Treatment of (former) Incoming Associates

[observer]

Apparently, former incoming associates were informed by letter that the firm would not pay them the stipends, expense reimbursements, etc., that they were promised when they were made offers (which they accepted). I haven't seen the letter; if anyone has, please post a copy.

This is lousy news, and lousy treatment of these people.

But all former incoming associates who don't have new jobs (yet) should consider doing the following:

1. Send the firm a demand letter, specifying the items and amounts that you are owed but have not been paid. State that these are contractual obligations, of which the firm is in breach. I would suggest sending it to Benvenutti, as chair of the Dissolution Committee, at his new address at Jones Day - S.F.

2. Continue to follow events (here, or at HellerDrone, or at Above The Law [caution on accuracy there]).

3. If there happens to be a Heller bankruptcy filing (not predicting there will, or won't be), file a claim in it.

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There have been some rumors that Heller's AR collections have been going well. Don't know if that is true or not. But it may well be that there is enough money at the end of the day to pay what you are owed, before the partners get anything. IMO, you should get what is owed you before they see any money.

Good luck to you all.

[A Former Associate]

Heller Drone reports that the former incomings received a written communication stating they will not be paid the stipends, bar course reimbursements, etc., that are due them. Again placing the blame on secured lender's lien as preventing the payments, essentially admitted to be owed.

This leaves the former incomings in a bad spot. The amounts promised them were contractual; they are entitled to them. But these amounts would not appear to qualify for Cal. DLSE enforcement procedures. They could sue, but would not be able to enforce any judgment against assets (such as AR’s) until the bank lien is satisfied first.

About the best I can think of for them would be a class action suit, aiming to get summary judgment (since the liability doesn’t even seem to be denied, or deniable). But not attempting to enforce the judgment until it can be determined that bank lien is out of the way. (Don’t hire Nichols Kaster, IMHO. There are excellent plaintiff - labor attorneys in S.F.)

Someone among the former incomings would have to take the lead to contact the others, line up counsel, etc. It would be work, and it would be a while before any results were obtained. But in the DC’s letter they essentially admit these amounts are owed the former incomings and would be paid but for the bank lien. So taking legal action might not be met by much resistance from the DC, though the bank would almost certainly step in to prevent any early enforcement of a judgment.

If I were a former incoming, I would hate to see the firm get away without paying these amounts. And legally it is not entitled to avoid these claims.

Other thoughts?