Wednesday, March 9, 2011

More Nonsense from Ruyak


The Wall Street Journal spoke with Bob Ruyak, who provided two RIDICULOUS reasons for Howrey's collapse, neither of which pass the laugh test.

1.  Ruyak claims that the evolving legal market over the last few years forced Howrey to accept several contingency billing arrangements, which caused swings in Howrey's profits, which therefore drove partners away because they have "very little tolerance for change [in billing arrangements] and very little tolerance for fluctuation in profits."  First, nice dig at your fellow partners, Mr. Chairman & CEO.  Second, if this were true, wouldn't every large law firm be collapsing Howrey-style?

2.  Ruyak blames the rise of third-party document discovery specialists that could provide litigation support at substantially lower rates than Howrey, which has many offices in big cities and therefore, higher costs.  Howrey just couldn't compete with that.  But as with #1 above, if this were true, wouldn't every large law firm be collapsing Howrey-style?

No analysis from WSJ at all.  You know what you call that?  CrapAnalysis.

[UPDATE:  As a few commenters have noted, Ruyak said "merger was never an option."  On its face, this is a preposterous comment, but for different reasons than are immediately apparent.

The transaction Winston contemplated with Howyak was a strategic cherry picking raid under the guise of a merger.  Under that guise, Howyak could provide financial information to Winston that would never be allowed in a traditional cherry picking raid because it would be a breach of fiduciary duty to the partnership.  Winston offered jobs (note that in a merger, you usually do not receive a job offer) to the portions of Howrey that it was interested in, and discarded the rest.  So in a sense, I think Ruyak was right in that a true merger was never an option.  Regardless, as commenters have noted, it's definitely a doozy of a comment worthy of mention.]

26 comments:

  1. I love Comment #2. Howrey actually lost its Electronic Discovery Expert in 2008 to Winston of all places. Partner is John Rosenthal.

    http://winston.com/index.cfm?contentID=24&itemid=15590

    http://winston.com/index.cfm?contentID=30&itemID=1642

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  2. You ignored the most interesting line of the article: "A law-firm merger 'never was an option,' [Ruyak] said."

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  3. Last line in the article : >A law-firm merger never was an option, he said.>

    What a fuckwad.

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  4. I knew Howery was screwed two years ago when Ruyak asked non-equity partner for capital contributions. It speaks to his hypnotic powers that no one questioned the rationale behind that particularly peculiar request.

    hmm... maybe Howrey lawyers aren't so smart, after all.

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  5. Ruyak blames everything except for his own incompetence, stupidity and gross mismanagement.

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  6. Ruyak is at best a fool. In time, I am confident that a good case will be made that he defrauded his partners.

    Ruyak's first point has a perverse ring of truth. Time and time again Ruyak would state that contingency income was not considered in the annual budgeting process. Such income, if received, was essentially "icing on the cake" for Level II partners. What Ruyak and his MBA yes-men were not disclosing, however, were the ever-growing numbers of partners and associates who were spending substantial amounts of time on contingency work with no immediate prospect of revenue in sight. Meanwhile, these people had to be paid, and the so-called "investment cases" financed, out of the firm's current revenue. This led to significant management resistance to concessions on rates for paying clients. After all, how else was Bob to pay his partners? So while the productivity numbers may have looked good, the dirty little secret behind those numbers was that the firm wasn't going to collect any money for many of those hours anytime in the forseeable future. Sometime in 2009, management decided to get more proactive about oversight of these "investment cases," but the horse had probably left the barn by that point.

    Ruyak's second point is nonsense; he is simply parroting an article published in The New York Times last week. It's true that the firm made a tidy profit at its Northern Virginia site billing out contract lawyers at multiples of their hourly pay. But arguing that a downturn in such work led to Howrey's downfall is like saying that the firm would have survived if its charged 75 cents in the soda machines rather than 50 cents.

    Ruyak's last comment is remarkable. If I were a Howrey partner without an offer from Winston & Strawn (or a rescinded W&S offer) that statement would be Exhibit A in my complaint for breach of fiduciary duty and fraud against Ruyak, Boland, and the rest of the cabal.

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  7. no COBRA benefits for employees

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  8. By "COBRA benefits," you mean the firm is paying nothing, right? Or that people can't even pay for their own coverage?

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  9. @4:03: Highly on the mark comment by someone who seems to know a lot and sounds still there. How in the world could the WSJ, a supposedly insightful paper, print this sort of puff piece that gives this sociopathic megalomaniac a platform for spewing misdirection and hogwash? There is essentially nothing at all true about anything he is quoted as saying. Amazing that even after all these months anyone would want to publish a word the man says. If he had never come to manage the firm, it would be alive and well today. How was he ever put in that position anyway. Did the partners elect him? Shame on them if they did.

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  10. @4:19 - no Howrey, no insurance, no COBRA.

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  11. Unless Howrey files BK (and, in doing so, kisses good-bye to EVERY penny of the $110 million in receivables still on the books), it would appear that the winding-down company would not be exempt from having to comply with the WARN act as well as paying for COBRA and any PTO.

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  12. Worse: Howrey is actually self-insured for the health plans of all covered. As one wo has been trying to understand this, I pass on what I have been told by others (Howrey mamangement being wholly unresponsive). People can get new coverage without being in the pre-exisiting condition predicament upon the earlier of (a) the next open enrollment period or (b) the dissolution of the "Howrey Plan." I am not 100% sure I understand this, but everyone does need to be sure they talk to some non-Howrey professional and understand how to protect the continuity of their health coverage.

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  13. IT and Lit Support people are dropping like flies in NOVA.

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  14. WARN notices went out in the SV Office this afternoon... I hear.

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  15. 60 days..May 9th

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  16. Staff told in telcon today that Howrey closes its doors May 9, 2011. No payments of any kind after that. Bank now involved in all decisions, including whether there will be any more paychecks. Staff encouraged to look for new work now, but will not be paid if they don't come in. Wind down committee is being formed.

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  17. It'll be interesting to see if the third member of the committee is Curly or Shemp.

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  18. Ruyak looks like the bad guy in a '90s Adam Sandler movie...shame that his poor management skills contributed to so much trouble for so many...

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  19. Citibank has been approving all payments for at least the last two weeks.

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  20. WARN Notice:

    Dear Colleagues,

    As discussed in the meeting held earlier today, attached is a letter which provides 60 days notice of your termination from Howrey, due to the cessation of the firm’s business operations and closure of your office. This letter is being sent in compliance with applicable Federal and/or State Worker Adjustment Retraining and Notification (“WARN”) Act(s), and will also be sent to your residence via overnight delivery from Federal Express tomorrow.

    Howrey sincerely appreciates the contributions you have made during your tenure at the firm, and wishes you success in your career pursuits.

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  21. Heard WARN notices emailed to LA staff too.

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  22. While Ruyak was at the helm and running the show with his minions (uh financial wizards) the rest of the partnership stood by and let this happen. It is a partnership and they all submitted to the dictates of one. They should all be ashamed of themselves. They are not going to suffer, it is the staff, who stood by, did their best to support these partners and have stuck it out to be thrown out with the dirty bath water. Sure it is their "intent" to come through with WARN Act requirements, but we all know that their "intent" means nothing at this point. As someone who valued the Howrey family, I leave angered and dismayed.

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  23. What a POS article. WSJ "journalist" Vanessa O'Connell takes dictation.

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  24. The caption for this picture should be changed sinmply to: "Why is This man Smiling?" That shoulk start a more focused string of post: prizes for best 15/20 word descrrition of reason or something

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  25. Anyone else notice that since that first skin-crawling photo of The Bobster, his new photo reflects (unlike Howrey) a significant gain? As in, hey, fat boy, aren't you the buff little skank? Disgusting.

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  26. Did Ruyak's acne finally clear up?

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