ABA Journal - Law News Now

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1. Posted by anon - 3 months, 3 weeks, 15 hours, 42 minutes ago

   heller’s shareholders sowed the seeds of their own downfall before levin.  asia was one of many mistakes, part of an ill-advised (and i feel, greed-fueled) expansion plan.  all they ever cared about was making sure every partner earned a million-plus.

2. Posted by TSK - 3 months, 2 weeks, 5 days, 18 hours, 4 minutes ago

   I know that those responsible for the ABA Journal are considered somehow exempt from the normal requirement that lawyers engage in rigorous thought and analysis of issues. But even they must have noticed that institutions which took the biggest risks in the past few years (and thereby made the biggest profits) are now suffering the biggest losses. Forget this obsession with personalities: it’s the policies and practices that count!

3. Posted by R - 3 months, 2 weeks, 5 days, 17 hours, 20 minutes ago

   Yes, Heller’s problems were caused by term limits:  BILL CLINTON’S!

4. Posted by DCEsq - 3 months, 2 weeks, 5 days, 16 hours, 22 minutes ago

   I was almost startled by this article’s title.  Dared I to hope for some kind of analysis as to this particular firm’s woes?  Might there be some element of the analysis that readers could extrapolate to make some sense of the imminent decline of corporate law firms?  Alas, no!  In fact, the reporting was not even original, but a mere regurgitation of some blog out there, whose credibility remained a mystery.  Perhaps the print version of the ABA Journal will bring some juicy morsels of food for thought.

5. Posted by anonymous - 3 months, 2 weeks, 5 days, 14 hours, 58 minutes ago

   Terms limits really had nothing to do with the fall.  (Though “R” is right that the last eight years of Bush caused significant atrophy to Heller’s former antitrust powerhouse and rainmaking factory). In fact, the policy shifts that began during Levin’s tenure (i.e., growth as a top priority, the bottom line (PPP) as new the top priority, rejection of “smaller case” and “smaller clients”, etc.) sowed the seeds of a deep cleavage among the partnership that grew to a deep chasm during Larabee’s tenure.  (It also killed associate morale because it became clear that with only “huge” cases, associates would never get substantive experiential opportunities because the stakes were always going to be too high.  The same proved to be true of junior partners, who fought to take/defend depos or stand up in court, etc.)  The firm was ultimately converted from a collection of California attorneys who worked together with the primary goal of practicing law (a law firm) to a collection of east and west coast attorneys who were more interested in making money as a business that practiced law to generate revenues and boost profits.  Heller morphed from a “kinder, gentler, west coast” BigLaw firm to a firm that was trying so hard to move (culturally, financially, etc) to NYC and ended up getting stuck somewhere in the Midwest (metaphorically).  Many partners didn’t like, and weren’t interested in, that move.  In the 80s and 90s Heller partners could have made more money at other firms, but didn’t want the extra money if it came with working somewhere else.  Heller also intentionally avoided paying top dollar (it paid just below top dollar) to law grads because it didn’t want to recruit those grads who were guided primarily by money—it wanted people who were choosing Heller and not just the highest paying firm.  That all began to change with Levin’s tenure.

   The small cabal that ran the firm was committed increasing profits and believed that the best way to do that was to emulate NYC firms and to “move” the firm eastward in all respects (e.g., open offices on the east coast, raise rates, raise billable requirements, work associates harder, etc).  With that came higher rates (to boost PPP) that forced out some partners whose clients could no longer afford their services at Heller.  Other groups (e.g. employment, environmental, soft IP (trademark), etc.) were given a signal that they were marginal to Heller’s future, causing further defections.  Then, some “old school” partners began leaving because they saw the writing on the wall due to the new greed that had taken over the firm’s management.  They liked the old Heller community, where attorneys were individuals and people instead of being perceived solely as profit generators.

   When the big cases settled last year it became clear that the whole gig was up, and that spawned a renewed interest in a merger Failed mergers and divisions among the partnership made matters worse.  The old power core consisted of the antitrust group (Popopofsky, Bomse, etc) and the new power core had shifted to IP Lit (Haslam, Fram, etc).  Heller’s inability to satisfy the members of the IP Lit group was the straw that broke Heller’s back.  The IP Lit group was the source of the conflicts that broke up the Baker marriage and the IP Lit group had already committed to leave before Mayer opted out (which is probably a primary reason why Mayer opted out). 

   A tragic tale, where the greed and short-sightedness of few left a lot of people in the lurch.  Best of luck to all involved.

6. Posted by Lessons From Heller - 3 months, 2 weeks, 5 days, 13 hours, 10 minutes ago

   As a case study, Heller can be instructive.  Those lawyers who retain control of client relations for future business and those lawyers who used their position in the firm to acquire control over clients and generate income for themselves will move on to new organizations without significant economic loss.
   However, the large number of lawyers who embraced the Heller culture and tied their fortunes to the firm itself will find that they have problems they never anticipated.  Unless they ar taken along with the lawyers who can sell their practice to a new firm, they will have to compete with the many, many lawyers who now must find new jobs for much less money.
   If they are shareholders in Heller, they probably financed their capital and will have to deal with that debt on their own.  If the crditors and lessors get restless, they mayfind themselves facing liability claims.  Every day that the headcount goes down and the bills pile up, the risk of liability increases.  The lawyers who have moved to major firms are now in stable and profitable situations.  The ones who remain must accept the risk that the compensation will cease abruptly and that they will be looking for work without any current income. 

   The lesson or question, really, is how to be secure from the sudden collapse of a large enterprise.  Whethere it is Bear Stearns, Lehman or Heller, being part of a very, very large organization with a volatile and intangible asset base is a bad idea.

7. Posted by Long Time Heller, First Time Caller - 3 months, 2 weeks, 5 days, 9 hours, 54 minutes ago

   Thank you very much #5, excellent summary and exactly right.

8. Posted by anonymous2 - 3 months, 2 weeks, 5 days, 4 hours, 31 minutes ago

   When I was offered a job (which I accepted) at Heller in 1969, the last phase of the process was a meeting with the Managing Partner, then Richard Guggenheim.  The purpose was to explain the firm’s history and culture.  Heller,  he informed me, had laid off no one during the Depression.  Not no partners.  Not no lawyers. No one.  That ws because Heller was a professional community.

   Fast forward 35 years to another firm, where my task at the directionof the Executive Committee is to meet with a highly-recruited new associate on the day he reports to work, and tell him that due to a downturn, he is being terminated.

   That was the day I knew I had been in the “profession” long enough.

   Heller is just one more sign of the times, and of the sorry state of most current law firm practice.