Update: 5:30 PDT: A story expanding on this blog item has been posted at CalLaw.com, with the final version to be posted at 7 pm. Click here to read the latest version. Our original post remains below, with the full layoff letter at the bottom, after the jump.
Updated 11:45 PDT: That was quick. Today is the last day for a large chunk of Heller Ehrman, according to an email laying off an unknown, but apparently large, portion of the firm's staff.
The firm's banks — Bank of America and Citigroup — forced management to lay off “many employees,” the four-attorney dissolution committee wrote in e-mails to both terminated employees and those who will remain.
“Generally, they have refused to pay employees who we cannot convince them are necessary (as they define it) for the wind down efforts,” the e-mails read (see the full email below).
The firm had voted to dissolve in late September, with the wind-down to have been complete at the end of November. More recently, there's been some question as to whether the firm would pay accrued vacation time — a memo from the dissolution committee indicated that the banks wouldn't let that money be paid, despite California law. Now it appears the banks are also forcing immediate layoffs that will also invite lawsuits from staffers due vacation time under state law and additional wages, arguably, under the federal WARN Act.
Employees terminated today were told in the e-mail that there would be more layoffs over the next two weeks. The scope of today's layoffs, and whether they include attorneys as well as staffers, was unclear. All library staff and the firm’s group of ten IT trainers were laid off.
Terminated employees were told that they would receive final paychecks, “but because of the volume of final paychecks we will need to prepare, it may take a few days to get your final paycheck to you.”
Scott Andrews, a San Francisco associate, said he and at least two secretaries who assist him have received the e-mail that they will continue to be employed. He and others assume associates are being kept to continue collections from clients, but he guessed many may leave for new firms anyway.
A Silicon Valley junior associate said he and at least one other associate will remain, “which leads us to believe that non-billing personnel has been cut off,” he said. The terminations haven’t come as a huge surprise to staffers, he added. Neither associate knew the size of the group terminated or the group remaining.
And now: The layoff email.
It is with a great deal of regret that we write to inform you that we will not be able to pay you for work performed after today, Friday October 10 and, as a result, that your employment with the firm will be terminated today. We also expect that we will need to inform other employees over the following two weeks that we are unable to pay them any further and will need to terminate their employment. We do expect that we will be able to continue to pay some people for a longer period of time. Regular paychecks will be provided today but because of the volume of final paychecks we will need to prepare, it may take a few days to get your final paycheck to you. We know this is important to you but please be assured your colleagues in the Payroll Department will be working as hard and as quickly as they can to get you your paycheck.
These actions have been forced upon us by the two banks -- Citibank and Bank of America -- that control our ability to make any payments. Generally, they have refused to pay employees who we cannot convince them are necessary (as they define it) for the wind down efforts. We understand how upsetting this news is. You should continue your activities to serve clients, including, where applicable, to bill your time. Time billing and client service are two of the criteria the banks are examining in our continuing negotiations with them to maintain an orderly transition.
We want to thank you for your professionalism and forbearance to date and ask you to continue to proceed with the same degree of professionalism you have demonstrated during your valuable service to the firm and to its clients.
The Dissolution Committee
We’ll have more here and at CalLaw.com starting around 12:30 p.m. (An aside: We just got solid confirmation that the Madison office, as we said before, is going to Perkins Coie.) Tips and comments are welcome on this post and via email.
— Niraj Chokshi