“Why Didn’t Partners Reach Into Their Pockets?”

There is an article in today’s Daily Journal entitled “Heller Nears Deal with S.F. Landlord, Meets With Creditors,” which highlights some of the proceedings at yesterday’s meeting of creditors in bankruptcy court. [Note: due to copyright issues, the article will not be replicated in its entirety here at Heller Highwater]

One interesting exchange came from Steven Blum (a former Heller associate during the 1990s and representing a class of former Heller Ehrman employees) and Peter Benvenutti:

“Why didn’t partners reach into their pockets [to satisfy their obligations under the WARN Act]?” Blum asked Benvenutti during the meeting.

Benvenutti paused for a long minute.  It almost seemed he might not answer.

“They had no legal obligation to do so,” he said finally.

Speaks much to doing the “legal thing” and doing the “right thing” doesn’t it?

I’ll have more about Steve Blum and Blum Collins in an upcoming post later today.

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10 Responses to ““Why Didn’t Partners Reach Into Their Pockets?””


  1. 1 SFGirl 28 January 2009 at 3:09 pm

    Do I still need to file a Proof of Claim even if I am listed as one of the Creditors in the document that Heller filed??

  2. 2 Thomas MacEntee 28 January 2009 at 3:11 pm

    SF Girl

    YES YES YES
    I am recommending that everyone file a proof of claim even if you are listed on the Schedules filed by Heller on Monday. Invariably it only lists accrued vacation and not the WARN ACT monies or the Waiting Time penalties (for CA employees only)

    There will be definitive instructions on how to fill out the form later this week – I PROMISE. Everyone just needs to sit tight in the meantime. We have plenty of time to file – the deadline is April 27, 2009.

    Thomas aka Heller Drone

  3. 3 SFGirl 28 January 2009 at 4:07 pm

    Thanks for your quick response, Thomas.

  4. 4 Anon 28 January 2009 at 5:38 pm

    Please. This isn’t the partners’ responsibility. This just sounds like whining now. A lot of partners (particularly the junior ones) lost a lot too and aren’t exactly rolling in the money. Some of them still don’t have jobs and have completely lost their considerable six figure buy-ins to the firm. I can’t believe that you would even suggest that employees had some expectation that the partners should be (either morally or legally) responsible to you in this way. Sheesh.

  5. 5 Thomas MacEntee 28 January 2009 at 5:51 pm

    “This isn’t the partner’s responsibility.” Thus speaketh Tokyo Rose or Lord Haw Haw, take your pick. There are plenty of apologists for the partners and also pro-Heller management spies and mis-informers. I’m just trying to figure out which one you are.

    Stop apologizing for the actions of the partners and when I use the term “partners” I don’t speak of any one of them individually. There were some pretty piss-poor management decisions made and whether it was by a cabal of five or six partners or not, there had to be some responsibility by all partners to check on the direction of the firm and as to how its employees were being treated.

    Partners made an investment in the firm and with most any investment there is a risk – a risk that you won’t see good returns or even get your original investment back. Employees don’t have the same level of risk (or at least they shouldn’t). Being an employee doesn’t mean you have a right to a job. But if you are an employee you have a right to be paid wages that you work for, such as accrued vacation. And state and federal laws say you have a right to be either notified of a mass layoff or to be paid a certain amount of severance. And some state laws say you have a right to be penalized if you don’t pay your employees on time. There shouldn’t be an element of risk with being an employee but for some reason Heller Ehrman saw fit to add the element of risk for the employees.

  6. 6 former junior shareholder 28 January 2009 at 6:21 pm

    Frankly, even though I am junior and lost a lot myself, I would have been happy to contribute to employee severance if there had been a realistic way to make all the shareholders do so as everyone was scattering to the winds, and IF I would have been sure that the banks would not have seized that money too. Remember that had control of all of Heller Ehrman’s accounts at that point. I just don’t see that it would have worked and I’ll be damned if I’d pay a cent more to Citi and BofA after the cr%p they pulled.

    This is all moot now in any event. At least the bankruptcy process, while expensive, will sort through all the claims and the employees should all get paid in an orderly manner. I’m sorry you have had to wait so long.

  7. 7 anon2 28 January 2009 at 9:52 pm

    Wow. The arrogance being shown by Heller over and over again with respect to their (lack of) responsibility. Does anyone else see a theme here? The banks MADE them get rid of their employees, the landlord FORCED them into bankruptcy, and now, naturally, the owners of the damn firm can’t even own up paying their employees. This is sickening. I’ve lost any and all respect I used to have for Heller.

  8. 8 P-Owed 28 January 2009 at 10:48 pm

    Thomas,

    Great response to the partner apologist!
    Slowly but surely all the former shareholders are getting nervous about their personal liability in this mess. Sounds like Blum hit a nerve and is on the right track…at least an avenue that we all want explored!

    P-Owed

  9. 9 Former SF Assoc 29 January 2009 at 2:08 pm

    I second P-Owed. Former shareholders should be getting nervous about their personal liability, just like Wall Street bankers should be getting worried about their personal liability. Every shareholder had some say in the operations of Heller Ehrman. You can’t go off on expensive partner retreats, spend ridiculous amounts of money on office renovations, and generally mismanage a firm’s finances and then expect that you are going to have no personal liability or responsibility. AT THE VERY MINIMUM there is moral responsibility. And hopefully there is legal responsibility. You should not just be able to get up one fine day, and decide you are moving to Covington & Burling (for example) and totally absolve yourself of the consequences of your actions ESPECIALLY when you are a partner in the firm you are leaving. The world doesn’t work like that.

  10. 10 Frustrated 30 January 2009 at 12:04 am

    There is one big piece of that affects attorneys and staff alike. By losing our jobs in this awful market, some of us has lost tens of thousands if not hundreds of thousands of dollars in our real estate investments in our homes. If we move to find future employment, we are walking away from a market that has dropped sharply and will surely spike again in the future. It’s time to move on…


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