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Arter & Hadden, a Cleveland-based firm that expanded nationally in the 1990s, has just two weeks’ worth of operating capital and told employees on Friday that the firm was shutting down July 15. The firm circulated a memo to personnel in all 10 of its offices, including the five the firm maintains in California, stating attempts to fix its financial problems had failed. “Unfortunately, we must now report that efforts to obtain the additional financing and required concessions from Arter & Hadden’s landlords to continue the law firm have been unsuccessful,” according to the memo, which found its way onto message boards for law firm associates and InternalMemos.com, a Web site that collects corporate memos. “We will need to permanently terminate the employment of substantially all employees of Arter & Hadden at the end of the business day on July 15,” the memo said. Managers at Arter, struggling with a bulging overhead and shrinking lawyer ranks, informed partners in mid-June that they were trying to renegotiate some leases to stave off bankruptcy or dissolution. The memo suggested the firm was also trying to drum up additional financing to help stay afloat. Arter has shrunk to about 250 lawyers but is still on the hook for space to house its 1999 peak headcount of 425. The firm has been bleeding partners since late 2000. Kim West, the managing partner of Arter’s 13-lawyer San Francisco office, said the firm distributed the memo to comply with the Worker Adjustment and Retraining Notification Act. The act outlines the notice companies must give employees before a mass layoff or company shutdown. West, a member of the firm’s executive committee, said the firm’s partners hadn’t voted to dissolve Arter & Hadden, but refused to comment further. But one senior partner who has been with the firm more than 10 years and spoke on the condition of anonymity said partners learned Friday that efforts to keep the firm afloat had failed and closure was imminent. “There is no hope of keeping Arter alive as an institution,” said the partner. “We are not getting the relief that we need to stay open.” Daniel Bailey, the chairman of Arter’s executive committee, did not return several calls for comment Monday. However, Cleveland’s The Plain Dealer quoted the firm’s marketing director, Janet O’Hara, on Saturday saying the firm had just two weeks of operating capital remaining. The article quoted O’Hara as saying the firm’s 10 offices would continue to operate under the Arter name at least until then. The senior partner who spoke on condition of anonymity said some of the practice groups could try to continue to operate independently from the firm. Two more partners left over the weekend. John Hosack and Andrea Slade, both from the firm’s Los Angeles office, started work Monday at Jeffer, Mangels, Butler & Marmaro. Lawrence Watanabe, a recruiter at Watanabe Nason & Seltzer, which helped the pair make the transition, said he’s gotten numerous calls in recent weeks from Arter partners who are frantic to find positions at other firms. “As far as why, we don’t know,” Watanabe said.

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