Dead Pool - Law firms

Latham

Skadden

This is really funny because my friends at those BIG firms keep on telling me that their business is "counter-cyclical" and they are doing great. I wonder that's what they've been instructed to say when asked.

At the same time, sure, I know a kid who had his job offer retracted (and all he got was this lousy $2,000 check as a "sorry").

Is it just the most likely, or all of the most likely? If it's the most likely right now I favor White & Case. Then, in no particular order, Latham, DLA Piper, Cadwalader, Orrick, Mayer Brown, Baker & McKenzie, Morgan Lewis, Kirkland & Ellis, Millbank Tweed, Katten Muchen, Clifford Chance US, Sidley & Austin. Etc., etc.

Litigation is, or can be if there's any GD money in the system, countercyclical. The vast majority of large shops tilted heavily corporate over the last ten years. Some firms are doing just fine. The problem is that stink spreads quickly in a large firm. Which is why White & Case tops my list.

"Is it just the most likely, or all of the most likely?"

I guess we should set up some ground rules if we're gonna be serious, huh?

How's this: each guess costs you 10 points, so if for example you make 10 guesses, you start off at -100. For each firm that goes under, 250 points are awarded, divided up by those who made that pick. So, if you pick a firm that no one else did, you get 250 points. If you pick a firm that 4 other people picked, you each get 50 points. If you pick a firm that 9 other people picked, you get 25 points. You can pick as many or as few firms as you want, but it starts you off in a bigger hole at the beginning.

Guesses before this post don't count, since they rules were not announced.

AR does that sound good to you or would you like some modifications?

I do business with both DLA and K&E - there dont seem to be problems at either. I have been beating them up for rates but no budging from them. Also the teams I work with are overflowing with work.

Oh, a drinking game - when is that SE get-together?

I forgot about White and Case that should be at the top.

http://www.abovethelaw.com/dla_piper/

cutting people occurs almost everywhere, although not at these levels, but it is a big firm. cutting salaries occurs somewhat. getting rid of lockstep not so much. officially announcing an across-the-board (strange, btw) cut in partner pay and emphasizing that it will not be equal? not so common.

samadams, latham was a damned fine choice.

btw, according to the spouse, work at large firms is up (compared to first quarter '09, the worst). collections are down, significantly depending on the client base. '09 is expected to be worse than '08 (duh), and 2010 is expected to be flat from '09.

It is a funny concept -- in that when companies run into trouble, the one bill they must pay is that of the lawyers (administrative priority)

AR's list looks pretty good. I'm a bit doubtful that Milbank and Latham belong (and yes, when I say that I'm well aware of how big Latham's layoffs were) with the rest. As for Skadden (timfisher), I got a good laugh out of that one. Not likely.

In the pool under 30yrs' rules, I'll take take Mayer Brown and Cadwalader plus throw in Strook because 30yrs seems like a smart guy and I may as well try to free ride on his view. So I'm in for 30 points. I don't necessarily disagree with the White & Case people, but I don't see much payoff because if the 250 points pays off it's likely to be split a lot of ways.

AR, what do you think about Dewey? That marriage of convenience for a fading white shoe firm was not made in heaven.

Definitely stroock.

I would have Latham and Skadden at the bottom of my list. Take Latham's layoffs as a sign of management decisiveness. They led in the layoff category in the early 90s as well.

I forgot Dewey. I don't know if i'll take dewey, millbank and latham yet. this was just an off the top of my head list, from things i've read and heard over the past few months. layoffs in and of themselves may just be prudent, although i think latham may have gone beyond that point. you will recall how much difficulty chadbourne had for a number of years after their carnage. i think sherman (?) had the same issue. if you are an outlier, it may not be good for the business over time. i seem to recall something else in terms of millbank, i'll have to search.

but there are others that have been rather merciless in the cutting that i did not include. dechert and akin gump come to mind. skadden will outlive us all.

30 years: There should be a credit to the first person who names a firm. How about they get allocated twice as many points of the 250 than a "me too" pick?

My pick is Fried Frank.

All those points = math! I thought lawyers hire people to deal with math!

I've heard rumors about so many firms, but the one I've heard the most about recently is Baker & Mackenzie. I hear W & C may be shedding some floors at the Death Star on 6th Ave, but folks say they will make it in the long run. Who knows? certainly not me. Quite a few of my colleagues have been playing musical firms, but who will end up without a chair in the end is difficult to see right now.

What I do know, though, is that for the first time in lo, these many decades, I am having serious trouble collecting my accounts receivable. In June, I had to hire a collection agency for the first time ever.

Very few will not survive. It's easy to stay in business when you can fire all of the support staff, hire 1/2 the associates, cut the pay for the other 1/2 and not make any new hires (as graduating law schoolers are being deferred until 2025 or something).

sorry, "fire" 1/2 the associates (not hire!)

BS, it's not that. it's when your rainmakers decamp for sunnier and more lucrative places. no incentive for a top producer to stay at White & Case.

"sunnier and more lucrative places"

Such as? I don't there are any at the moment.

believe me, in a relative sense, there are.

"Very few will not survive." Yes, that's what makes the pool interesting.

there are two down already. although not NY based.

Wachtel is totally going under.

Both Cravath and Sullivan & Cromwell will be out within months.

quinn?

(no 30yrs, i'm NOT taking quinn)

I don't see any of these failing. The firms that have failed in the past were specialist firms (firms that represented Silicon Valley during the tech boom and firms that specialized in structured finance during the RE boom). Almost all the firms named in this thread are generalist.

http://lawshucks.com/2009/09/management-shakeup-plummeting-distributions-at-white-case/#more-3243

their distributions for the year are running at less than $300k yearly. partners jumping left and right.

Not true, BS. Heller Ehrman was not a specialist firm. Neither was Thelen, Wolf Block or Lord Day.

mudge rose, and of course the superb conflagration, myerson & kuhn.

Hello ... O'Melveny!

I think a lot of you are saying there is no way some of these firms will go under but I dont think you understand the way law firms use lines of credit. Latham is in trouble based on the structure of the way banks will finance law firms. If you work in law and understand what Latham does you know what I am saying.

grantM and MyEli - what are you two smoking? Thanks for the laugh ;)

grantM and MyEli are smoking anything. They are using hyperbole to poke fun at the rest of us.

"aren't" smoking...

i just can't keep up with such intensely witty posters.

"30 years: There should be a credit to the first person who names a firm. How about they get allocated twice as many points of the 250 than a "me too" pick?"

Agreed: first to pick gets double share.

OK, 30yrs, I'll put my marker down on Dewey and drop Strook. I'm first in on Dewey and following in aboutready's wake on Mayer Brown and Cadwalader.

Actually I've only called white & case but for now I'll add Mayer brown also

Any standards? AmLaw 100, 200? Vault 100?

"it's not that. it's when your rainmakers decamp for sunnier and more lucrative places.:

Agreed. And it's not just law firms. When I worked at Arthur Andersen, it's similar to the reason the consulting decision split with the Accounting Division: consulting brought in more money per partner, but the partners got less since the firm was controlled by the accounting partners. I remember a lot of ex-AA consulting guys making terrible fun of the choice of "Accenture", and then when AA imploded after the Enron scandal getting calls "Soooooo..... what do you think of the name now?"

Often, whole departments leave with a big rainmaker who's practice area is generating like 50% of the firm's profits, but not getting 3 times as large a partnership payout at the end of the year.

But let's look at some history:

nytimes.com/1994/01/29/business/shea-gould-partners-vote-to-close-law-firm.html

nytimes.com/1990/03/25/books/finley-kumble-sat-on-a-wall.html

nytimes.com/1995/10/01/nyregion/the-mudge-rose-firm-enters-the-tar-pit-of-legal-history.html

nytimes.com/2008/12/22/business/22law.html?_r=2&partner=permalink&exprod=permalink

Let's say anyone with over 50 attorneys? or would you rather something else?

I'm good with 50 up if others agree. Timeline? I think for a meaningful contest we've got to go until next September although we could do interim winners

30yrs, i totally forgot shea & gould. couldn't have happened to a more assholic firm. (OK, maybe cadwalader, but that's personal on my part. i interviewed there and i can honestly tell you i've never met nastier people at a large law firm in my life.)

Shea & Gould wound up being absorbed for the most part by Proskauer c.1994. No idea how the merger worked out financially for anyone involved, but it caused years of turmoil, rancor, infighting at PRG&M (as it was known at the time before lopping off 3 names), and was a morale nightmare. Shea & Gould had about as high an asshole-per-capita grade as any firm in existence at the time.

Greenberg Traurig.

"Despite its rapid growth over the past decade, Greenberg Traurig has paid millions to clean up the messes of some prominent partners in recent years. On Tuesday the firm received another dose of bad news.
The New York Law Journal reports the firm was slapped with a $100 million malpractice suit for allegedly failing to properly prosecute patents for Leviton Manufacturing, a longtime electronics client. Leviton also claims Greenberg abused discovery rules in related litigation."

With the bulk of the brokers drawn and quartered it does make organizational sence to now go after lawyers. The whole thing has an air of French Revolution meets Martha Stewart.

God has smiled upon you this day.
The fate of a nation in your hands.
And blessed be the children, we,
Who fight with all our bravery,
Till only the righteous stand.
You see the distant flames,
They bellow in the night.
You fight in all our names,
For what we know is right.
And when you all get shot,
And can not carry on.
Though you die,
La Resistance lives on!

You may get stabbed in the head,
With a dagger or sword.
You may be burned to death,
Or skinned alive or worse.
But when they torture you,
You will not feel the need to run for.
Though you die,
La Resistance lives on!

They may cut your dick in half,
And serve it to a pig!
And though it hurts you'll laugh,
And dance a dickless jig!
But that's the way it goes,
In war you're shat upon!
Though you die,
La Resistance lives on!

Stroock, Latham and Skadden! oh my!

falco, you've done it again.

much of this depends on stuff we don't readily see. did a firm sign a pre-crash 10-year deal for too much space, anticipating expansion? is a small to mid-size firm heavily dependent on one or two large clients who decide to go shop for better rates and leave the firm sucking air?

it's true that most will survive or merge, but there will likely be a couple of spectacular fails.

about ready, Latham took a whole lot of space in the lipstick building. In fact I think the only other tenant was Madoff securities

also aboutready there are some big firms that depend on one large client not just small and medium.

samadams, i know, but it's not as common. and big vs. medium is a strange concept these days with so many law firms having blown up in size over the last few years. i'm always amazed to hear of some Kansas City or Cleveland or some such firm with more than a couple hundred attorneys.

Jones Day is Cleveland

samadams, i'm laughing at myself. what a bad (and good) example.

a consulting firm told my husband that in addition to outsourcing stuff to india, etc., some firms have been setting up auxillary offices in small cities, giving new meaning to the back offices being in Jersey City.

Paul Weiss and Clearly, Gottleib are f*d

Does Streeteasy remove posts if they are negative post about certain buildings?

I would put Debevoise up there.
And some of the out of town firms too like Hogan & Hartson, Williams & Connelly, MoFo for sure.
I'd also be concerned about Friedman & Kaplan.

I can't believe you people forgot Weil Gotshal of all places.

Cellino & Barnes, and Levy Phillips & Konigsberg. Maybe Weitz & Luxemborg.

I don't think you people have omitted a single firm in the AmLaw top 25. Is the consensus here all law firms will die like the dodo birds? Weil, Wachtel, Skadden, Debevoise, Paul Weiss, White & Case, Milbank, Sullivan, Cravath...is there anyone left?

hey remember Jacoby and Myers (sp?)... the ambulance chasers way back when... they used to always get in the way of my Saturday morning Kung Fu fix....damn that commercial....

Remember Battle Fowler... had a great RE attorney and a professor from that Firm way back when....

I've also had good experiences with Stroock (RE Tax issues), Proskauer (RE tax Issues), Troutman Sanders (for zoning), and my one man shop on retainer (HE KICKS AZZ, but he's all mine).....

KW, some of them are jokesm most of the ones you listed. i hadn't seen sullivan. white & case is not a joke (well, it's becoming one).

"samadams
about 3 hours ago
ignore this person
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Does Streeteasy remove posts if they are negative post about certain buildings?"

Why? Did you point out that Worldwide Plaza could become just about 100% vacant (the commercial side)?

I feel bad for anybody with White and Case on there resume

I won't comment on the main topic, since I am a member of such a firm that I am pretty sure won't win or even place in this contest, but usually there has been a side line that accompanies law firm failure, only part of which is explained by faltering economies and finances. Partner defections, bickerings about business models and profit shares, leverage, high rent commitments, compensation commitments to lateral partners and over-expansion are characteristic of earlier failures. Finley Kumble is a brilliant example of a firm that grew to among the 5 largest within 20 years of its founding, hired slews of high-profile lateral partners at enormous pay with no business, opened expensive offices with no business model, and collapsed amidst enormous debt even before the stock market crash in 1987. Mudge Rose was another -- clashed egos, loss of important clients, fights over compensation, opening offices to meet partners' living preferences rather than business needs, the defections of the chairman and 30 or so lawyers to Latham and others to White & Case, the collapse of Drexel and the muni bond market that was a significant focus of its business, etc.

You can find some or all of these troublesome qualities at a number of firms in NY and elsewhere. There are others lurking -- unfunded pension commitments, leases signed in 2005-07 that predicted expansion when now facing contraction, rapid but unsustainable profit growth in the recent boom that creates expectations or lifestyles that cannot be met, and undo reliance on a handful of often aged partners. This too is not a healthy combination.

nyc_sport: it's interesting how much of what you describe in that first graph also fits much of the big RE brokerage community............. ruh, roh Relroy.

I'm w/ whoever said very few will die. Does that get me any points? I have no idea how you people remember all these ridiculous names either. Hubby's is an easy one and beyond that, I'm lost.

uwsmom, even though you once accused me of being 407PAS, i'd never torture you so. most firms will be fine. but a few will fail hugely, and i'm afraid the associates may not know at this point.

all the best of luck, and peace.

LOL. that was so weird. He was doing/saying weird things in that post.

I would love to weigh in but just have no idea who's who in the zoo. Yep, I'm sure some will fall.

"but a few will fail hugely, and i'm afraid the associates may not know at this point"

I'm waiting to hear of some firm where the associates show up one morning and the office is locked. For all we hear of "corporate greed", if you've seen the inner workings of medium sized or larger partnerships, they are MUCH more likely to fuck the peons when things get tough because it's THEIR money, not the shareholder's which they are keeping/whatever.

Ah, yes. Findley Krumble. Remember that debacle well. When partners stop acting like,well, partners their firms are doomed. Right now I predict across the board defections won't be substantial at most firms because there is simply nowhere to run.

If all Big Law firms are in the same boat with their office leases, and if commercial RE is as bad as some say, then couldn't all Big Law firms renegotiate their leases? For LLs, it's either massive empty space in a glutted market for an indefinite period into the future, or less rent for a little less space than projected.

Anyone remember the Shea Gould collapse? I thought that had to do with too-expensive (new) office space, too lavish partner-office-space expenditure, the $$ of a move from their older space to the newer one, lateral hires.

Skadden's fortunes were linked to M&A in the '80s, but they didn't die in the hangover that followed. They made some big changes, but they didn't die. But for some reason I tend to agree with most posters here, someone has to collapse in this down cyle.

lowery the landlords in many cases can not lower the rent. Without the going rents the landlords will not be able to pay the mortgage or even worse will not be able to refinance. NYC office space owners are leveraged more then ever before. WHo signed the big leases the past 2 years?

Sam, I understand what you're saying, but if the situation is as dire as everyone says, then landlords will have no choice.

I know of at least one AmLaw Top 5 firm that owns its building and is its own LL.

Cadwalader

kw, i know of one also. not all law firms are in the same condition, it varies hugely.

lowery, very good pick. rode the securitization wave up, is now crashing down. really nasty firm culture as well.

Cadwaleder's business model/business is unique and what made it so suddenly, stunningly profitable is proving to be its greatest vulnerability now. It is on very shaky ground.

btw, i think orrick was similarly dependent on the securitization business for its growth. dla maybe as well. i was always amazed at how few law firms specialized in that business, but now it seems to make sense.

(hanging head low) By "cadwalader" I meant that I thought they were a law firm who had bought their own building, back in the '80s boom. Did I have that wrong? If so, I'm glad I accidentally picked the right firm to predict going down, because I didn't know their business was heavily focused securitization. All the Big Law firms did their fair share of that work, didn't they?

So what IS the downtown law firm I'm thinking of? It used to be referred to as "A Wall Street Law Firm," had pictures hanging on the walls of bird dogs and guys wearing British riding suits and toting hunting rifles and used to be furnished with awful oversized leather sofas? They bought a building, somewhere a little west of Water Street, with a big interior multi-story foyer? I recall hearing in the '90s that they were ver-r-r-ry sorry they had bought that building.

lowery, you might be correct, they made a major real estate move, but i don't know if they bought their building, and i believe it was in the mid-to-late-'90s, as that's when i think i interviewed there. i don't recall the old cadwalader space having british hunting decor, i recall faux pastels (think pepto bismal) and a general sense that the offices were going to shit. i was thinking of a midtown firm.

only a few firms specialized in CDOs, SIVs and the like. at least that's my understanding.

Cadwalader bought its building on Maiden Lane in the early 1980s. It was sold 5-6 years ago (too small), and Cadwalader moved to WFC. For a long time owning that building was peceived as a troublesome financial burden for the firm.

http://www.abajournal.com/news/kl_gates_chairman_advises_would-be_law_students_to_reconsider/

The building Cadwalder sold was being converted into condos. The developer is now in distress.

Cadwaleder's "new offices" in the late 1980s, I believe, included a multi-story atrium and design that made it into architectural magazines. Lowery, I think you were correctly recalling Cadwaleder.

http://www.cadwalader.com/assets/feature/100503NYTOffice%20Move.pdf

Yes, it's Cadwalader. Thanks for jogging my senior memory.
You had to see their space prior to that. Peee-yewwwww!
Interesting that they went to WFC. Maybe they emerged from
their Maiden Lane mistake when the market recovered and
maybe they decided not to repeat that risk?

"falco, you've done it again.
much of this depends on stuff we don't readily see"

... readily see:
http://www.youtube.com/watch?v=_uF3UU22PGQ

I know of one top 5 that owns the majority of the floors in the building that it occupies. Partner some time back thought it was a great deal on RE and it's actually helped make the firm all the more profitable.

sullivan & cromwell owns 125 broad, according to SE. saw an ad for 125 broad availabilities in a NY Observer article, and had a look-see.

to the best of my knowledge, they own the majority of the floors, but not the entire building. I could be wrong though. that's just our understanding of the situation.

it's a commercial condo building, s&c is listed as owner. my guess, and it's only a guess, is that sullivan spearheaded the project, and then sold (sell) units they don't need. they could lease them, also, if they have retained ownership of excess floors and want to have the flexibility to grow later.

ah, that makes more sense. they do lease many of the floors.

far from a dead pool firm, but Cravath just announced end of year bonuses which are about 50% down from pre-bust bonuses. I'm sure the other top firms will follow. Implications? probably none... at least not on a large scale.

its a pretty big deal but it was expected to be pretty bad

i thought it was fairly bad. weirdly, the husband thought the numbers would have been worse. but it's cravath.

Think they're going to something about that 900m lease?

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aar21pxL.2ow

i didn't realize they resigned their lease in 2007. hilariously bad timing, reupping then in worldwide plaza, which is now 40% vacant. i don't know if there's any wiggle room. subletting would be next to impossible, i'd think, under the circumstances.