Posted Dec 10, 2009 02:48 pm CST
Heller Ehrman leaders were grappling with declining revenues at the same time they reassured partners that the firm was in good health, according to creditors’ exhibits in the firm’s bankruptcy mediation talks.
The Recorder obtained a copy of the exhibits. “Meeting notes show Heller’s leaders in 2007 were seriously grappling with the firm’s problems—declining revenue and productivity, unintended partner departures, the need for layoffs and boosting partner morale,” the story says.
Several cases setting in 2007 had created “a $200 million hole in continuing revenue, while partners generated only $135 million to $175 million in new business,” the story says. By early 2008, firm leaders were talking about merging with other law firms to survive and drawing on the firm’s credit line, hitting a $40 million balance. The amount was 45 percent higher than the year before.
At the same time, partners were talking about ways to reassure partners that the firm was financially sound, the Recorder says.
The documents also “expose embarrassing ironies,” according to the story. One of them: Heller sought to oust 50 underperforming partners in 2007, but it collapsed the next year when too many partners left and triggered a loan default.
Former Heller shareholder Michael Rugen is coordinating the defense of about 90 Heller partners. He told the Recorder that leaders were not aware Heller was a sinking ship in early 2008.