Another Victim Of Credit Crunch: Thelen Law Firm Faces Closure
In a new example of how the financial meltdown is roiling the legal community, Thelen LLP, an 84-year-old law firm with offices in the District and around the world, said last week that it may close by early December.
Revenue at the San Francisco-based firm, which specializes in construction law, corporate finance and intellectual-property cases, has been hit by "recessionary pressures" and partners' departures, a spokesman said. Thelen's management team recommended last week that the firm dissolve. Partners are expected to complete their vote on the closure tomorrow.
Thelen would be the second major firm to implode as demand decreases during the credit crunch. Officials at Heller Ehrman, also headquartered in San Francisco and operating in Washington, recently announced that it would soon close. The firm, which specializes in big litigation, collapsed in part because it was unable to replace income from several cases that were settled and because some of its key lawyers were hired away, a leader at the firm said.
Thelen's business, including structured finance, real estate and capital markets work, fell off because of the economy, said Andrew D. Ness, Thelen's managing partner in the D.C. office, which has about 45 lawyers.
The firm's fate was sealed two weeks ago when merger talks with another firm failed, officials said. Thelen, which merged with Reid & Priest in 1998, had been seeking consolidation with another firm for several months.
"Other firms were not interested in merging with us because of economic conditions. That was a major contributing factor -- no question," he added.
Like Heller Ehrman, Thelen grappled with an exodus of several partners, putting the firm in violation of an agreement with its bank that capped the number of such departures a year. (The firm lost 65 lawyers from June to October, Ness said.) Thelen's default on the agreement prompted the bank to take charge of its expenditures, officials said. The firm is negotiating with the bank on a "wind-down" budget governing such matters as final pay for employees. As part of that process, partners will not receive profit from the firm but will be able to access limited funds until Nov. 15.
Law firms have been hit by budget cuts by corporate legal departments. As a result, some firms in Washington and around the country have resorted to layoffs, while others decided they will reduce raises and hire fewer associates.
Ness said: "Economic conditions limited our maneuvering."
-- V. Dion Haynes