Law firm mergers are tricky business, but the payment to Bingham partners of amounts of up to $4 million to $5 million contributed to the problems for the firm, the departure of partners and other major issues.
AmLaw Daily reported the story about the financial guarantees to the former McKee Nelson law firm after its 2009 merger and following AmLaw’s interviewing several of Bingham’s former partners.
Bingham told partners the total value of the guarantees was $59 million in 2010 and $70 million in 2011, the story says, citing sources briefed on the matter. The value decreased as the guarantees expired. The largest of the guarantees ended last year.
The five largest annual payments to McKee Nelson partners ranged from $4 million to $5 million, the story says.
Bingham confirmed to the publication that guarantees were paid, but said it could not comment on amounts paid to individuals. According to the story, the deal to pay guarantees “now raises questions as to what role it played in the lead-up to the firm’s current financial state, with revenue and profits plunging in 2013 to mark its worst financial performance ever.” The story notes that the slowing of countercyclical practice areas and increased expenses also contributed to lower profits.
Bingham had an open compensation system, but the law firm agreed to keep guarantees paid to individual lawyers at McKee Nelson secret for their duration, in keeping with McKee Nelson’s closed compensation system, the story says.
Bingham is looking for a merger partner and reportedly approached at least four major firms within the last three months, according to a report published earlier this month.