Miami law firm Brown and Heller has suddenly shut down after losing its only client, a defendant in a class action lawsuit tied to Bernard Madoff’s monumental investment fraud.
After 38 years in operation, the law firm informed its 47 employees last week that it would be closing, and Monday was their last day. The lease on two floors at the One Biscayne Tower building, the firm’s home since 1975, expires April 30.
Employees will receive no COBRA health insurance but will receive three weeks of severance pay, firm co-founder Lewis Brown said.
"I was the primary if not sole shareholder," Brown said. "We’re in a phase-down. We had formal meetings with everyone on Monday. Everyone has been very understanding. We are making sure we ensure all our ethical obligations are met."
The firm let staffers keep their computers but not the lawyers. Firm management sent an email Wednesday that was obtained by the Daily Business Review stating paychecks would not be issued Thursday until "the office supplies that have been taken have been returned."
Brown called it a "silly misunderstanding" and everyone would be paid. Employees are not receiving COBRA because the firm is closing, and there is no one to administer it, he said.
Attorneys and staffers are looking for jobs, and many have enlisted headhunters, according to sources.
Brown and Heller, formerly Gilbride Brown and Heller, specialized in complex commercial litigation. The firm became Brown and Heller after Gilbride departed.
About three years ago, the firm was hired as Miami counsel for Citco Group Ltd., an offshore company that administered the Fairfield Greenwich and Fairfield Century funds being sued by victims of the investment Ponzi scheme perpetrated by Madoff.
The suit, Anwar v. Fairfield Greenwich, was certified as a class action lawsuit last month by U.S. District Judge Victor Marrero in the Southern District of New York.
After snagging the lucrative client, Brown and Heller staffed up, hiring numerous lawyers and paralegals.
According to one lawyer who asked not to be identified, attorneys were working 12-hour days and weekends reviewing documents and helping with the case. Twenty-two lawyers were assigned to the case and billed 240 to 270 hours a month.
The case was profitable for the firm, which billed $2 million a month, the source said.
There was no sign of trouble late last month when Brown, celebrating his 60th birthday, flew his four partners to Paris for a celebration.
But Brown circulated an email March 1 stating New York law firm Paul, Weiss, Rifkind, Whartson & Garrison was taking lead on the case.
Sources at the firm said a rift developed between the New York counsel and Miami counsel because Brown and Heller wanted to appeal class certification and Paul Weiss did not.
Brad Karp, the lead Paul Weiss partner on the case, did not respond to telephone calls and emails for comment by deadline.
Lewis said the decision to part ways with Citco was mutual. He said he wanted to retire to spend time with his young children. Heller retired last year.
"It was a mutual decision," he said. "I didn’t want to spend so much time traveling to New York any more."
Attorneys and staff were called last Friday and informed the firm was closing. They were told to pick up their belongings and clean up their files for transfer Monday. That morning, Brown gave a speech thanking his employees — some who had been with the firm for more than 20 years.
Both lawyers and staff may have trouble finding jobs in the shrinking legal market, said Abbe Bunt, a legal headhunter with Bunt Legal Search of Hollywood. She is urging employees to consider taking jobs in Broward or Palm Beach counties and consider pay cuts.
"These people are all top notch, highly credentialed and especially well-versed in research and writing," she said. "That being said there are now many lawyers on the market that will now be competing for the same limited litigation opportunities. My advice would be to have writing samples ready, be flexible geographically and be realistic about salary expectations."
Brown served as lead defense counsel in numerous shareholder class actions, bondholder class actions, shareholder derivative litigation, professional malpractice cases, securities investigations and civil securities enforcement actions. Clients included KPMG LLP, the former Coopers & Lybrand LLP, the former Price Waterhouse & Co., the merged PricewaterhouseCoopers LLP and Andersen LLP.