There is nothing like a law firm collapse to stoke up the headlines, and this year, it was the Americans providing the fuel.
On 3 February, The Lawyer revealed that, nine months after the shock departure of 11 partners to Clifford Chance, San Francisco-based Brobeck Phleger & Harrison was finally laid to rest. The departure of Texan rainmaker Steven Zager to Akin Gump Strauss Hauer & Feld, followed closely by the collapse of talks with Morgan Lewis & Bockius, sealed the fate of the once great 77-year-old firm. But white knight Hale and Dorr came to the rescue of Brobeck’s European operation, taking the London, Oxford and Munich offices.
As if one collapse wasn’t enough, on 27 June www.thelawyer.com broke the news that Chicago giant Altheimer & Gray was preparing for a shock dissolution vote.
In July, The Lawyer’s Dearbail Jordan revealed that the firm was buckling under the weight of nearly $30m (£17.2m) in debt and that Altheimer partners would not be paid that month. Retired partners were considering their legal options after it emerged that there were no cash reserves left to pay their pensions.
Then the defections began in earnest. Fellow Chicago player Sonnenschein Nath & Rosenthal bagged two litigation partners, including the head of the group, and two real estate partners. Meanwhile, a group of intellectual property and real estate lawyers fled to Neal Gerber & Eisenberg, bringing to 19 the number of former Altheimer lawyers at the firm.
The firm’s San Francisco office splintered, with Bingham McCutchen, Mayer Brown Rowe & Maw, Perkins Coie and Seyfarth Shaw all recruiting Altheimer lawyers.
By August the sell-off had begun, with Altheimer flogging off its chattels to the highest bidder. Its Eastern European network fetched $1.8m (£1m), with the bulk of Altheimer’s lawyers in Prague, Bucharest, Bratislava, Istanbul, Shanghai and Budapest finding a new home with Salans. Chadbourne & Parke grabbed the Kiev office.
In November, to add salt to its wounds, four unsecured creditors, including the firm’s landlord, filed for Chapter 7 bankruptcy proceedings against the now defunct firm.