Heller Watchers, a Trip Down Brobeck-Memory Lane
Sept. 25 Update: Heller to dissolve.
Some of the blog posts and comments fretting about Heller Ehrman's situation have dropped in references to Brobeck, Phleger & Harrison, the San Francisco mainstay that famously soared during in the tech boom and then crashed with the bust. For those of you who weren't around in the run-up to Brobeck’s 2003 demise, or who forget what went down, we've put together a handy crib sheet after the jump.
Feel free to chime in with comments if you think we missed an important milestone, or if you want to sound off on how Brobeck's pre-dissolution history compares to, or contrasts with, Heller’s situation thus far. (Not to suggest this is the only case study out there: Tomorrow we plan to take a look at another big firm that succumbed in recent memory.) Now, on with that Brobeck history lesson ...
2000: Brobeck became California’s second highest-grossing firm, with $476 million in revenues in 2000
Early 2001: Brobeck to $135,000!
October 2001: Then-firm Chairman Tower Snow Jr., who had emphatically opposed the idea of layoffs, announced he wouldn't seek re-election at the end of the year
November 2001: The firm offered to pay underperforming associates in its business and technology group as much as five months' salary to leave the firm
2001: Gross revenue was $447 million, a 6 percent slide from 2000
Early 2002: Brobeck froze associate salaries, meaning associates would not advance to their next lock-step salary level and first-year and second-year associates would be earning the same base pay of $135,000
Early 2002: The firm laid off 54 associates and 85 staff
March 2002: The Silicon Valley office moved to East Palo Alto, but the firm was already looking to sublet 70,000 square feet of the new 190,000-square-foot space. At the same time, it was hoping to rent out 120,000 square feet at its old Palo Alto location, where its lease wasn’t set to expire for another 1 ½ years. The new lease was for 12 years
May 2002: The firm laid off 35 associates and 24 staff
May 2002: The firm expelled Snow from the partnership in retribution for his attempt to lure several partners with him to Clifford Chance
May 2002: After a false start, a group of the firm’s lawyers, including Snow, left to set up an S.F. office for Clifford Chance
June 2002: Some associates and staff also left for Clifford Chance
August 2002: Brobeck pushed back arrival dates for half its fall class of 60 attorneys, in the process offering some as much as $3,000 a month not to show up for work until January 2004
September 2002: Almost half of the firm’s IP partners, including rainmaker and IP group head James Elacqua, left for Dewey Ballantine
Late 2002: After earlier talks reportedly broke down with Hogan & Hartson, Brobeck was thought to be in merger talks with Morgan, Lewis & Bockius
December 2002: The firm laid off “fewer than 20” S.F. staff
2002: The firm grossed $353 million in 2002, down 21 percent from 2001
Late January 2003: Steven Zager, one of Brobeck’s biggest rainmakers and head of the litigation department, left the Austin office to join Akin, Gump, Strauss, Hauer & Feld
Late January 2003: Brobeck, crushed by debts and the collapse of merger talks with Morgan, Lewis, announced its dissolution. The firm had lost more than 60 partners in the past year and had seen its lawyer ranks shrink to 518 from a height of 921 in September 2000
Early February 2003: More than 50 partners from Brobeck accepted offers to join Morgan, Lewis
February 2003: O'Melveny & Myers signed Brobeck corporate rainmaker Warren Lazarow along with four other partners, a counsel and 12 associates from Brobeck's business and technology group
February 2003: Partners had more to worry about than just finding another job — they had financial obligations to their old firm
Early 2003: A handful of partners were named to a liquidation committee
March 2003: Former Brobeck employees sued seeking severance pay from the now-defunct Brobeck and from Morgan, Lewis
September 2003: Former Brobeck landlords filed a petition to put the remnants of the defunct firm into involuntary Chapter 7 bankruptcy
October 2003: Brobeck sued Snow, its former chairman, and Clifford Chance, the firm he joined, alleging they contributed to the collapse
— Pam Smith
Looks like a roadmap. How can Heller avoid the same path as Brobeck?
Posted by: Former Heller Lawyer | September 23, 2008 at 08:59 AM
"Those who don't remember the past are doomed to repeat it"
Jim Jones
Posted by: Heller Drone | September 23, 2008 at 09:09 AM