Wolf Block partners met at 1p.m. today to discuss the fate of the firm and have issued a statement that they voted to commence an “orderly unwinding of the firm’s business.”
“Wolf Block will remain in the practice of law for several months to protect the interests of its clients, employees and creditors,” the firm said in a statement. “The decision to unwind was reached in view of a confluence of unfavorable factors: the economic recession, especially in the firm’s core real estate practice; the constriction of credit occasioned by the ongoing banking crisis; and the intended and anticipated departure of significant partners and practices.”
The partners determined the continued attempts to finance the firm’s operations would create more harm than good for clients and employees, the statement said. Wolf Block hired consulting firm Hildebrandt and Leslie D. Corwin of Greenberg Traurig to work with firm leadership to relocate as many people as possible, while liquidating the firm’s obligations.
“We are deeply saddened by the decision to unwind,” said firm Chairman Mark L. Alderman. “But we intend to conduct ourselves during this difficult time with the pride, focus, humility and determination that have characterized WolfBlock lawyers for more than a century. This result is ironic given that many of our practices and offices continue to perform at a high level despite our difficulties.”
Several sources have said members of the executive committee met Saturday to discuss a possible dissolution of the firm. The matter was said to be set for a full partnership vote at 1p.m. Monday. A decision to dissolve the firm would have needed to be approved by at least 75 percent of the partnership, one source said.
There is no indication that the firm is in dire financial straits, though it saw some significant declines in several key financial indicators in 2008 and was said to be seeking extensions of its line of credit. Sources have said work and receivables are still there and the firm isn’t said to be considering any sort of bankruptcy filing in the immediate future — a situation that has befallen a few other firms across the country in recent months.
Wolf Block saw its gross revenue fall 7.8 percent from $173 million in 2007 to $159.5 million in 2008. The firm’s equity partner tier fell by 34.8 percent from 86 equity partners to 56 and, conversely, the non-equity tier rose by 36.6 percent from 71 non-equity partners to 97 in 2008. The overall headcount fell about 4.6 percent from 304 attorneys to 290 in 2008.
Revenue per lawyer (RPL) dropped by about 3.3 percent, falling from $568,000 in 2007 to $549,000 in 2008. The profits per equity partner (PPP) and average compensation for all partners took more significant hits. The PPP fell 18.5 percent from $502,000 to $409,000 and the average compensation for partners dropped by 19.7 percent from $400,000 to $321,000 in 2008.
Sources have said that Alderman has potentially worked out a deal to join Cozen O’Connor, a former merger candidate for Wolf Block, and other attorneys may make the move with him.
One source familiar with the firm’s financial situation said Wolf Block sought in late 2008 an extension of its line of credit with Wachovia. After some back and forth, it was eventually decided that the line of credit would have to be personally guaranteed by each partner. That didn’t go over well and a number of partners announced they would leave before signing such a deal, the source said.
Ultimately, Wachovia — now owned by Wells Fargo — extended the line until March 31 without mandating the partners personally guarantee it. But by that time, the source said, a large number of attorneys, including all of the New York office, said they would be moving to Cozen O’Connor. Some put the number close to 100 attorneys while others said it was still fluid and was probably lower.
Wachovia could only confirm that Wolf Block was a client.
Thomas A. “Tad” Decker, president of Cozen O’Connor said the firm has a policy not to confirm or deny any discussions it has with laterals or merger partners.
“It’s not a happy day when you see a firm with the reputation of Wolf Block going out of business, if that’s true,” Decker said earlier today.