In the aftermath of failed merger talks with Nixon Peabody last month, powerhouse law firm Stroock has reportedly experienced a substantial outflux of attorneys and legal staff. In response, the firm is now earnestly pursuing a new merger partner and the first step? Jettisoning its pension plan. Above the Law reports.
Earlier this year, while Stroock was still reportedly on the market, they conceded that due to the firm’s outstanding pension obligations, which at one point tied to its revenue and round-about $40 million annually, there may be a need for operational revisions. Even though the liabilities have been decreased significantly, it still imposes an annual obligation that sits around $4 million.
In the midst of merger deliberations with Nixon Peabody, Stroock reached out to its retirees requesting them to consider a reduction in benefits. As the firm is now urgently trying to find a new merger partner, it’s taking even more drastic measures to remove what it calls a “major obstacle”: pension buyouts are now in the offing. American Lawyer supplies more details.
According to sources, the decision to buyout the pension fund was voted on by the partnership, with the deadline set for August 8th. The firm’s leadership was for a total buyout, thus nullifying the pending pension obligations.
When asked why Stroock did not carry this out earlier ahead of merger talks or why it hasn’t considered other ways to minimize its pension program, firm co-chair Alan Klinger stated “looked at several different ways to reduce our pension program before arriving at our current approach.”
“The partnership authorized a buyout of the pension. A vote of the retired partners is in progress. We are optimistic about its success. This will remove a major obstacle to us accomplishing a desired combination. We are grateful to our retiree community, who understands the need and is stepping up to support the firm” Klinger said in a statement about the pension conundrum of the firm.
Undoubtedly, this ambitious plan shows Stroock’s dedication in lightening its burden to find an appropriate merger. Only the coming months will tell what the destiny holds for them.