Legal Pad

Thelen Files For Bankruptcy

Thelen LLP filed for Chapter 7 bankruptcy in the Southern District of New York on Thursday night. See the petition here (.pdf).

Many expected the bankruptcy to come before the end of this week. A New York landlord had obtained writ of attachment in Los Angeles Superior Court in June that guaranteed it $25 million of Thelen’s assets. The firm had 90 days to void the writ with a bankruptcy.

A similar writ forced Heller into bankruptcy last December.

Thelen voted to dissolve last October. The firm had paid off most of its debt to its banks by the summer, when the writ arrived.

Thelen filed the bankruptcy in New York because that’s where its assets and major creditors are located, said Peter Gilhuly, Thelen’s bankruptcy counsel at Latham & Watkins, in an e-mail.

“Thelen believes that its principle remaining assets (receivables) are located in NY as is its bank, and two largest unsecured creditors (landlords).”

Update: A little more detail from the bankruptcy filing is in the version we've just posted on CalLaw.

—  Amanda Royal

Thelen Staff Sue Ex-Partners for $18 Million

Thelen’s former employees have filed an $18 million proposed class action against former partners and the firms they now work for.

The suit, filed in the Northern District of California late Monday, alleges the partners paid themselves $25 million as the firm dissolved, and neglected to pay $18 million in wages owed to employees, which included accrued vacation and pay in lieu of 60 days’ notice.

This is the second class action brought by Thelen’s employees. The first was filed against the defunct company a few weeks after it dissolved.

Litigation boutique Blum Collins is representing the employees in both suits. The firm also represents Heller’s employees in their $30 million bankruptcy claim.

The suit targets well-known Thelen partners Stephen O’Neal, Thomas Hill, Ellen Bastier, Mark Weitzel, Julian Millstein, Jeffrey Steiner and David Graybeal. It also names Orrick, Herrington & Sutcliffe, DLA Piper, Nixon Peabody, Howrey and Morgan Lewis, where these partners landed before and after Thelen dissolved.

— Amanda Royal
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Thelen Class Action Case Gets a Little Simpler

Two former Thelen employees are throwing in the towel after their attorney was accused of trying to get a piece of the action one too many times.

Attorney Cary Kletter filed three similar complaints against Thelen in two courts, and tried to intervene in a fourth case, all on behalf of Todd Bennet, a librarian at Thelen for 29 years, and Matthew Troup, a clerical worker for a little over a year.

Attorneys for Thelen had threatened to seek sanctions against Kletter for allegedly violating federal court rules, saying he was bogging down the courts just so he could rack up legal fees for himself.

A week after a federal judge told Kletter’s clients they couldn’t intervene in a class action in the Northern District of California brought by former Thelen employees seeking unpaid wages from the firm, Kletter filed a second class action in the district on essentially the same claims.

Early on Friday, Kletter was defending the decision to file the separate class action because it included more claims involving unfair business practices and unjust enrichment.

And then he wasn’t. After the jump.

Intervention in Thelen Employee Class Shot Down

A class notification is on its way to the printer in an employee class action against defunct Thelen after a federal judge ruled two employees who filed a separate suit in San Francisco Superior Court can’t intervene in the federal case.

The employees wanted to intervene because the federal case doesn’t include a claim under California’s Private Attorney General Act.

U.S. Magistrate Judge Elizabeth Laporte agreed with counsel for Thelen and the class that there wasn’t much point. Any recovery under PAGA would send money to the state that might otherwise go to plaintiffs.

“Plaintiffs attorneys represent that they carefully considered whether or not to assert a PAGA claim, but chose not to assert such a claim because 75 percent of the recovery goes to the state in such an action, and Thelen has very limited funds to pay any claims of the class,” Laporte wrote.

Thelen had objected to the motion to intervene, saying that the employees’ counsel, Cary Kletter of Kletter & Peretz, was basically just trying to stay employed.

These days, who isn’t? More, after the jump.

Thelen Gets More Sued

Xerox Corp. has won a temporary protective order (.pdf) on about $900,000 the company says defunct Thelen owes it.

The order, granted by San Francisco Superior Court Commissioner Everett Hewlitt on April 17, means Thelen, or its banks, will have to set aside the money until a hearing is held in August.

Xerox asked for a $1.2 million writ of attachment, which would have sent a stronger signal that the money is theirs. The order refers to Thelen as a “limited liability partnership in possession of or under the control of Citibank.”

This is one of several suits Thelen is facing in the wake of its dissolution last fall. The firm has managed to stay out of bankruptcy, but it faces a class action by employees for failure to pay accrued vacation and WARN Act money.

It’s also being sued for a delinquent account by G Street, which appears to be a landlord. It settled with its 101 2nd Street landlord in February.

Thelen has also been using Joel Adler, of the Adler Law Firm, to go after some of its accounts receivables.

— Amanda Royal

Landlord Lets Thelen Cleanup Crew Stick Around

A threat of eviction is off for the remnants of three-months-defunct Thelen, which has 22 employees working to wind down the firm’s operations at its 2nd Street office in San Francisco. The employees are settling accounts, taking collections and checking mail in a small fraction of the space formerly rented by the firm, which closed shop in early December.

The landlord had filed the first step to eviction, called an “unlawful detainer,” in San Francisco Superior Court in late November. The action was dismissed Tuesday after Thelen and the landlord reached a deal, according to Peter Gilhuly, a bankruptcy partner at Latham & Watkins who is representing the firm in its dissolution. Gilhuly would not give details of the accommodation reached, but said the wind-down team will be able to stay in the building “for a number of months.”

Gilhuly had said last week, “We’ve done everything we can to make the best of a bad situation with the landlords.”

As for the dissolution, Thelen’s main objective is to collect money and pay down Citibank, which was originally owed $60 million and has been paid $25 million. Partners have been “for the most part” cooperative in collecting money from clients, he said.

“We’ve paid down Citibank quite a good amount, but still have a ways to go,” Gilhuly said. “It’s going to be a few more months before we know the economics of the case. You don’t really know how the receivables are going to collect out until you get to the end of things.”

— Amanda Royal

Thelen Employee Suit Refiles for Better Payday

Someone has pressed the restart button on a potential class action against defunct Thelen brought by former employees.

Mathias Troup v. Thelen was dismissed, by request, on Dec. 29. On the same day, a similar class action was filed, Todd Bennett et. al. v. Thelen, with Troup as the second class representative.

It appears the first suit may have been filed too early, because employees can get more money under the California WARN Act if they wait 30 days to sue. Thelen announced on Oct. 28 that it would dissolve. Troup landed in San Francisco Superior Court about two weeks later, on Nov. 12.

Nixon Names More Names

Nixon Peabody put out some convenient lists to fill in the blanks on the rest of that huge group of lawyers the firm has picked up in the wake of Thelen's dissolution.

For those interested in all the nitty gritty, check out today’s three press releases on the California contingent, for the San Francisco, Silicon Valley, and Los Angeles offices, respectively. (They include some names we'd already reported were Nixon-bound.)

As for those who are news to us today, we’ll point out: Labor and employment lawyers Michael Hallerud and Robert Dolinko were among those, in a story we did in September on CalLaw.com, who were thought to be particularly desirable laterals still with the firm in its final months. Corporate lawyer Jay Margulies happens to be a vet of another firm dissolution -- he was one of the partners in charge of the looooong wind-down that followed Pettit & Martin's 1995 closure.

—  Pam Smith

Heller Blogger Launches Thelen Staff Site

The Drone, captain of the blog for Heller Ehrman’s suddenly unemployed staffers, went to a lot of trouble to keep his identity secret in the midst of the firm’s collapse.

There was the fake use of British English, and the intentionally misspelled words. There’s also the LinkedIn profile, in which his experience includes a show girl gig in the 1970s. His name was Lola.

“I would purposely do things to trip people up,” he told LegalPad today over Skype phone from Chicago. The humor gave him away to a few people who knew him best, he said.

Now he’s ready to pull back the curtain and step out. And he is responding to a request that came about a month ago from staffers of the soon-to-be-defunct Thelen to launch a blog just for them.

13 Lawyers Going With Bastier to Reed Smith

Legal Pad's bag o' news is ripping open with Thelen developments today.

Reed Smith has just announced that Thelen energy partner Ellen Bastier will join its San Francisco office, along with 13 partners, counsel and associates in three locations. We totally called Bastier's move on Cal Law more than two weeks ago, but this makes it official and fills in how many people will be accompanying her.

In addition to Bastier, Edward Rogan, Paul Lacourciere, Donald Ousterhout and David Biesemeyer will join as partners in San Francisco, and James Lee will join as counsel there. Five associates are coming with: Michael Eden, Ashlee Bonds, Ann Elling, Kurshid Khoja and James Hazlehurst.*

Robert Vilter and Eli Mattioli will sign on as partners in New York, and Elizabeth Quirk will join as counsel in Princeton.

—  Petra Pasternak

*Updated to add associates' names.  Just because.