Archer Norris, a Northern California firm that announced last week its intention to close its doors by mid-October, filed for bankruptcy on Aug. 22 in San Francisco.

In its Chapter 11 filing, the roughly 70-lawyer firm said its board had hired Sacramento's Felderstein Fitzgerald Willoughby & Pascuzzi to advise it in bankruptcy court, as well as Russell Burbank, a senior managing director at accounting and consulting firm BPM, to handle its liquidation process.

Archer Norris will continue to provide client services until Sept. 24, the firm said in its bankruptcy petition. The firm also stated that all lawyers and clients are expected to leave by Sept. 15 as they search for new homes and employment opportunities. After that deadline, Archer Norris will continue to exist to the extent that funds are available.

But if those funds are not available to continue an orderly wind-down of operations, the firm's management committee has the authority to either enter into an assignment for the benefit of creditors under applicable California law or to convert its pending Chapter 11 case to a Chapter 7 liquidation.

According to a list of Archer Norris' 20 largest unsecured creditors, the firm owes $204,166.65 to Mokri Vanis & Jones (a California firm that several former Archer Norris partners have joined) for a “legal settlement,” as well as $15,737.50 to Los Angeles-bases economic consulting and forensic accounting firm Vavoulis, Weiner & McNulty for “expert fees.” Archer Norris also owes several landlords money for rent: LaSalle Income & Growth Fund ($164,303.44); Maquire Properties ($39,948.15); Boston Properties LP ($31,515.41); and JP XXXII LP ($13,341.38).

Archer Norris was created in 2000 via a merger between two legacy Bay Area firms. At the time of its dissolution, Archer Norris had four Golden States offices in Los Angeles, Newport Beach, San Francisco and Walnut Creek. Douglas Straus, who took over leadership of the firm in 2017, said last week that Archer Norris has not been doing well financially in recent years. That led to the decision by partners to close the firm, he said.

“Several factors contributed to the need for Archer Norris to wind down its operations, including the departure of over 20 attorneys from Archer Norris' Newport Beach office in 2016, the loss of 10 additional partners since January 2017, and the firm not being as successful during the last few years as it once was,” said Straus in a declaration filed with the bankruptcy court Friday supporting a motion to pay prepetition wages to employees who are still employed by Archer Norris on Sept. 7.

In its bankruptcy filing, Straus noted that Archer Norris still projects that it will have approximately $302,634 in accrued and unpaid prepetition payroll that needs to be paid out to its remaining employees.

Douglas Straus

“The debtor believes that this payment will maintain morale given that employees will only have received payment for only post-petition wages on Aug. 31, and receiving the second half of their paychecks will be a large inducement to stay and participate in the short wind down period,” Straus said in his declaration, which includes as an attachment the firm's plan of dissolution.

Archer Norris' largest secured creditor is MUFG Union Bank N.A., which is owed approximately $2.7 million under a line of credit and two equipment loans. Court papers show that Jeffer Mangels Butler & Mitchell is advising Union Bank in Archer Norris' Chapter 11 case, one in which a status conference has been scheduled for Oct. 4.

The American Lawyer reported in January that bankruptcies for law firms have waned in recent years due to new workaround and pending case law. In March, the California Supreme Court unanimously ruled that dissolved firms do not have a viable claim to so-called unfinished business that former partners take with them to new firms. The decision was a win for Jones Day and other large firms that had pressed the case after hiring partners from Heller Ehrman following the 2008 dissolution of that San Francisco-based firm.