) http://www.wsj.com/articles/SB123292954232713979. 4 Why Howrey Law Firm Could Not Hold It Together, THE WASHINGTON POST (Mar.
    [Show full text]
  • United States District Court, S.D. California. QUALCOMM
    Untitled Document 2/28/10 4:30 AM United States District Court, S.D. California. QUALCOMM INCORPORATED, Plaintiff. v. BROADCOM CORPORATION, Defendants. Broadcom Corporation, Counter-Claimant. v. Qualcomm Incorporated, Counter-Defendant. Civil No. 05CV1662-B(BLM) May 2, 2006. Barry Jerome Tucker, Heller Ehrman, San Diego, CA, E. Joshua Rosenkranz, Heller Ehrman, New York, NY, Gregg A. Duffey, Peter J. Chassman, Howrey Simon Arnold and White, Houston, TX, Richard S. Taffet, Bingham McCutchen, New York, NY, William K. West, Jr., Howrey LLP, Washington, DC, Aaron Schur, Chad Russell, Rianne E. Nolan, Bingham McCutchen, San Francisco, CA, David E. Kleinfeld, Heller Ehrman, San Diego, CA, for Plaintiff. Amy R. Schofield, Kirkland & Ellis LLP, San Francisco, CA, Brian C. Smith, Heath A. Brooks, James L. Quarles, III, Jonathan Frankel, Juliana Maria Mirabilio, Nathan Mitchler, Thomas Olson, Wilmer Cutler Pickering Hale and Dorr, Washington, DC, Elizabeth M. Reilly, John J. Regan, Richard W. O'Neill, Wayne L. Stoner, William F. Lee, Wilmer Cutler Pickering Hale and Dorr, Boston, MA, Maria K. Vento, Mark D. Selwyn, Wilmer Cutler Pickering Hale and Dorr, Palo Alto, CA, Robert S. Brewer, Jr., James Sullivan McNeill, McKenna Long and Aldridge, San Diego, CA, for Defendants. William K West, Jr., Howrey LLP, Washington, DC, Aaron Schur, Chad Russell, Rianne E. Nolan, Bingham McCutchen, San Francisco, CA, David E. Kleinfeld, Heller Ehrman, San Diego, CA, for Counter- Defendant. CLAIM CONSTRUCTION ORDER FOR UNITED STATES PATENT NUMBER 5,682,379 RUDI M. BREWSTER, Senior District Judge. Pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), on April 18, 2006, the Court conducted a Markman hearing concerning the above-titled patent infringement action regarding construction of the disputed claim terms for U.S.
    [Show full text]
  • HOWREY LLP, 14-Cv-04887-JD 9 14-Cv-04888-JD Appellee
    Case3:14-cv-04882-JD Document13 Filed06/03/15 Page1 of 19 1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 HOGAN LOVELLS US LLP, Case Nos. 14-cv-04882-JD 6 14-cv-04883-JD Appellant, 7 14-cv-04884-JD v. 14-cv-04885-JD 8 14-cv-04886-JD HOWREY LLP, 14-cv-04887-JD 9 14-cv-04888-JD Appellee. 14-cv-04889-JD 10 PILLSBURY WINTHROP SHAW ORDER ON APPEAL 11 PITTMAN LLP, 12 Appellant, 13 v. 14 HOWREY LLP, 15 Appellee. SEYFARTH SHAW LLP, 16 Appellant, 17 v. United States District Court District United States Northern District of California District Northern 18 HOWREY LLP, 19 Appellee. 20 21 22 23 24 25 26 27 28 Case3:14-cv-04882-JD Document13 Filed06/03/15 Page2 of 19 PERKINS COIE LLP, 1 Appellant, 2 v. 3 HOWREY LLP, 4 Appellee. 5 NEAL, GERBER & EISENBERG LLP, 6 Appellant, 7 v. 8 HOWREY LLP, 9 Appellee. 10 KASOWITZ, BENSON, TORRES & 11 FRIEDMAN LLP, 12 Appellant, 13 v. 14 HOWREY LLP, 15 Appellee. SHEPPARD MULLIN RICHTER & 16 HAMPTON LLP, 17 Appellant, United States District Court District United States Northern District of California District Northern 18 v. 19 HOWREY LLP, 20 Appellee. JONES DAY, 21 Appellant, 22 v. 23 HOWREY LLP, 24 Appellee. 25 26 27 28 Case3:14-cv-04882-JD Document13 Filed06/03/15 Page3 of 19 1 Eight law firms that provided legal services to former clients of debtor Howrey LLP appeal 2 the bankruptcy court’s denial of their motions to dismiss.
    [Show full text]
  • Chicago's Competition
    STATE SURVEY: ILLINOIS James Mutchnik Robert Bloch Tom Frederick Amy Manning Chicago’s competition bar Over the past few years, Chicago’s federal court has become one of the busiest antitrust litigation forums in the country. Ron Knox meets the Windy City’s leading competition lawyers HANDFUL of decisions handed down recently by the Seventh says Kirkland & Ellis partner James Mutchnik PC, who is nominated Circuit court of appeals have fuelled the perception that to The International Who’s Who of Competition Lawyers and Chicago is a fitting home for courtroom warriors embroiled Economists. in some of the largest and most complex antitrust cases in The changes do not end there. Two years ago, Kirkland & Ellis Athe country. Practitioners here predict a future where even more began transitioning from separate (albeit good) offices and antitrust plaintiffs’ lawyers set up shop or expand their practices, putting teams around the country to a truly integrated national practice. more cases before Chicago courts and calling the prominent defence Before, Mutchnik says, the practice was a vertical one for the most bar into action. part. “We’re beyond that now,” he says. The firm has now identified Of course, Chicago firms still handle their share of mergers and and connected a core team of litigators from each office to help government investigations. But many antitrust practices here rank boost its private antitrust litigation ability. Partner Daniel Laytin themselves and their competitors by the number of multi-district leads the way in Chicago and says that with the firm’s client base litigations (MDLs) they’re involved in.
    [Show full text]
  • I:\Chambersdm\Chambers 22 E-Ordersnew\Orders to Be Converted\Howrey\Howrey
    Entered on Docket September 09, 2014 EDWARD J. EMMONS, CLERK U.S. BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA 1 Signed and Filed: September 9, 2014 2 3 4 5 ________________________________________ DENNIS MONTALI 6 U.S. Bankruptcy Judge 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case 10 ) No. 11-31376DM HOWREY LLP, ) 11 ) Debtor. ) Chapter 11 12 ___________________________________) ALLAN B. DIAMOND, Chapter 11 ) Adversary Proceeding 13 Trustee for Howrey LLP, ) No. 13-3093 DM ) 14 Plaintiff,) ) 15 v. ) ) 16 JONES DAY LLP, ) ) 17 Defendant.) ___________________________________) 18 19 MEMORANDUM DECISION ON MOTIONS TO DISMISS 20 I. INTRODUCTION 21 Plaintiff Allan B. Diamond, chapter 11 Trustee (“Trustee”) 22 for debtor Howrey LLP (“Howrey” or “Debtor”), filed multiple 23 nearly identical complaints for avoidance and recovery of actual 24 and constructive fraudulent transfers and for an accounting and 25 turnover and other relief, seeking to recover from several law 26 firm defendants the value of profits received by them with respect 27 to unfinished business that previously had been handled by Debtor. 28 Relying on District of Columbia law which in turn relies on Jewel -1- Case: 13-03093 Doc# 48 Filed: 09/09/14 Entered: 09/09/14 17:42:15 Page 1 of 13 1 v. Boxer, 156 Cal. App. 3d 171 (1984), Trustee seeks to recover 2 profits realized or to be realized by the defendant law firms from 3 Debtor’s unfinished business (“Howrey Unfinished Business”). 4 Trustee alleges that pre-petition waivers executed by Howrey 5 partners relieving them of their duty to account for profits made 6 on the Howrey Unfinished Business (the “Jewel Waiver”) constituted 7 fraudulent transfers, and that the defendant law firms are liable 8 as subsequent transferees.
    [Show full text]
  • Why Law Firms Collapse
    Why Law Firms Collapse John Morley1 Law firms don’t just go bankrupt—they collapse. Like Dewey & LeBoeuf, Heller Ehrman, and Bingham McCutchen, law firms often go from apparent health to liquidation in a matter of months or even days. Almost no large law firm has ever managed to reorganize its debts in bankruptcy and survive. This pattern is puzzling, because it has no parallel among ordinary businesses. Many businesses go through long periods of financial distress and many even file for bankruptcy. But almost none collapse with the extraordinary force and finality of law firms. Why? I argue that law firms are fragile because they are owned by their partners, rather than by investors. Partner ownership creates the conditions for a spiraling cycle of withdrawals that resembles a run on the bank. As the owners of the business, the partners of a law firm are the ones who suffer declines in profits and who have to disgorge their compensation in the event the firm becomes insolvent. So if one partner leaves and damages the firm, it is the remaining partners who bear the loss. Each partner’s departure thus has the potential to worsen conditions for those who remain, meaning that as each partner departs, the others become more likely to leave as well, eventually producing an accelerating race for the exists bank. This kind of spiraling withdrawal is sometimes thought to be an unavoidable consequence of financial distress. But if law firms were not owned by their partners, this would not happen. Indeed, the only large law firm in the history of the common law world that has ever survived a prolonged insolvency is also one of the only large law firms that has ever been owned by investors.
    [Show full text]
  • New Partners 031609.Indd
    SPECIAL SECTION NEWPARTNERS 2009 LIST P.24 THE THE STORY P.18 SURVEY P.20 THE NEWPARTNERS 2009 We sent our anonymous online survey to about 300 new partners. Excerpts of their answers follow. Forty-one responded: 44% percent are women and 56 percent are men; almost two- thirds are Caucasian; and one-fourth are Asian, Indian/South Asian or Latino/Hispanic (an- other 12 percent declined to describe their ethnicity). The size of their firms runs the gamut, from 1 to 25 to more than 1,000 lawyers. Their estimates of the associate-to-partner track at their firms also vary widely: The majority offered lengths of seven, eight or nine years, but the spectrum ran from three to four years at the low end to eight to 12 years at the high end. They represent more than a dozen practice areas. 1. What do you think was the most important factor in your IN THEIR making partner? “My ability to manage others” “My work ethic” “An excellent and supportive mentor” “Perceived value I could bring to the firm” “My specialty” OWN WORDS “One of the most important factors was having a profitable client” “Becoming the go-to guy in my practice area and development of client trust” “My business development skills and making my hours” “Performing at partner level while still an associate” “Relationships with supportive partners” “Solid all-around litigation skills” “Relationships (within and outside of firm) and personal skills and industry name recognition” Reflections from California’s “Being a necessary and critical part of the practice group” “Hard work; teamwork; commitment to the firm” “I became more knowledgeable than the partners in a few critical areas” new partners, from our “Longevity at the firm” “Quality of work and opportunities to work with many partners within the firm.” “Analytical skill” annual anonymous survey “Earning the trust and respect of my colleagues” “Attention to details” “Having an ‘ownership mentality’ every day as an associate” 2.
    [Show full text]
  • Campaign 18 Director of Public Relations Generosity of Alumni and Friends Make Adrienne W
    RES IPSA LOQUITUR The Georgetown University Law Center Magazine SPRING / SUMMER 1990 Volume 39, Number 3 Dean Law Center News 2 Quadrangle groundbreaking; Judith Areen Daniloff on eastern Europe; Blondel delivers Hart Lecture. Assistant Dean for Development and External Affairs Law Center Graduates 8 Graduates reach success in Congress with Kevin T . Conry on Capitol Hill Georgetown law degree. Assistant Dean fo r Career Services Home C ourt 1990 16 Professors and students team up against and Publications Congress in annual charity game. Abbie Willard Thorncr Law Library Campaign 18 Director of Public Relations Generosity of alumni and friends make Adrienne W. Kuchneman Draws to a Close Williams Library a reality. Flaws in Campaign Finance 23 Problems are numerous in efforts to reform Assistant Director of Public Relations Edwin C. Darden by Roy A. Schotland campaign finance laws. Profile: Robert Kimmitt 26 Undersecretary of state is a key policymaker in Bush Administration. Alumni News 28 Reunion weekend in Washington, D.C. Res Ipsa Loquitur is published three times each year for On the Cover: Georgetown Law Center’s McDonough the Georgetown University Law Center community, Hall and Williams Library arc situated just a short with distribution to alumni, faculty, staff, students, the distance away from the U.S. Capitol. All three structures media and friends. Published by the Office of Public are captured at twilight by photographer Sarah Hood. Relations, Georgetown University Law Center, 600 New Jersey Avenue, NW, Washington, DC 20001. ©Copyright 1990, Georgetown University Law Center. All rights reserved LAW CENTER NEWS Georgetown Law Center Breaks Ground for New Campus Quadrangle jjjLl) |»Jj Artist's rendering o f the new Quadrangle, as seen from Second Street.
    [Show full text]