Serious financial problems have hit the Buffalo law firm that attorney Ross M. Cellino Jr. started last year after a messy breakup with his business partner, Stephen E. Barnes.
Cellino met with attorneys working for his firm, Cellino Law, on Thursday, telling them he would have to cut salaries because the Covid-19 pandemic has made it difficult to get cases.
“If we want to survive as a firm and hopefully thrive in the future, drastic changes must be made immediately,” Cellino told his attorneys in an email sent to them on Wednesday.
Cellino, the high-profile personal injury lawyer known for his longtime involvement in the Cellino & Barnes firm, declined to comment on his firm’s situation when contacted by The Buffalo News on Friday.
In his Wednesday email to employees, Cellino said he has been working since March with his managing attorneys to “find solutions to the significant cash flow deficits that we are experiencing as a firm.”
“Unfortunately … we could not come up with a painless solution. Frankly, I am not wealthy enough to continue to personally fund the significant cash flow deficits each month. If we continue to operate as we are, would require me to liquidate all of my hard assets to keep a sinking ship afloat. It is only a matter a time before everyone would be out of a job,” Cellino wrote to his attorneys.
The email said Cellino had cut “TV and Radio buys in half” since March in an effort to cut costs, but the financial problems had continued. He expressed concern that, if additional changes are not made to cut more costs, “given our current caseload and intakes to date I will be forced to let go of no less than 50% of our lawyers and support staff.”
“My heart was in the right place when I aggressively solicited and asked you to join Cellino Law. I had every intention and desire to “share the wealth” and provide an even better life for you and your families. But circumstances have changed. … The effects of COVID has diminished caseloads dramatically,” Cellino wrote.
“If we want to survive as a firm, and hopefully thrive in the future, drastic changes must be made immediately. I am confident our brand is strong and we will continue to see an uptick in our case intake and grow together as a firm. While I am hopeful I have another 10+ years in my career, my goal is to leave the firm in a strong position to continue to the next generation and support all of the lawyers we have here today for many years to come. I want everyone here to live out your career at Cellino Law.
“That being said, each of you needs to make the best decision for you and your family. As the owner of the firm, I have to make the best decision for the firm and for the 100+ people/families we support.”
Two attorneys who attended meetings with Cellino on Thursday spoke to a reporter on the condition that their names would not be published.
When Cellino opened his new firm last year, he gave generous salaries to his lawyers, the attorneys said.
“We were told Thursday that salaries would be eliminated, and we would work on a draw system, as we did with Cellino and Barnes,” one of the attorneys told The News.
Under the “draw” system, the Cellino Law attorney explained, lawyers receive a weekly loan of money from the law firm to cover their mortgages, loans and basic living expenses. At the end of each month, the lawyers pay that money back to the law firm.
The lawyers make all their money when their cases are resolved, through settlements, arbitration awards or verdicts.
Eliminating salaries and switching to the draw system are “non-negotiable,” Cellino told his lawyers in the email, adding that the law firm had reached a “breaking point” and had “no other option” but to cut attorney salaries.
After a long and often ugly battle in State Supreme Court, the two founders of the Cellino & Barnes firm – Cellino and the late Stephen Barnes – each opened his own new law firm last October.
They had been partners for more than 25 years, and Cellino & Barnes had been hugely successful due to extensive advertising on radio, TV and in newspapers.
A long-simmering dispute between the two men became public in 2017 when Cellino filed a lawsuit seeking to break up the firm. Barnes fought against Cellino’s move for more than two years before finally agreeing to dissolve Cellino & Barnes, creating Cellino Law and the Barnes Firm.
Barnes and his niece, Elizabeth Barnes, died last Oct. 2, when Barnes’ small plane crashed in Genesee County.
The Barnes Firm continues to operate, now headed by Barnes’ brother, Richard; managing attorney Robert J. Schreck; and other partners.
Schreck declined on Friday to discuss Cellino Law’s financial situation.
“I’m not commenting on anything happening with any other law firm,” Schreck said. “I will say that we at the Barnes Firm are doing well and moving forward. We had a solid business plan, and have stuck with it. We’re getting ready to hire three more attorneys over the next few months.”
Schreck added that he believes that the Covid-19 pandemic has caused less personal injury cases to be filed in Buffalo and elsewhere over the past 18 months.
“Less people were driving during the pandemic, less people were getting out and doing things,” said one of the Cellino Law attorneys who spoke to The News. “I’m certainly not hoping for anyone to get injured, but that is how our cases come to us. The pandemic definitely has had an effect on personal injury case filings.”
Before the breakup, Cellino & Barnes employed 53 attorneys in its offices in New York State. Thirty of those lawyers elected to join Cellino Law, while 23 joined the Barnes Firm.
“The salary offer was one reason I went with Ross,” said one of the attorneys who spoke to The News. “Also, Ross was more affable than Steve, easy to work with. He told us he was totally dedicated to making Cellino Law a success, no matter what it took. … What happened this week is disappointing, very disappointing.”
The News asked Hugh M. Russ III, president of the Erie County Bar Association, whether Covid-19 has hurt other personal injury law firms.
Russ said some areas of legal practice have seen a “dip in activity” in Western New York, and some are “busier than ever,” but he declined to comment specifically regarding the practice of personal injury law.
“We did see a drop-off in personal injury cases, especially in the first six or seven months of Covid. Things were practically at a standstill,” said Florina Altshiler, a Buffalo attorney who defends companies against personal injury cases. “We are seeing the numbers go back up now, as people get out and become more active.”