Business of Law
As Howrey Hemorrhages, Observers Speculate re Possible Debt Issues, Winston Exposure
Posted Feb 2, 2011 4:24 PM CST
By Martha Neil
After news yesterday and today that Winston & Strawn reportedly has made offers to most of Howrey's remaining partners and another five are headed to Morgan Lewis & Bockius, observers say both those remaining at the firm and those who have already left face potential liability for the firm's likely debt obligations.
Also possibly exposed is Winston & Strawn, if it follows through on its reported plan to add some three-quarters of Howrey's remaining partners to its attorney roster, reports the Am Law Daily.
"The courts are smart enough to know if you brought over 75 percent of partners, and you just spent the past three months looking over the firm's books, you've assumed successor liability," Jonathan Landers of Milberg tells the legal publication. He is a bankuptcy practitioner.
Meanwhile, both the thinning partner ranks and apparent reduced billables could violate likely provisions in Howrey's loan covenants with Citibank, which is a secured lender to the law firm, observers speculate.
"There was no work going on in December," an unidentified ex-partner of Howrey says of his now-former firm. "People were just sitting in their offices with the doors closed."
Office rental obligations are also likely to add up, whether or not there are Howrey lawyers to fill the space.
The Am Law Daily reached Howrey executive partner Robert Ruyak, who declined to comment; and Winston managing partner Thomas Fitzgerald did not respond to an e-mail requesting comment.