We’ve received a copy of a memo which was sent to all billing shareholders at Heller as part of the dissolution process. This may help to answer some of the questions as to what “arrangements” were made in terms of collecting Heller’s receivables especially for those shareholders on their way out the door.
September 26, 2008
Dear Billing Shareholder:
You are receiving this letter because you are a Billing Shareholder. As you know, the Plan of Dissolution of Heller Ehrman, LLP (the “Firm”), dated as of September 26, 2008 (the “Plan”) has been approved by the Shareholders. Pursuant to the Plan, you will be receiving a monthly tabulation of your work-in-process and accounts receivable by client and matter. The tabulation will also indicate the amounts you have collected since the last report. Please note that in accordance with Article XI E of the Plan, any record of success/failure and cooperation in connection with billing and collection will be taken into account in allocating any returns of capital to Shareholders.
We request that you prepare and send bills to the clients in the amounts stated within one week of such accrual. Any failure on your part to do so will result in the Dissolution Committee having to take on the task of arranging to have these bills prepared and sent to your clients.
The bills you prepare must conform with the following guidelines:
1. Each bill must indicate the outstanding balance due;
2. All billing must be strictly based upon the outstanding amount of work-in-process, provided that: if you determine that the client should pay a premium for the work done, you may prepare a bill in excess of the amount of work-in-process; and provided further that, you will have discretion to write-down the lesser of $1000 or 10% of the work-in-process; and
3. If there is an existing arrangement with a client not to bill a matter until its completion (or some similar practice), you should prepare a “dummy bill.” This “dummy bill” will reduce the work-in-process and be forwarded to the client at the time that the matter is completed. You are required to provide appropriate documentation of any such special arrangement to the Dissolution Committee immediately.
As the Billing Shareholder, you must assume primary responsibility for collecting all accounts receivable for which you are responsible at the Firm that are less than 90 days old. If you are unwilling to assume such responsibility or appear to be uncooperative or to be acting in bad faith, or in any event, if any accounts receivable more than 90 days old are not paid within thirty (30) days of the date of the letter, the Dissolution Committee will take all actions it deems necessary to collect such accounts receivable from your clients. For good cause, the Plan provides that the Dissolution Committee in its discretion may permit you to continue to remain responsible for collection of certain accounts receivable that are more than 90 days old but you must advise immediately why there is good cause.
Your inquiries or comments regarding the work-in-process and accounts receivable for which you are responsible in the first instance should be directed to the Manager or the Deputy Manager. Except as permitted above, you may not writedown work-in-process or write-off accounts receivable without prior written approval of the Dissolution Committee. You must direct clients to pay their bills immediately unless the Dissolution Committee has otherwise consented in writing. Such consent may be granted in the following circumstance:
1. The Firm had entered into a written payment plan with the client prior to the dissolution and you have submitted a copy of this agreement to the Dissolution Committee;
2. There is a prior existing written agreement between the Firm and the client that provides that the client will not be required to pay until the occurrence of some contingency or the completion of the matter and you have submitted a copy of this agreement to the Dissolution Committee;
3. The client has filed bankruptcy and you have submitted a copy of the proof of claim that the Firm has previously filed against the client’s bankruptcy estate; and
4. Other extenuating circumstances which you feel should be approved by the Dissolution Committee.
Unless you request otherwise, and such request is granted by the Dissolution Committee, all unapplied receipts will be applied to outstanding accounts receivable for a particular client on the basis of oldest bill first, applied to disbursements and then to fees. You must get written approval from the Dissolution Committee and./or the Manager if you do not want the Collection Staff to contact the client directly for payment.
Additionally, enclosed please find a draft letter to your clients with active matters and/or outstanding accounts receivable. Also enclosed, please find a letter to your new law firm, if applicable, regarding (i) fee splitting arrangements when the final fee is subject to performance of additional work and (ii) accounting for/certification in respect of fee splitting arrangements.
Please do not hesitate to contact us with any questions or concerns.
The Dissolution Committee