|A Chicago Tribune story reveals why Altheimer & Gray folded:
- The firm booked $6.3 million in uncollected fees as 2002 profits.
- Using this accounting maneuver, the firm borrowed $24 million, to pay big partners like Gery Chico $800K per year, to fund day-to-day operations and to open a San Francisco office.
- Meanwhile, revenues were down and the firm could not repay the debt or pay its rent.
- 40% of the firm's $31 million in receivables was over six months old, meaning it was likely uncollectible.
On July 1 when the firm voted to dissolve, it came as a shock to partners and staff. The staff was left out in the cold; they got no advance notice and were given their last paychecks on June 30, and no severance pay.
For the story, see:
Altheimer practices questioned
Partners now wonder about firm's management