When Heller Ehrman partners gathered at Santa Barbara, California’s Bacara Resort & Spa in March 2007, there was already reason to be concerned about the firm’s future. Several practice areas were slow. The firm’s national and global ambitions were in disarray. And partners were increasingly skeptical about management’s ability to address the problems. But that weekend they were determined to laugh at this somewhat worrisome predicament. The final night of the retreat featured a $300,000 skit. Performers from the Los Angeles Opera, accompanied by a professional orchestra, portrayed chairman Matthew Larrabee and other firm leaders frantically searching for a merger partner. “Some people were laughing, but I thought it was surreal,” says one former shareholder (Heller’s term for partner).
Eighteen months later, no one was laughing. Partners were flooding out the door and management couldn’t put together a merger. With no hope of rescue, the once 650-lawyer firm announced on September 26 that it was shutting down.
