There’s big news out of Jenkens & Gilchrist and it sounds like something out of Star Trek: they’re breaking up. You see, Jenkens’ image has taken a hit as of late. And it’s not just from this little gem of a recruiting video released last year which was widely criticized (and yes, of course, including me).
Nope, the once formidable 600 lawyer firm (down to 211 as of last month and I anticipate that we’ll see that number drop following the barrage of articles about the firm this week) took a huge hit a la KPMG when some former clients filed a class action suit, Thomas Denney, et al. v. Jenkens & Gilchrist, et al., over questionable tax-shelter advice given by Jenkens that the Internal Revenue Service finally declared improper. The result? The firm coughed up over $5 million in 2006 and its image took a hit. A big hit. You see, in the tax world, it’s not necessarily advantageous to align yourself with attorneys who have been accused of giving advice that the IRS doesn’t like. It’s kind of like sitting with your old ex in-laws at a reunion. Just uncomfortable.
A bad taste in the mouths of a lot of clients, well ex-clients, probably contributed to two years running of profits down more than 30%. A lot of attorneys knew what was coming.
The Chicago office – where the tax troubles stemmed – would be closed, as would branches in Houston, Austin, San Antonio, Los Angeles, Pasadena and DC. What was left? Dallas.
A trip to the firm’s web site says otherwise. Currently, the web site lists a number – six – of associates (but no partners or associates) in Houston, six attorneys (three shareholders/partners, one staff attorney, one counsel and one of counsel) in San Antonio, over thirty attorneys in Austin and just over twenty attorneys in Chicago, though of course, none of them tax attorneys. In fact, in what was once one of the firms in the country with a thriving tax group has whittled down to a mere seven tax attorneys (5 shareholders/partners and two associates) in two offices.
Somehow I get the feeling it’s not game day anymore.