"For everyone here, it is a sad and painful day that we are not able to maintain our place in the legal community," said Levin, a former chairman of the firm that was founded in 1890, survived the 1906 earthquake and led legal projects ranging from the financing of the Golden Gate Bridge to the overturn of the state's ban on same-sex marriages.
As recently as 2004, Heller ranked second on the American Lawyer's A-list, a measure based on a variety of factors such as profitability, pro bono representation, associate satisfaction and diversity ratings. But in recent years the firm had grappled with a variety of challenges, including the financial strains of trying to compete in an increasingly globalized legal industry.
The legal press had followed the firm's recent troubles: It was a company that specialized in big litigation cases, and some of these either settled or were scooped up by competing firms, contributing to a 3 percent revenue drop in 2007 that led to the departures of key partners whose absence began to weaken the firm.
Unusual structure
Former Heller Ehrman partner Stephen Ferruolo, who left in spring 2007 to join the San Diego law firm Goodwin Procter, said the San Francisco outfit had an unusual structure that may have proved particularly unlucky in the current financial climate of tight money.
Ferruolo said Heller Ehrman was a partnership made up of professional corporations, and in order to avoid double taxation of its income, it distributed all its earnings at the end of each calendar year and used a line of credit to fund operations until the subsequent year's cash flow caught up with its outlays.
"It was always a big thing for us to be 'out of the bank' as we used to say," said Ferruolo, who speculates that a bad 2007, combined with the tight financial climate, made this annual financial juggle even tougher this year.
