July 3, 2003
BY LYNN SWEET WASHINGTON BUREAU CHIEF
The Chicago-based law firm of Altheimer & Gray is dissolving. The chairman of the executive committee of the firm is Gery Chico, one of the Democrats running in the 2004 Senate primary.
The demise of Altheimer & Gray is a potentially dramatic development in a contest where the main job of the Democrats is to distinguish themselves in a crowded field. Chico said he is pushing ahead with his race. "I will be pursuing the campaign vigorously,'' he said. "I am a fighter.''
It's not clear when the Altheimer & Gray doors close, but the wind-down process is under way. A $1.5 million bank loan is being used to cover the payroll, benefits and accrued vacation and outplacement services. Matters are not settled regarding pensions and severance pay. A firm spokesman said layoffs already started.
The firm has a debt between $30 million and $40 million, but there are probably enough assets to cover many of these liabilities. Equity partners, who will likely wave goodbye to some or all of their entire stake, in mid-June were told to pay back loans and advances taken from the firm in order to generate cash flow.
It's not a pretty picture. The closing impacts the lives of a lot of people. The international firm has U.S. offices in Chicago, Springfield, San Francisco and eight other cities in Europe and Asia, with about 301 lawyers and 292 people in supporting positions. In Chicago, there are 132 lawyers and 275 staffers. The firm has been a source of campaign cash for Chico. I checked federal election records and found that for 2002 alone, there were 68 people working at Altheimer & Gray who donated to Chico's campaign. Norman Bobins, the chief executive of Altheimer & Gray's lender, LaSalle Bank, has been helping the Chico campaign.
Altheimer & Gray is shutting down on Chico's watch. Whether this is a speed bump or a formidable roadblock for Chico's Senate campaign remains to be seen.
To be at the top of a firm laying off people during a political campaign is--I am searching for the phrase now--not good. It is a problem, especially as Democrats in Washington talk about job creation and the economy and Chico touts his record with organized labor.
There is some angry e-mail traffic directed against Chico at a message board run by a lawyers Web site, the "greedy Chicago board'' to be found on www.infirmation.com. From my reading, the messages are from Altheimer & Gray workers. Having a bunch of disgruntled former colleagues around is dangerous for a campaign.
Until now, the storyline for Chico, 46, was about his success: from a 21-year-old in the Planning Department at City Hall to Mayor Daley's chief of staff, to a partner in the old Sidley & Austin law firm, to president of the Chicago School Board at the same time he joined Altheimer & Gray. There, his rainmaking ability to land transaction and lobbying business vaulted him into the top management of the firm.
Chico alone cannot be blamed for the downfall of Altheimer & Gray; there are three other partners who are part of the ruling quartet. And although the economy is terrible, Chico was a top biller. While Chico's clout lobbying business made the news, the bread and butter of the firm was its transactions work, which dried up. On top of that, United Airlines, a major Chico client of the firm, filed for bankruptcy protection.
Chico's opponents may hold off using the downfall of Altheimer & Gray against him. Chico's camp may be perversely thrilled if he becomes important enough to attack.
A lesson: Last year, in the Florida primary for governor, former Attorney General Janet Reno was running against little-known attorney Bill McBride, the managing partner of Holland and Knight. McBride's firm ran into a rough patch, and the Florida Republican Party (wanting a weaker opponent for Gov. Jeb Bush) ran ads hitting McBride's management. McBride's name recognition shot up, and he beat Reno.
Said Chico, "You know what you do with speed bumps? You go over them.''