A Law Firm Struggles to Stay Afloat

While the White House and Congress reach a deal to try to right the American economy, the San Francisco law firm of Heller Ehrman is a ship that may go down later today.

Heller, a 118-year old firm known best for its intellectual property practice and litigation skills, has been on life support for much of the summer. An unofficial website, called "Heller Highwater; life preservers for the support staff of a flooded law firm amid the flotsam and jetsam" reports this morning that all employees have been invited to a firmwide videoconference this afternoon.

But the vultures are already circling: Headhunters are trying to pick off the partners and associates with the best and most lucrative practices. Some of the best are already on their way out the door: Covington & Burling LLP has picked off 15 lawyers from the intellectual property practice. Earlier this month, Proskauer opened a Beijing office with lawyers from Heller.

The treasure from this sinking ship is the venture law group, a practice described on the official Heller website as 100 lawyers strong and cities throughout the United States, Europe, and Asia. One of the main contenders for the practice is Cooley Godward Kronish LLP, a San Francisco-based firm that is having a very good year. Another San Francisco firm, Orrick, plucked about nine lawyers from the Venture Law Group in 2005.

The venture law group was founded by Craig Johnson, a prominent start-up lawyer.

While out-of-town lawyers are reportedly camped out at San Francisco hotels to pick off the best talent, the Heller lawyers themselves are taking a breath and trying to make the right decision about where to go.

Some are already reaching out. The Recorder, a San Francisco daily legal publication, ran a feature several weeks back about a boutique Silicon Valley firm called Montgomery & Hansen LLP
of Menlo Park. The Recorder feature mentioned that the firm was looking to hire an Intellectual property transactional partner, a tax partner and an executive compensation partner. Sure enough, the firm
heard from Heller partners with those expertises.

"We had conversations directly or indirectly with three of them," says John Montgomery, a veteran of two Silicon Valley icons, Wilson, Sonsini, Goodrich & Rosati and Brobeck, which imploded in 2003.

The biggest of the Big Law firms are not vying in this fight because the start-up companies in this practice cannot afford the overhead, rates and big teams that the big firms staff for each case.

On Wednesday, Heller's chairman, Matt Larrabee, put out a firm-wide memo in which he apologized for not communicating better, which was duly leaked to the Above the Law blog.

Employees are clearly a bit fed up, based on comments on the employees' site.

"Has a decision been reached? Will we know the fate of the S.S. Heller Ehrman? Or will just receive another "I'm communicating that I'm sorry I haven't communicated" type message?
Stay tuned.
Over and out.
Heller Drone¿Cruise Director."

And they say lawyers have no sense of humor.

Karen Donovan