The Dirt Lawyer's Blog Archive

This has been one of the top stories at the New York Times website for a few days now. I can give you my opinions, which you can also call a condensed version of the story. Not enough transactional work to keep people busy. Ebb and flow. This happened in the 90s, too, people. Granted these layoffs are bigger, but that's because BigLaw is bigger. Salaries got out of control. I was a beneficiary of this, admittedly. Firms are rolling back these increases a bit and I htink that is a good thing for them. (Don't even get me started about how I think we should close about 2/3 of our law schools.) To pay for everything, billable rates have become insane. Work that is not "bet the company" work going to people like me. Would you rather pay BigLaw rates for a routine deal or pay me a fraction of that for the same work? (I am busy enough to tell you what I think clients are saying.) In some cases, greed. Per partner profits have become -- for better or worse -- the me...

While getting ready for work this morning, I found two excellent posts here and here at Zero Hedge. As you can see, these posts are from last month, but they still bear reading. Why? It states what may be reality tomorrow , depending on the judge: that General Growth may be able to consolidate its SPE malls into the GGP bankruptcy. If that succeeds, chalk that up in part to good lawyering. They are saying this is a procedural consolidation only, but is that really true? I'm honestly not sure. I readily admit that, while I worked on a number (say, a dozen or so) of these opinions over the years, I do not live, breathe and eat non-consolidation. No thanks. Here are some D&B thoughts , by the way. Are there remedies? There could be insurance out there, I suppose. And law firms have, in every case, rendered legal opinions about non-consolidation. These, however, are reasoned legal opinions and while it may not be feasible to go after a law firm for its opinion, don't b...

The AmLaw 100 is out, and many big law firms had a decline in revenue last year. And you've seen many if not most of them whacking staff, associates, non-equity partners and even some equity partners in response. So how much should we cry? I'm not so sure. Take Chicago , for instance. According to the Tribune, "Average profits per partner at six of the 11 [Chicago-based firms in the AmLaw 100] either fell or were flat compared with 2007." That means five were up, perhaps modestly, but up nonetheless. And those that fell? Mayer Brown: PPP went down to $1.11 million. Sonnenschein: oh my gosh, the PPP went down from $915K to $805. The partners may have to cut back to one country club membership. Kirkland was the big boy, as it usually is, with flat PPP of $2.47 million. Get out the violins. No tears here. In short? BigLaw's a business and it has been for years now. Most partners are still making plenty of money and to ensure profits do not tumble too much th...

A Trump Tower Chicago resident is apparently complaining that Jenner & Block's lights are on 24/7, and that this is disturbing her sleep, not to mention that Jenner's wasting energy. Not very green, I guess, but yhey are a BigLaw firm, and that's the way many of these folks operate. (When I was in BigLaw lights went out around 9 as I recall; after that you had to work them manually in your office.) OK, so this buyer never bothered to check out a million dollar-ish condo at night for the views or other issues? She's apparently using eyemasks now (uhhh, yeah, a good idea), but that's not good enough. But at the end of the day I don't understand why the Tribune story failed to catch a key issue here, one that hopefully makes this story a non-story soon. As I recall, Jenner is moving to new digs later this year. Hopefully that solves this "problem."

There's a lot going on both in dirt and in my profession. Here's a quick summary of what I have been thinking about and reading: In the "It's about time" department : many law firms are cutting way back on summer associates, retooling the programs from cocktail parties to work and even reevaluating the necessity of them altogether. I actually worked hard as a summer associate, but I wonder aloud whether we should to to an articling/apprenticeship system (a la medical residency) where law grads are low-paid interns at firms for a year before taking the bar -- and if they cannot find an articling position then they cannot take the bar. I always felt the second year law student thing was not a great way of evaluating talent. WTF is going on with GGP stock? Up big yesterday, up again so far today...and the company is acting like Sergeant Schultz . Some harsh but perhaps accurate advice for laid off associates who are not networking and developing business: get o...

I still like this idea , that of good lawyers practicing largely without offices, staff and associates and keeping what they earn. It is largely what I do now, albeit without partners anymore. But Virtual Law Partners has the kind of business model I like. And it is one I might consider down the road myself if they'll have me. (The story also has a bit to say about layoffs, outsourcing and other factors causing turmoil in the legal market.) The WaPo headline notwithstanding, I don't think it is entirely accurate to say that the recession is driving lawyers into this kind of practice. Yes, it allows people like me to cut rates and yet keep more money because of low overhead. In part, yes, it is a function of good lawyers being "fed up with the traditional business model that required it to annually increase rates and billable hours to finance ballooning profits and overhead." Billing rates at many firms are simply out of control. Call it Wal-Mart discounting if...

I know everyone and his or her mother has already commented on the layoffs at many firms yesterday. This is something we haven't seen since the early 90s and even then probably not on this scale. Nonetheless, to close out the week I do have a few comments on the situation. (There is also a good summary here that contains many of these ideas.) The layoffs had to happen not only because of a lack of work but also because of a lack of normal attrition in a down market. Of course, the fact that some law firm managers plan on and expect 25% attrition is entirely another problem. We've let our profession become a business driven by profit and loss. Because of the business model, some move around like nomads either because of it and/or because they know they are almost as fungible as associates. I'm not sure we can close Pandora's Box, but it is food for thought. First year associates are, by and large, overpaid and useless. I know. I used to be one. And now, of co...

That is what the LA Times says it is for lawyers. And it is for some - mortgage fraud, bankruptcy and all that. And perhaps the bailout will create opportunities that lawyers will have to helo their clients wade through. Of course, this is being written as two major California law firms (Thelen and Heller) have dissolved in the last few weeks. Don't tell all the laid off lawyers we're in a boom time. They and support staff are in many cases having a tough go of it. Larry Bodine, citing a Hildebrand International report, agrees . The word is that 2009 will be a tough year for lawyers, not a boom time. More layoffs are expected, profits will be flat or down. And I'll bet a nickel you will see several more major firms dissolve. There''s always opportnuity out there for a good lawyer. And sometimes a downturn in one sector of the business means an uptick in others. But I just don't see this as a boom time.

The NLJ reports that Jenner is once again asking (read: telling) about 10 partners to leave the firm. Why? Staffing changes to meet expertise. I hope no one I know is affected. Once again, here's that reminder that, for better or worse, partnership isn't what it once was. Nothing on associate layoffs though. Indeed, there was apparently an all-hands meeting the other week where employees were told everything is fine . ATL and the WSJ both have their own stories on this event. I guess you call call it the annual event, sort of like GE performance reviews. But GE's a corporation, of course. And much as I deplore the loss of the traditional partnership model, let's look at the flip side: is it the fault of the associates that certain partners are not making targets? Looking at it that way, this makes more sense than dumping younger potential partners. Jenner's press release makes it clear that the bottom line's more important than ever.

Above the Law is reporting that Katten Muchin Rosenman and Sonnenschein Nath & Rosenthal are letting go more staff, including associates. While these firms are national now, they are best known as Chicago law firms. This is not the first round at Sonnenschein either, if I recall correctly. I have worked with both of these firms in the past (and interviewed many years ago at SNR). I don't know how many dirt lawyers were impacted, but both shops are well known for having first-rate real estate practices. If you are a young lawyer reading this (and I know a good number of you do), take heed. Without portable business, you are a fungible billing unit at BigLaw. And I don't mean that as a slam on Katten or Sonnenschein, either. That's the business model of law firms in 2008. It is much more that way than it was in 1993. And at least firms are not calling these layoffs "performance-based" like they did in the early 1990s. What is the lesson? Well, you ...

Holland & Knight has some really good real estate lawyers. They do. And they give good advice to their clients. Here's some they gave recently: Banks are willing to work with commercial real estate developers on projects before trouble arises, and bankruptcy should not be part of the equation for either side. That’s the opinion of lawyers with Holland & Knight LLP, which discussed options for a down market with both groups during breakfast Thursday at the firm’s local headquarters. Don't get me wrong: I absolutely agree with this advice. I just find it utterly unfathomable that any troubled developer would file an 11 or a 7 without trying to negotiate a workout with the bank. And I'll bet a nickel that this is what the lawyers said or at least implied. The story, at least to me, just came off as overstating the obvious, and I'm confident that was not the complete thrust of what was going on at these meetings. Maybe I'm just not getting it -- it'...

Boy, I'd like to be a fly on that wall. The reports are here and here . Employees, including associates, will receive 60 days severance (WARN Act and all that) and will be expected to participate in the winding up of the firm (read: keep a phone, office and PC and brush up the resume). Coudert, now Heller...great firms going by the wayside. As Law.com reminds us: As recently as 2004, Heller ranked second on The American Lawyer 's A-list, a ranking of firms based on a variety of factors such as profitability, pro bono representation, associate satisfaction and diversity ratings. But I guess the watchword is "What have you done for me lately?" The cause of the demise ? A tough economic climate coupled with declining revenues and several litigation cases settled in a short period last year has put Heller Ehrman in a difficult spot. Profits per partner, a traditional measure of a law firm’s success, fell by 3 percent in 2007 to $1 million. The firm’s revenue per law...

The report from Law.com says that Heller Ehrman is likely moving toward dissolution. Management held a firmwide videoconference at 4:30 p.m. to update the partnership on the status of the firm's line of credit, opportunities for groups and offices, and "plans for an orderly transition (or wind down)," according to an e-mail announcing the meeting. The blog Heller Highwater reports : Something tells me there won’t be too may more of these “end of day” postings after today’s shareholder video conference. While the exact course of action isn’t known, word has it that it was a very difficult meeting and those who’ve cried on the inside didn’t hold it in any longer. Apparently the firm's line of credit may be in jeopardy, and without that...well, you get the picture. Heller's been trying to merge for some time now, to no avail. (Could it be because they've represented plaintiffs against insurance companies, causing conflicts of interest?) I'm sure parts o...

Dear Law.com: Tell me something I don't know . The "scoop?" National law firms have rushed into Chicago during the past decade, especially in the past three years, but many are finding now that their collective arrival is fueling intense competition to fill those offices with lawyers. I'd like to chalk it up to that old line from Meredith Willson's The Music Man : "But he doesn't know the territory!" Maybe so. But there's more. Everyone and their mother seems to have decided to open a Chicago office, either by starting fresh with a few partners, by poaching from another firm, or by acquiring another firm. But, except for the larger players, then they cannot seem to grow it with lateral partners. Some of it is just plain loyalty to an existing firm rather than jumping to a perceived greener pasture. Sometimes you have good talent but a lack of a book necessary for BigLaw. To be perfectly honest, I am in that category. I neither have nor, mo...

A couple of years ago, we were all riding a crazy, insane wave of deals that no rational person thought could go on forever. Confidence was at an all-time high. Just as we had the highest of highs, now we see the lowest of lows. Record optimism has turned into record pessimism, or so says the latest DLA Piper State of the Market survey. But let's think about this: is this any less insane than where we were a few years ago? Some say yes. Take this Business Week post comparing what is going on to a run at the bank. Just as we may have overvalued some properties and mortgage pools, are we now over-discounting them? It is a thought-provoking comment, at least to me. I'm still torn about the bailout being proposed. Very smart people tell us that without it we could be back in the 1930s, but, at the risk of being political here, I've always been of the mindset that government involvement generally makes things more costly and less efficient. Here's a rational post ...

So Lehman filed but is now back at the table with Barclay's to sell significant assets to them, AIG might be next (a trillion dollars? ), the Fed meets today and may lower rates (100 bps = panic city?) and the market's in the tank. Oil prices? Down. What's up? The yen and the Euro. REITs also took it on the chin . GGP is especially being hit heavy. I've written before that GGP's not going anywhere, but in this market all bets are off. My ex-partner, an ex-Wall Streeter, told me it was "absolutely inconceivable" that Lehman would go bust. Simon, according to David Bodamer, might be being beaten up unfairly. The word on the street seems to be: perception trumps reality. Hank Greenberg on CNBC tells us that "it is in our national interest that AIG survive" and that it is a "national treasure." This is an open plea to the Fed to save it because he says the problem is only one of liquidity. He then tells us that an AIG bankrupt...

As a now solo practitioner, I am sometimes asked how I can handle complex real estate transactions by myself. The answer? The same way I did at BigLaw . It is easy! I was therefore happy to see this story about large and small firm "partnerships" for certain matters. I do wish they'd taken the next step, though. Sometimes large firms refer matters to me because I can handle price-pressured matters at a more reasonable cost while also maintaining high quality. I can do it because of low overhead. And when my clients have huge deals needing a large staff, I send it to some great shops where I have relationships. Other times firms refer work to me because they don't handle commercial real estate. So I am their guy, so to speak. Out of state? I've got that covered with a network of local counsel that I've developed over 15 years in the business. Non-transactional matters? No problem. I don't litigate, but I have friends who do, and I cannot tell you how m...

My partner resigned from our law firm Tuesday. It was the right thing for him to do and I am delighted for him, as he had an opportunity he simply could not pass up. Frank is a tremendous lawyer and person and I will miss working with him very much. While I am a bit overwhelmed about possibly becoming a solo practitioner, in an odd sense, I'm also somewhat relieved, and I'm not sure why. Unfortunately, no time is a good time for this, and that's not anyone's fault. I'm not exactly sure what I am going to do right now. I have several options that I need to weigh, and I'll keep you posted. But I promise I'll go back to writing about issues that you care about rather than my personal and my business life. After all, that's why you came here. If, however, you have thoughts or suggestions I'm always open to them.

Crain's is reporting cutbacks at Chicago BigLaw of varying types. This story focuses on delayed starts for new hires (including at DLA, Sonnenschein and Seyfarth) but also gets into matters we've discussed here before, such as layoffs, partner deequitizations and the like. And finally, there's the obligatory story of a recent law grad who can't find a job. Other than SNR's announced layoffs, what I did not see here was any discussion of some BigLaw stealth layoffs that have been rumored at some sites such as Above The Law . Even if the rumors are true the numbers may not be compelling enough to bring up in the story. But I'm a curious type who likes to know about these things. But even though everyone keeps predicting the demise of BigLaw, I call BS. Restructuring, yes. Finley Kumble , not yet. But if anything I think we'll see more and more consolidation.

Seen quotes like this lately? The lawyers of America have laid their heads together and drawn up a lot of proposed reforms--for other people. The unpleasant truth is that the American public feel that no class needs reforming more than lawyers, particularly many of the shining lights of the profession. The man in the street is disgusted with both the lawyers and the courts. Looks familiar, no? It comes from the September 15 issue of Forbes -- in 1923 , that is. I guess complaining about lawyers is timeless. Some of the biggest complaints come from major corporations, who pay huge bills to BigLaw to support seven-figure partner draws and $165k starting salaries. And yes, they pay to train the young-uns as a rule. The Association of Corporate Counsel claims it has a solution (via Portfolio ) that it will roll out next month, which appears to have much to do with sharing billable rates at law firms used as outside counsel. And other smart people (in this case, Larry Bodine ) are rep...