How Much Will a Law Firm Pay to Make a Bankruptcy Trustee Go Away?

By Ross Todd

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As The American Lawyer reports in Gone But Not Forgotten, bankrupt law firms don't go away quietly. Indeed, those responsible for unwinding such firms—and collecting as much as possible for creditors—often target the law firms where failed firm partners land in order to recover the proceeds from unfinished business those partners took with them. A search of public bankruptcy dockets shows that more than 40 law firms have settled claims with the bankrupt estates of Brobeck, Phleger & Harrison; Coudert Brothers; Heller Ehrman; Howrey; and Thelen. To date, those settlements total more than $35.5 million.

This chart shows the amounts paid by individual firms in connection with those five bankruptcies, as well as the dates when the settlements were finalized. Click on dollar figure for an individual settlement to see the court filing detailing that settlement. —Ross Todd

 

BROBECK, PHLEGER & HARRISON    
Settling party Date  Total amount 
Morgan, Lewis & Bockius September 2004  $10,200,000 
Clifford Chance December 2004  $5,500,000 
Estate of Heller Ehrman August 2011  $470,988 
Orrick, Herrington & Sutcliffe April 2011  "a substantial, confidential amount" 
Dorsey & Whitney March 2011  "a substantial, confidential amount" 
       
COUDERT BROTHERS    
Settling party Date  Total amount 
Baker & McKenzie July 2010  $6,650,000 
       
HELLER EHRMAN    
Settling party Date  Total amount 
Covington & Burling July 2011  $4,996,213* 
Arnold & Porter; Cooley; Hafetz Necheles & Rocco; Hogan Lovells US; Patton Boggs; Pillsbury Winthrop Shaw Pittman; Proskauer Rose; Wilmer Cutler Pickering Hale and Dorr September 2011  $2,256,146 
Orrick, Herrington & Sutcliffe December 2009  $1.5 million plus a portion of certain contingency fees* 
Sidley Austin April 2011  $500,000 
Goodwin Procter October 2011  $350,000 
Sheppard Mullin Richter & Hampton October 2011  $337,844 
Gibson, Dunn & Crutcher December 2011  $240,850 
White & Case January 2011  $17,500 
       
HOWREY    
Settling party Date  Total amount 
Perkins Coie September 2012  $618,743 
       
THELEN    
Settling party Date  Total amount 
Butzel Long; Davis Wright Tremaine; LeClairRyan; Morgan, Lewis & Bockius; Ober|Kaler;Sedgwick March 2012  $703,336 
Reed Smith; Knobbe Martens Olson & Bear September 2012  $610,000 
Pillsbury Winthrop Shaw Pittman; Hartman & Craven; Holland & Knight; DLA Piper June 2012  $412,663 
Alston & Bird; Baker & Hostetler; Dergosits & Noah; K&L Gates; McDermott Will & Emery; Meserve, Mumper & Hughes; O’Melveny & Myers; Riker Danzig Scherer Hyland & Perrett; Troutman Sanders; Wilson Sonsini Goodrich & Rosati February 2012  $200,750 



*In the case of Covington's settlement with the Heller estate, IP shareholders who left Heller for Covington were responsible for $996,213 of the total settlement amount. In the case of Orrick, the Heller estate was to be paid 40 percent of certain contingency fees after all of Orrick's costs were covered and it received payment equal to 300 percent of its hourly rates billed on the unfinished matters at issue.

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