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September 18, 2009 11:30 AM

Heller, One Year Later

Posted by Zach Lowe

We've spent much of this week reflecting on the one-year anniversary of the Lehman Brothers collapse, but we should devote some attention to the one-year anniversary of Heller Ehrman's demise, too. That will pass on Sept. 26, a year after Heller's partners voted to dissolve the firm in the wake of its lender bank's decision to freeze the firm's accounts and the move of a major IP group to Covington & Burling. Law firm leaders on the West Coast are still thinking hard about the lessons of Heller's collapse, according to The Recorder, an Am Law Daily sibling publication. 

Heller's fate showed the importance of beefing up capital reserves and cutting back on short-term debt, the Recorder says. Here's Keith Wetmore, chair of Morrison & Foerster: "Certainly Heller and the other law firm failures from last year were important lessons in minimizing short-term debt, because in every death story from those law firms, the banks rang the bell."

Of course, Heller's fall triggered a ton of litigation that still roils today, and the Recorder's Legal Pad blog updates us on one of those cases: The $30 million class action suit ex-Heller staffers filed against the firm for allegedly violating the federal law that requires employers to provide two months' notice--or the equivalent in pay and benefits--before a mass layoff. Heller's estate (represented by Manatt, Phelps & Phillips) has offered the employees $7.5 million to settle the case, but the employees' attorneys at Blum Collins are urging the plaintiffs to reject that offer, The Recorder reports.

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