Posted Aug 19, 2013 12:03 pm CDT
The trustee for the defunct Howrey law firm will recover millions of dollars of fees from a law firm that hired 11 of its antitrust partners and will use the money to pay off most of its debt to Citibank.
Trustee Allan Diamond called the new settlements “monumental” and “a massive positive step” in interviews with the Am Law Daily and the Wall Street Journal (sub. req.). He told both publications that the settlements increase the chances that Howrey will be able to pay some of the debt owed to former employees and other creditors.
Baker & Hostetler will pay Howrey $41 million, $38 million of which is from contingent fees earned in antitrust litigation. The suit was filed on behalf of dairy farmers by the antitrust partners when they were at Howrey. The Howrey estate will then use $37 million of the Baker & Hostetler recovery to pay principal and most of the interest owed to Citibank.
Baker & Hostetler also agreed to pay a portion of future contingency fees earned by the former Howrey partners in continuing cases. According to the Wall Street Journal, “Litigation was Howrey’s bread and butter, and the firm’s growing reliance upon contingency-fee matters—which require large up-front investments for a delayed and uncertain payoff—was among the factors that contributed to its collapse.”