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By Brian Malcom
This Wednesday will mark the one-year anniversary of Thelen's collapse. All that remains of the once-powerful firm is a shell of a website http://www.thelenreid.com/ and some hard feelings.
The Recorder reports that Thelen's former employees are suing law firms that hired the partners after Thelen's demise for $18 million. In sum, "[t]he employees, represented by Los Angeles litigation boutique Blum Collins, argue the firms' hiring of the partners amounted to purchasing a portion of Thelen's business. Therefore, the firms are bound by the same obligations as an employer under the WARN Act. The defendant firms, meanwhile, argue that since there was no merger, they had no obligations to former Thelen staff."
After Thelen's collapse, hundreds of lawyers scrambled and scattered to dozens of firms. Even still, hundreds of employees were left unemployed. Staffers only received a 30-day notice, not a 60-day notice as the WARN Act requires. "The WARN Act portion of the claims is $6 million."
"The defendant firms, Orrick, Herrington & Sutcliffe; DLA Piper; Nixon Peabody; Howrey and Morgan, Lewis, filed motions to dismiss the case in August. They argue Thelen dissolved and there simply was no acquisition or merger."
Morgan, Lewis, one of the defendant firms, argued in its motion to dismiss that "’Neither Thelen's individual partners nor its individual employees were 'assets' to be 'purchased' by Morgan Lewis or anyone else[.]"
This begs the question: if partners or employees are not “assets” of a law firm, what are? Is it the only “asset” of a law firm the goodwill associated with the name? Are the only “assets” of a law firm the property of the law firm?
It will be interesting to see how this case plays out. In the meantime, collapsing law firms should strive to give at least 60 days notice to employees just to be safe.
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