10/17/08
Displaced staff members have received some help from their former employers. The Dissolution Committee wiped the home page of the Heller Ehrman website clean and replaced it with a link to legal career placement opportunities. Heller Ehrman promised health benefits to employees until October 31, 2008, while also telling employees that they were negotiating COBRA benefits to continue health coverage. It remains unclear whether the firm will pay out accrued vacation time, a state law in California. The federal WARN Act mandates 60 days’ warning before large layoffs.
The Recorder reported that at least one staff member who remained with the firm did not receive an email about the company layoffs and had to read about them on the blogs.
These are the third round of cuts since the firm voted to dissolve on September 26, 2008. When announcing the plan, partner Barry Levin told the 500 plus employees that an orderly dissolution was going to take place over a number of weeks. However, yesterday’s firings indicate that this is not the case. One hundred employees were let go last Friday, October 10, notified by an email very similar to the one issued to employees on Thursday.
The company was experiencing major legal and financial troubles, started by a bad year in 2007. Assetts tied with lenders were frozen, making it impossible for the firm to make loan payments and compensate employees. The Seattle Times spoke with that former partner Stephen Ferrulo, who attributed the firm’s financial difficulties to the San Francisco office’s unusual structure that may have proved particularly unlucky in the current financial climate of tight money. The firm, a partnership made up of professional corporations, used a line of credit to fund operations until the next year’s cash flow caught up with its outlays. Then it distributed all its earning at the end of each calendar year.
Partners from Heller Ehrman have been placed in firms around the country including Perkins Coie, Davis Wright Tremain, Sidley Astin, Jones Day and Goodwin Procter. The partners were allowed to bring along only one associate, leaving many of the Heller Ehrman associates without work.
Heller Ehrman was founded in 1890 and was an international law firm of more than 650 attorneys in 14 offices in the United States, Europe, and Asia. The firm has survived the 1906 earthquake and led legal projects ranging from the financing of the Golden Gate Bridge to the overturn of the state's ban on same-sex marriages. In 2004, the American Lawyer’s A-list ranked Heller second. This list is ranked on a measure based on various factors such as associate satisfaction, diversity ratings, pro bono representation, and profitability.
The recent layoffs are indicative of a steadily declining demand for legal services in the tumultuous US economy. Other larger US firms have also been affected by the layoffs, including Chicago-based firms Sonnenschein and Katten, Muchen and Rosen, as well as Charlotte firm Moore & van Allen.
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