Legal News

R.I.P. Howrey: Firm to Dissolve Next Week

By Ashby Jones

The handwriting has been on the wall for several weeks, if not months.

On Wednesday, the Howrey partnership read every word, syllable by painful syllable. Following  a vote by the firm’s partnership, the executive committee voted to wind down the firm, effective March 15.

“The firm had experienced disappointing financial performance over the past two years and subsequently several partners had resigned," said to Bob Ruyak (pictured), the firm's Chairman and CEO. "This resulted in the conclusion that an orderly wind down of the firm's activities over time was the only practical alternative."

According to the release, a group of partners, associates and staff, mostly from the firm's Houston office, will join Winston and Strawn; others, however, were precluded by “significant client conflicts” from joining Winston. Many of them will join other AmLaw 100 firms. Click here for the American Lawyer story; here for the firm’s statement; here for Vanessa O’Connell’s story in the WSJ.

O’Connell’s story focuses largely on the difficulties with Howrey’s business model, which was to be all-litigation-all-the-time. Yielding largely to client demands, Howrey took on a decent amount of contingency-fee work, which proved difficult to manage for a firm that had grown up as a defense-side shop.

“The challenge really at [Howrey] was the business model,” with its focus on litigation and its global scale, said LB All-Name Team member and general counsel at GE Global Research Center, Buckmaster Mr. de Wolf, himself a former partner at Howrey. “Nobody wants to litigate repeatedly, so litigators have to be more entrepreneurial. The earnings you have at a firm like that are lumpy,” he added.

Dealing with the contingency payment adjustment was “difficult” for Howrey partners, partly because the arrangement contributed to the law firm’s dramatic swings in profitability and revenue, Ruyak said.

In 2009, the firm’s gross revenue declined 16% to $480 million while profit per partner dropped 35% to $846,053, according to the latest available data compiled by American Lawyer magazine.

"This is a very difficult time for our firm, for our attorneys and for our staff,'' Ruyak said in the firm’s statement. "Many of us have spent our entire legal careers at Howrey and remain proud of what we built. We find some solace in the fact that our people have been so well received by their new firms. They are first class professionals and deserve the respect accorded to leaders in their fields."

Full post as published by Law Blog - WSJ.com on March 10, 2011 (boomark / email).