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In the latest issue of The American Lawyer, Drew Combs offers an explanation of “Why Heller Died.” He contends that the dissolution “had little to do with larger economic events,” instead tracing the firm’s demise to “three critical decisions” over the last four years:
The decision in December 2004 to deny Chairman Barry Levin a third term. His successor, Matthew Larrabee, with his “dry but barbed sense of humor” was reputedly less “suited to keeping partners in the fold.”
Insufficient downsizing: in 2005, after a report suggested the firm was carrying more lawyers than it could afford, the firm laid off 60 attorneys. According to Combs, “It wasn't a deep enough cut.”
Mixed messages and lack of strategy: in 2006 and 2007, notwithstanding the layoffs and even as the firm continued to lay off staff and partners defected right and left, the firm announced a plan to increase headcount and open new offices.
By the summer of 2008, Combs argues, “merger was the only option for the crippled firm that Heller had become.” The loss of the heavy-hitting IP litigation team to Covington in September dealt the firm its death blow, nixing the potential merger with Mayer Brown, triggering the notice provision in the firm’s lending agreement, and prompting Citigroup and Bank of America Securities to call in their loans.
It’s an interesting argument, though I’m not sure it’s necessarily the final word on Heller’s death. (For example, a post on Above the Law argues that the firm’s problems had begun long before Levin left the scene—“term limits had little to do with the fall, as Matt Larrabee only carried out (though not as adeptly as his predecessor) the plans made years before.”)
And even if these three decisions were significant—primary?—factors, it seems likely that the state of the economy had to play some part, if in no other way than to give some of the partners itchy—or itchier—feet. Moreover, even assuming everything else to be true, is it certain that, if there were no credit crisis and the economy were in better shape, the banks would have still called in the firm’s loans?
- posted by vera
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