Two law firms that took in partners following Howrey’s 2011 collapse have agreed to make payments to the bankrupt firm’s estate based on the legal theory that dissolving law firms have a stake in work brought by their former lawyers to new professional homes.
Holland & Knight and Fenwick & West have both reached deals with Howrey trustee Allan Diamond, according to a Friday court filing asking U.S. Bankruptcy Judge Dennis Montali in San Francisco to approve the settlements. The agreements with the two firms are among the first to emerge from talks between Diamond and more than 70 firms that brought on former Howrey partners.
Under its agreement with Diamond, Holland & Knight will pay the Howrey estate $26,197, a sum equal to 11 percent of a $238,156 fee it has earned so far for its work on a contingency case it inherited from the now-defunct firm. Holland & Knight has also agreed to pay the Howrey estate the same percentage of any portion of $62,000 fees related to the same matter that are still outstanding. Holland & Knight has further agreed to drop a $42,584 claim against the Howrey estate in connection to the same engagement.
The case in question involved a class of National Guardsmen seeking reimbursement from the U.S. government for courses mandated by the Guard to keep positions or advance in rank. Former Howrey appellate lawyer Jerrold Ganzfried brought the case with him when he joined Holland & Knight’s Washington, D.C., office in March 2011. As part of Holland & Knight’s deal with the Howrey estate, Ganzfried can still be pursued for clawback claims seeking the return of money paid to him by Howrey in the months leading up to its collapse (Reached Monday, Holland & Knight partner Stephen Bogorad, who signed the agreement, said the firm had no comment. Ganzfried did not return a request for comment).
As for Fenwick, the California-based firm agreed to chip in $15,000 to cover unfinished business claims tied to a single, unspecified assignment that Silicon Valley patent lawyer Teresa Corbin brought with her from Howrey. The sum is equal to 25 percent of the approximately $59,000 Fenwick earned on the matter. Corbin, too, can still be pursued individually by the Howrey estate. (A Fenwick spokeswoman said the firm had no comment on the settlement. Corbin did not return a request for comment).
Both firms have cooperated with requests from the Howrey estate over the past eight months, according to Friday’s 32-page filing. In arguing that the settlements be approved, Diamond stresses that "because the amount of unfinished business completed by H&K and Fenwick is relatively small, there is a substantial benefit to the estate in light of costs otherwise to be incurred in obtaining these modest settlements."
Diamond, a name partner at Texas-based Diamond McCarthy, has been at the helm of Howrey’s Chapter 11 bankruptcy since October 2011. Unsecured creditors initially pushed the firm into involuntary Chapter 7 bankruptcy in April of that year, and creditors later insisted on removing counsel at Wiley Rein and installing a trustee. Since taking over the crippled bankruptcy, Diamond has actively pursued former partners and their firms to help bring in recoveries to pay creditors. As The Am Law Daily reported earlier this month, Diamond has begun suing firms that have been uncooperative, with six lawsuits initiated so far. Diamond has said he is in some stage of negotiation with "the vast majority" of the other firms he is targeting.
Lawsuits against Howrey’s onetime dissolution committeewhich formed as the firm went under and included former chairman Robert Ruyak, now a partner at Winston & Strawn; Gary Fischman, also at Winston & Strawn; Martin Cuniff, now at Arent Fox; Gregory Commins Jr., now at Baker & Hostetler; and D.C. lawyer Robert Greenmay also be in the works. In a move aimed at buying himself more time to consider pursuing such claims, Diamond asked that he be allowed until the end of September to file suit against the five lawyers.
