Former Howrey Partners Contribute Another $1.5 Million

Three-and-a-half years after Howrey LLP shut its doors, another 31 former partners of the bankrupt law firm have agreed to chip in money to pay back Howrey’s creditors.

In settlement papers filed Friday in U.S. Bankruptcy Court in San Francisco, Howrey trustee Allan Diamond says he’s reached deals to bring in close to $1.5 million from the batch of onetime equity partners. That’s on top of a nearly identical settlement reached in May with 60 ex-partners that raised $4.2 million for creditors.

The contributions, ranging from $3,532 to $200,000, claw back 16% of what partners earned between April 2010 and Howrey’s dissolution a year later—a period during which Mr. Diamond argues Howrey was insolvent.

“This one really takes us dramatically far down the road with respect to the former partners,” Mr. Diamond, a name partner at Texas firm Diamond McCarthy LLP, told Bankruptcy Beat on Monday. Settlement talks continue, he said, with a large group of lawyers who landed at Jones Day, and a handful of “stragglers” are also out there. (A Jones Day rep didn’t immediately respond to a request for comment Monday).

The deals with former partners are one of the last steps toward putting together a long-awaited liquidation plan that will lay out how Mr. Diamond plans to repay Howrey’s debts. Other roadblocks include settlement talks with Howrey’s onetime landlord at its Washington, D.C., headquarters, Mr. Diamond said, and with a dissolution committee that oversaw the first few months of Howrey’s wind-down.

Howrey has already paid off a $37 million debt to its largest creditor, Citibank, thanks to a $41 million deal reached last year with Baker & Hostetler LLP, a firm that inherited several large contingency fee cases from Howrey.

Howrey’s roughly 130 former U.S. partners have settled with the firm’s Chapter 11 estate begrudgingly. In May, some groused to Bankruptcy Beat that they’d already suffered enough from the firm’s demise and shouldn’t be forced to pay even more. Many ex-partners filed claims seeking money from the estate, Mr. Diamond said, but have agreed to drop those claims as part of the recent settlements.

At its peak, Howrey employed hundreds of attorneys and was known for its antitrust, intellectual property and litigation work. The firm voted to dissolve in March 2011 following an onslaught of partner departures and went into bankruptcy the next month.

Write to Sara Randazzo at [email protected]. Follow her on Twitter at @sara_randazzo.