An L.A. law firm that was owned by New York attorney Marc Dreier ended its relationship with him when he was charged with securities fraud last week.
Dreier Stein Kahan Browne Woods George LLP has dropped Dreier's name from the firm and will continue to operate, although headhunters are swarming. The firm's name now starts with Stein, and the partners plan to share in ownership.
"We are continuing to operate our Los Angeles law firm seamlessly for the benefit of all our clients," the firm said in a statement, "while immediately discontinuing our relationship with Marc Dreier."
Dreier was arrested in New York last Monday, and the New York U.S. Attorney's Office charged him with one count of securities fraud and one count of wire fraud. Federal prosecutors allege that beginning in October, Dreier sold fake promissory notes to hedge funds and other private investment funds on behalf of a New York real estate development company. At least two funds allegedly invested $114 million.
The Securities and Exchange Commission also charged Dreier with marketing the fake promissory notes.
Dreier is represented by New York criminal defense attorney Gerald Shargel, who did not return a call seeking comment.
Dreier was the owner of the firm, signed the leases and negotiated the salaries of the partners. He had formed a partnership two years ago with the firm's attorneys in affiliation with his New York firm, Dreier LLP, but the L.A. firm operated under separate management.
Industry insiders said the 72-attorney Stein Kahan Browne Woods George is likely to retain its clients, and the partners should continue practicing unscathed.
"I placed one of their up-and-coming partners at the firm about a year and half ago," said Sandy Lechtick, founder of L.A.-based legal search firm Esquire Inc. "I spoke to him Sunday night, and he said he likes the firm, and told me that the others really want to stay put. Their efforts are going to be to ride it out."
But there are rumblings within the legal community that legal recruiters have already started aggressively pursuing attorneys in an attempt to get them to leave the firm.
Lechtick said that headhunters called one firm partner at least eight times since news broke about Dreier's arrest.
In August, Dreier also formed a partnership with Century City entertainment attorneys John Mason and Darrell Miller, co-founders of four-attorney Mason Miller LLP.
The firm declined to comment on
Dreier, but in a previous interview with the Business Journal, the attorneys said that Dreier serves as a common partner of Mason Miller, but the firm is run independently from Dreier's New York firm much the way Stein Kahan was.
After receiving word that the partners in his litigation boutique wanted to merge with a larger firm, Jay Spillane opted to stay small. So he broke away and formed seven-attorney Spillane Weingarten LLP in November.
Spillane's former firm, Spillane Shaeffer Aronoff Bandlow LLP, merged with Lathrop & Gage LC in November. Instead of joining the 300-attorney firm, Spillane joined longtime friend Alex Weingarten to form Century City-based Spillane Weingarten.
Spillane said there are advantages to practicing at a small firm, including the ability to charge clients reasonable rates.
"There is a strong market in California for a firm that can be of service to middle-market clients," Spillane said. "And the way we try to compete for middle-market business is to keep rates competitive."
The partners said they plan to offer their clients hybrid contingency fee arrangements where the client pays a reduced hourly rate and the firm receives a percentage of a judgment or settlement in order to compete with national firms for business.
Spillane and Weingarten are litigators who practice mostly in the media and entertainment industries, with a focus on intellectual property law.
Spillane's clients include Mission Hills software company Unicom Systems Inc. and online payment processor CCBill LLC. He has represented entertainment and sports figures, including professional surfer Kelly Slater. Weingarten has represented comedian Danny Bhoy and Home Box Office Inc.
Spillane said the firm plans to hire more attorneys, and has already received inquiries from local lawyers.
"We have already had calls from people who are partners at big firms, and who have trouble developing business at rates that are $600 or higher," Spillane said.
A clothing drive organized by the Consumer Attorneys Association of Los Angeles ended this week.
Eleven firms participated in the drive, which was organized in conjunction with Downey non-profit Clothes the Deal, which distributes clothing to men, women and at-risk youth who need clothes and accessories for job interviews.
Amy Solomon, president of the Consumer Attorneys branch in Los Angeles and a partner at Girardi & Keese, said she organized the event with Clothes the Deal because attorneys regularly wear business suits, and therefore own a lot of dress clothes.
"I spent a good portion of my time going through my dressers and closets," Solomon said.
As of last week, Solomon said her firm had collected a rack of clothes.
Other firms participating in the inaugural event included L.A. firm Liner Yankelevitz Sunshine & Regenstreif LLP and the Law Offices of C. Michael Alder P.C.
Liner Yankelevitz said last week that one of its offices was one-quarter filled with clothes, while Beverly Hills plaintiff's attorney Alder said his firm has collected 35 suits in addition to dress shirts and dress shoes.
The goal is to collect 2,000 pieces of clothing, shoes, handbags, briefcases and jewelry.
Staff reporter Alexa Hyland can be reached at email@example.com or at (323) 549-5225, ext. 235.
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