Author Topic: Making $375,000 a year and declaring bankruptcy  (Read 7519 times)

goodlife

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Making $375,000 a year and declaring bankruptcy
« on: January 27, 2014, 04:08:35 PM »
Ok, this just made me laugh out loud! Here is the article...but if you don't want to read it, here is the breakdown that really made me laugh:

"How far does $375,000 a year go in New York City? Strip out estimated income taxes ($7,500 a month), domestic support ($10,517), insurance ($2,311), a mandatory contribution to his retirement plan ($5,900), and routine expenses for rent ($2,460 a month) transportation ($550), food ($650) and miscellaneous outlays for things like utilities, medical expenses and cellphone and Internet service, and Mr. Owens estimated that he was running a small monthly deficit of $52, according to his bankruptcy petition. He has gone back to court to get some relief from his divorce settlement, so far without any success."

http://www.nytimes.com/2014/01/25/business/partner-in-a-prestigious-law-firm-and-bankrupt.html

the fixer

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #1 on: January 27, 2014, 04:19:33 PM »
What insurance costs $2300/month??? He rents, so it's not homeowners. Does he wreck one car per year, or does he have 10 kids?

SnackDog

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #2 on: January 27, 2014, 04:24:31 PM »
i'd be happy to make his bed and wash his underpants for $10K/month

Jack

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #3 on: January 27, 2014, 06:39:58 PM »
i'd be happy to make his bed and wash his underpants for $10K/month

I had to think about it a while before I figured it out, but I'm pretty sure "domestic support" means alimony.

Anyway, I can only assume that what we have here is a portrait of a man who moved his money offshore to screw his ex out of the "domestic support."

MayDay

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #4 on: January 27, 2014, 06:44:56 PM »
If you read the whole article, it is alimony and child support.

The actual reason he is filing Bk is that he was a partner at a Big law firm that imploded a couple years ago.  All the partners are on the hook for millions of debt from the firm. 

I don't know what the insurance fee is (seems way high for health insurance and car insurance, what else could it be?  Can a divorce require really high life insurance?) but the rest isn't that crazy.  Obviously he could be way more frugal, but from what I understand food and apt costs like that are not bad for NYC, right? 

CommonCents

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #5 on: January 27, 2014, 06:58:18 PM »
The lack of cash on hand is likely quite strategic. Read the legal bog on it here and skim the comments (ignore the trash in them for the quick consensus analysis): http://abovethelaw.com/2014/01/dewey-know-a-biglaw-partner-driven-into-personal-bankruptcy-by-the-firms-collapse/#more-295794

Calling himself a contract attorney is melodramatic and quite far from the truth.

Maybe insurance is for his law practice?  Dunno.

Bigote

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #6 on: January 28, 2014, 07:46:13 AM »
He may also be required to pay Cobra for his ex-wife and kid.   That would most certainly be in the four figures monthly.


(for non-US folks, Cobra is an acronym for a law that enables people to buy health insurance through an ex-employer or through an ex-spouse's current employer for a period of time. )
« Last Edit: January 28, 2014, 07:47:46 AM by Bigote »

MilwaukeeStubble

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #7 on: January 28, 2014, 07:57:52 AM »
He may also be required to pay Cobra for his ex-wife and kid.   That would most certainly be in the four figures monthly.


(for non-US folks, Cobra is an acronym for a law that enables people to buy health insurance through an ex-employer or through an ex-spouse's current employer for a period of time. )

OT: Specifically, it stands for "Consolidated Omnibus Budget Reconciliation Act"

Because Congress

CommonCents

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #8 on: January 28, 2014, 08:09:14 AM »
He may also be required to pay Cobra for his ex-wife and kid.   That would most certainly be in the four figures monthly.


(for non-US folks, Cobra is an acronym for a law that enables people to buy health insurance through an ex-employer or through an ex-spouse's current employer for a period of time. )

Ah, yes that would make sense.

Angelfishtitan

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #9 on: January 28, 2014, 08:46:34 AM »
The lack of cash on hand is likely quite strategic. Read the legal bog on it here and skim the comments (ignore the trash in them for the quick consensus analysis): http://abovethelaw.com/2014/01/dewey-know-a-biglaw-partner-driven-into-personal-bankruptcy-by-the-firms-collapse/#more-295794

Clearly strategic:

Quote from: Article
And he has just over $1 million in retirement accounts that are protected from creditors in bankruptcy.

Not sure what his complaint can really be, according to the article he costs his firm money due to his wage being higher than what he pulls in, this was true even at his old firm that collapsed. If you know something like that about yourself, you sure as hell try to fix it else it will damage you in the future.


foobar

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #10 on: January 28, 2014, 12:14:40 PM »
Basically he is trying to get rid of 3 million in debt by declaring bankruptcy. ~8x of your yearly earnings in debt is a very high burden and most people should be thinking about bankruptcy at that level.

You  might ask where are the assets from his previous years of working but I have a feeling that they are with the exWife.

The lack of cash on hand is likely quite strategic. Read the legal bog on it here and skim the comments (ignore the trash in them for the quick consensus analysis): http://abovethelaw.com/2014/01/dewey-know-a-biglaw-partner-driven-into-personal-bankruptcy-by-the-firms-collapse/#more-295794

Calling himself a contract attorney is melodramatic and quite far from the truth.

Maybe insurance is for his law practice?  Dunno.

Undecided

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #11 on: January 28, 2014, 03:52:03 PM »

Not sure what his complaint can really be, according to the article he costs his firm money due to his wage being higher than what he pulls in, this was true even at his old firm that collapsed. If you know something like that about yourself, you sure as hell try to fix it else it will damage you in the future.

I don't think so---him not being a rainmaker means he doesn't originate the business, not that he doesn't bill time on matters. He probably bills at around $1,000/hour, so if he bills even 30 hours a week, he's probably covered his salary, benefits and overhead in the first half of the year.


Angelfishtitan

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #12 on: January 29, 2014, 01:09:41 PM »
I don't think so---him not being a rainmaker means he doesn't originate the business, not that he doesn't bill time on matters. He probably bills at around $1,000/hour, so if he bills even 30 hours a week, he's probably covered his salary, benefits and overhead in the first half of the year.

But the article states that he doesn't, bolding mine:

Quote from: Article
Nonequity partners like Mr. Owens are not really partners, but employees, since they do not share the risks and rewards of the firm’s practice. Service partners typically have no clients they can claim as their own and depend on rainmakers to feed them. In Mr. Owens’s case, his mentor and protector has long been Morton A. Pierce, a noted mergers and acquisitions specialist and prodigious rainmaker whom Mr. Owens followed from the former Reid & Priest to Dewey, Ballantine to Dewey & LeBoeuf and then to White & Case.
...
At Dewey & LeBoeuf, Mr. Owens’s name was perennially among a group of partners who were not making enough revenue to cover their salaries and overhead, according to two former partners at the firm. But each time, the powerful Mr. Pierce, then the firm’s vice chairman, protected Mr. Owens, they said.

foobar

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #13 on: January 29, 2014, 01:22:37 PM »
That was at the old firm. For all we know he was being paid 2x as much there. Or maybe he just has really good blackmail material on Mr.Pierce.


I don't think so---him not being a rainmaker means he doesn't originate the business, not that he doesn't bill time on matters. He probably bills at around $1,000/hour, so if he bills even 30 hours a week, he's probably covered his salary, benefits and overhead in the first half of the year.

But the article states that he doesn't, bolding mine:

Quote from: Article
Nonequity partners like Mr. Owens are not really partners, but employees, since they do not share the risks and rewards of the firm’s practice. Service partners typically have no clients they can claim as their own and depend on rainmakers to feed them. In Mr. Owens’s case, his mentor and protector has long been Morton A. Pierce, a noted mergers and acquisitions specialist and prodigious rainmaker whom Mr. Owens followed from the former Reid & Priest to Dewey, Ballantine to Dewey & LeBoeuf and then to White & Case.
...
At Dewey & LeBoeuf, Mr. Owens’s name was perennially among a group of partners who were not making enough revenue to cover their salaries and overhead, according to two former partners at the firm. But each time, the powerful Mr. Pierce, then the firm’s vice chairman, protected Mr. Owens, they said.

Angelfishtitan

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #14 on: January 29, 2014, 01:32:10 PM »
That was at the old firm. For all we know he was being paid 2x as much there. Or maybe he just has really good blackmail material on Mr.Pierce.

Nope:

Quote from: Article
In 2012, he made $351,000, and last year, while at White & Case, he made $356,500.

So he makes more than he was making at his old job where he didn't pull his weight. I highly doubt he is now suddenly making more than he costs when the only reason he is at White & Case is holding onto Mr. Pierce's coattails. Possibly, but not exactly a high probability especially based on this:

Quote from: Article
And they could get worse. The most recent deal on White & Case’s website in which Mr. Owens played a role was the relatively modest $392 million acquisition of the women’s clothing retailer Talbots by Sycamore Partners, in which Mr. Owens (working with Mr. Pierce) represented Talbots. That deal was announced in May 2012. The White & Case spokesman did not provide any examples of more recent deals.

CommonCents

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #15 on: January 29, 2014, 02:01:36 PM »
Hey guys, the key in the article is the word "overhead."  Things like secretaries, the expensive summer associate program, the salaries for the partners bringing in the clients, etc.  He's most likely covering his salary just fine - it's that he's expected to do much more than that.  As an associate they wanted us to bill 1900 hours, which at our billing rate and salary, equated to 3x our salary.  The standards may be higher for a non-rainmaker partner, I don't know.

foobar

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #16 on: January 29, 2014, 02:19:04 PM »
Read the article again. He is getting paid ~1/3 less than he did at Dewy & LeBoeuf where his income was over 500k(who knows if that is 501 or 900k). 2012 was an abnormal year for the obvious reason.  You can also wonder what years he didn't pull his weight. Was he a star from 2000-2008 who was on a bad 3 year run or was he a constant drag? Who knows.


Is he currently pulling his weight? Again who the heck knows. He has only been at the company for like 18 months. Maybe he has been working on 6 deals for the past 9 months that are set to close in Q2. Or maybe they only put deals over 100m on the site. Or maybe he isn't pulling his weight. None of us have that info.



That was at the old firm. For all we know he was being paid 2x as much there. Or maybe he just has really good blackmail material on Mr.Pierce.

Nope:

Quote from: Article
In 2012, he made $351,000, and last year, while at White & Case, he made $356,500.

So he makes more than he was making at his old job where he didn't pull his weight. I highly doubt he is now suddenly making more than he costs when the only reason he is at White & Case is holding onto Mr. Pierce's coattails. Possibly, but not exactly a high probability especially based on this:

Quote from: Article
And they could get worse. The most recent deal on White & Case’s website in which Mr. Owens played a role was the relatively modest $392 million acquisition of the women’s clothing retailer Talbots by Sycamore Partners, in which Mr. Owens (working with Mr. Pierce) represented Talbots. That deal was announced in May 2012. The White & Case spokesman did not provide any examples of more recent deals.

Angelfishtitan

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #17 on: January 29, 2014, 02:38:22 PM »
But covering your salary plus your percentage of overhead is pretty consistent across multiple fields, especially when you personally directly pull in the company's money through billing hours such as if you are part of a contracting company. Otherwise you are not covering your share. If enough people do this your company goes broke.

My question is: If you consistently show up on the list of people not pulling in enough money for the firm, is it really in your best interests to do nothing about it?

Me opinion: Not a good choice. Perennially implies at least a few year, which to me is plenty of time to work your current skillset especially when you have so much to lose if you don't.

Undecided

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Re: Making $375,000 a year and declaring bankruptcy
« Reply #18 on: January 29, 2014, 04:08:45 PM »
That was at the old firm. For all we know he was being paid 2x as much there. Or maybe he just has really good blackmail material on Mr.Pierce.

Nope:

Quote from: Article
In 2012, he made $351,000, and last year, while at White & Case, he made $356,500.

So he makes more than he was making at his old job where he didn't pull his weight. I highly doubt he is now suddenly making more than he costs when the only reason he is at White & Case is holding onto Mr. Pierce's coattails. Possibly, but not exactly a high probability especially based on this:

Quote from: Article
And they could get worse. The most recent deal on White & Case’s website in which Mr. Owens played a role was the relatively modest $392 million acquisition of the women’s clothing retailer Talbots by Sycamore Partners, in which Mr. Owens (working with Mr. Pierce) represented Talbots. That deal was announced in May 2012. The White & Case spokesman did not provide any examples of more recent deals.

In 2012, Dewey crashed. Partners there up to that point may have made peanuts for that year, and we don't know when in that year he went to W&C. Regardless, I am sufficiently familiar with large law firm economics to be comfortable that he was making much more than $375k in Dewey's heyday, and I wouldn't attribute any great precision to the quoted partners' comments.

As to the Times's attribution of some significance to the state of his current firm bio and deal sheet, well, I wouldn't put much weight in it. It's not like he has to update it every year, and it's not impossible that he's consciously kept it modest in connection with his BR filing.