Legal News

Thelen to vote on firm closure

By Jason Siegel

Management at San Francisco's Thelen LLP has recommended that the firm close its doors on Dec. 1, according to the law firm.

The full partnership of the firm has seven days to vote on the recommendation, which the partnership council announced on Tuesday.

The dissolution, if approved, would be the second law firm in the past month to collapse. On Sept. 26, Heller Ehrman, another San Francisco firm, closed its doors.

Both Heller and Thelen hemorrhaged partners in the past year and, in recent months, faced bank covenants that trigger a collapse once a firm fails to maintain a minimum number of partners, said Peter Zeughauser, of the Zeughauser Group, a legal consulting firm based in Newport Beach, Calif. Both firms also had too many lawyers and not enough work, and both faced increasing costs amid the current recession, which resulted in declining revenues.

And it's no coincidence that both originated from San Francisco, Zeughauser said.

"San Francisco has become probably the second or third most attractive market in the U.S., after New York and maybe after Washington, D.C.," he said. "That's resulted in a lot of strong firms coming into San Francisco and competing for work there. And I think that did have an effect."

Thelen, which has lost 100 lawyers this year, has defaulted on its primary credit agreement given the number of partners who have departed, the firm stated in a press release issued on Tuesday. Three partners who serve on an administrative committee are in discussions with its bank regarding expenses, including salaries and accrued vacation pay for its employees, the firm said. So far, the bank has committed to paying for salaries, but not vacation, through Nov. 30.

Partners will receive minimum draws, but not profits, through Nov. 15.

"The decision to dissolve the firm was precipitated by several economic factors, including recessionary pressures and numerous partner departures over the past year, both of which have negatively impacted firm revenues," the firm said.

Thelen was founded in 1924 in San Francisco as Thelen Marrin Johnson & Bridges, which specialized in construction law. In 1998, the firm merged with Reid & Priest, which added utility finance and energy expertise, particularly in renewable projects involving wind and solar power.

In 2006, Thelen merged with Brown Raysman Millstein Felder & Steiner, after which numerous senior partners departed, including name partners Peter Brown, Richard Raysman and Jeffrey Steiner.

In March, the firm laid off 26 associates and 85 staff members.

Merger discussions with Nixon Peabody failed several weeks ago.

Recent news reports indicated that Thelen chairman Stephen O'Neal and about 30 lawyers from the firm's construction and mass torts practice were in talks to join Washington's Howrey, and that Ellen Bastier, an energy partner, is anticipated to join Reed Smith along with several of her colleagues.

Earlier this month, Pillsbury Winthrop Shaw Pittman hired Thelen's China practice, which was made up of about 20 lawyers, including partners Joseph Tiano Jr. and Louis Bevilacqua, in Washington, San Francisco and Shanghai. The firm also took Washington partner Michael Jaffe and counsel Ronan McHugh.

Thelen's other practice areas are in corporate finance, antitrust and mass tort litigation, labor and employment and intellectual property.

The firm has 400 lawyers in seven offices: San Francisco, New York, Washington, Los Angeles, San Jose, Calif., Hartford, Conn., and Florham Park, N.J.

-- Amanda Bronstad

Full post as published by Legal Pad | LA on October 29, 2008 (boomark / email).