Posted Mar 10, 2011 11:39 am CST
By late Wednesday evening, the partners had voted and the press release was issued: Howrey will dissolve, effective March 15.
Even as Howrey’s fate was decided, the future of some of its lawyers remained unclear. Earlier reports had said Winston & Strawn had made offers to nearly 200 Howrey partners, but the press release indicates Winston will be hiring lawyers and staffers mostly from Howrey’s Houston office. Significant client conflicts are preventing other partners from joining Winston and they will be going to other law firms, the statement says.
A statement issued by firm chairman and CEO Robert Ruyak blames the breakup on partner defections spurred by disappointing financial results, echoing an interview he gave to the Wall Street Journal (sub. req.).
Ruyak’s statement reads: “The firm had experienced disappointing financial performance over the past two years and subsequently several partners had resigned. This resulted in the conclusion that an orderly wind down of the firm’s activities over time was the only practical alternative.” The American Lawyer and Above the Law both covered the partner vote. The law firm provided the ABA Journal with a copy of the press release.
The dissolution vote follows the defections of more than 70 Howrey partners in the past year, bringing the current roster to about 324 lawyers, fewer than half the number it had in 2009, the Wall Street Journal says. The story blames the partner losses on fluctuating fees from contingency work, helping cause a 35 percent drop in profits per partner in 2009.
Ruyak told the newspaper that, by last year, 10 percent to 11 percent of Howrey’s billable hours were devoted to contingency matters, up from 8.5 percent in 2009, and up from 3 percent to 4 percent in the 1990s.
“What we found is that partners at major law firms have very little tolerance for change and very little tolerance for fluctuation in profits,” Ruyak told the Wall Street Journal. The Wall Street Journal Law Blog also ran portions of the interview.
Howrey vice chairman Sean F.X. Boland identified two problems contributing to the breakup in an interview with the Washington Post late last month. He also mentioned fluctuating revenues, caused by contingencies. “Some people, including some fairly high-level people, sort of bailed on us when they didn’t get exactly what they wanted,” Boland told the newspaper. “You have to ask your partners to be patient until it pays off, and not everyone is patient enough.”
He also said the law firm grew too quickly, acquiring 40 construction lawyers from the disbanding Thelen law firm in 2008, even as other law firms were cutting back because of the recession. “There is sometimes a price to pay for growth,” Boland told the Post. “In hindsight, we should have probably cut back some. Buying a construction practice in the middle of the recession, I think people could legitimately look back and criticize that. We just didn’t see how long the recession was going to last and how bad it was going to be.”
ABAJournal.com: “Report: Latham Bankruptcy Lawyer is Running Howrey Meeting to Vote on Possible Dissolution”
ABAJournal.com: “Howrey VC Recounts Problems: Quick Growth, Lower Profits and Partners Who ‘Bailed on Us’ “
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