10 Huge Law Firm Collapses Of The Decade

Was it a good decade for big law?

It's difficult to say. There certainly were down times -- the dotcom bust, Enron -- and when you're in the middle of a down time like the current one, it's easy to give the decade a thumbs down.

On the other hand, hourly rates went up, profits were made on both sides of various bubbles, and 10 law firms are loving the financial crisis.

But some law firms were definite losers.

Certain mid-size firms were devastated by defections to large firms. Other firms were unready for the end of the dotcom or housing bubbles, withering due to lost revenue. And among other natural processes, some firms failed due to scandal and crime.

See the Decade's 10 Huge Law Firm Collapses>>

Hill & Barlow

Founded: 1885

Size: 130 attorneys in 2002

Closed: December 2002

The 107-year-old Boston firm -- founded by the lawyer who defended Sacco and Vanzetti (pictured) -- could not sustain itself after the departure of its real estate group. When 33 attorneys suddenly declared allegience to the 900-lawyer firm Piper Rudnick, Hill & Barlow became another victim of the trend toward consolidation, according to Legal Affairs.

Brobeck Phleger & Harrison

Founded: 1926

Size: 900 attorneys in 2000

Closed: January 2003

Brobeck boomed during the dot-com bubble, specializing in IPOs and mergers. With clients like Cisco Systems and Enron, the San Francisco firm expanded rapidly and doled out salaries on par with the biggest New York firms. But when the bubble burst, Brobeck shriveled to 500 lawyers. Stuck with $90 million in debt, the firm declared bankruptcy in 2003, according to the San Francisco Chronicle.

Photo: Google Maps

Arter & Hadden

Founded: 1843

Size: 425 in 1999

Closed: July 2003

After aggressive expansion during the nineties, ye olde Cleveland law firm was vastly over-extended when the economy soured. Attorney defections and accumulating debt led the general practice firm to declare bankruptcy in 2003, according to Cleveland Business News.

Photo: Google Maps

Jenkins & Gilchrist

Founded: 1951

Size: Over 600 attorneys in 2000

Closed: March 2007

While growing at an incredible rate, the Dallas-based practice made a few bad hires and adopted a few sketchy policies, according to The Dallas Morning News. These were tax specialists and clever and ultimately fraudulent ways to avoid taxation. In 2002, the IRS began a damaging and costly investigation of Jenkins & Gilchrist. Over four years later, the firm paid a $76 million fine and agreed to dissolve.

Heller Ehrman

Founded: 1890

Size: 700 attorneys

Closed: September 2008

To avoid some taxes, Heller Ehrman used to pay out all earnings at the end of the calendar year, while using a line of credit to fund operations until new earnings came in. The unusual financial structure became an acute vulnerability when departures and lost clients led to decreased revenue in 2007. The San Francisco firm sped into debt and quickly called for bankruptcy, according to the San Francisco Chronicle.

Photo: Google Maps

Thelen

Founded: 1926

Size: ~600 in 2006

Closed: December 2008

Less than a month after the closure of Heller Ehrman, another San Francisco firm announced plans to dissolve. Thelen was known for representing major construction projects, such as the Hoover Dam and the Golden Gate Bridge. But the firm was crippled by an abortive merger with Brown Rayman, when it lost over 200 lawyers, according to the ABA Law Journal.

Photo: Google Maps

Dreier LLP

Founded: 1996

Size: 250 attorneys

Closed: December 2008

When Marc Dreier (pictured) was arrested for cheating hedge funds out of more than $100 million, Dreier LLP, not surprisingly, folded.

The Manhattan corporate law firm went into bankruptcy to handle debts of up to $50 million and a critically soiled reputation, according to Bloomberg.

Thacher Proffitt

Founded: 1848

Size: 350 attorneys in 2007

Closed: December 2008

Thacher was such a dominant force in structured finance that the standard paperwork used by mortgage traders was known as "Thacher docs," according to Am Law. Consequently, the New York firm was ravaged by the collapse of the subprime crisis and the ensuing credit crunch. Also, their biggest client was Bear Stearns, according to WSJ's Law Blog.

Photo: Google Maps

Wolf Block

Founded: 1903

Size: 317 attorneys

Closed: March 2009

Wolf Block was another firm that focused on real estate law and suffered during the collapse of the housing bubble. Once an elite and pioneering Jewish organization, the Philadelphia firm started to lose ground with key partner defections in the early nineties. Recently, Wolf Block was in failed discussions for mergers with two larger firms. Falling revenues prompted the firm to dissolve in 2009, according to the Philadelphia Business Journal.

Morgan & Finnegan

Founded: 1893

Size: 45 attorneys in 2009

Closed: February, 2009

The New York IP boutique lost significant revenue from 2005 to 2007 as partners quit. Morgan & Finnegan's death blow came in 2009 when 30 lawyers -- over half of the firm -- signed with 700-lawyer rival Locke Lord, following merger talks between the two firms. The smaller firm quickly declared bankruptcy and dissolved, according to Bloomberg.

Photo: Google Maps

Now for the winners

10 Law Firms That Are Loving The Financial Crisis>>

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