But the events that transpired in 2008 could have ramifications for the legal industry for a long time.
Our third-place story is the Biglaw salary freeze. It could be the “Shock Doctrine” of the market meltdown. Slashing bonuses during a down year is one thing, but freezing pay (or cutting pay depending on your perspective) is downright deflationary.
We’ve given a lot of “credit” to Latham & Watkins for being the most prestigious firm (according to Vault) to freeze salaries, but as commenters have pointed out, Latham wasn’t the first.
The memo below was sent to us by a tipster, with this prefatory comment: “No one really knows what the f*** the second half of the first sentence of the memo means.”
Since then, the following firms have instituted some form of a salary freeze: Orrick, Dorsey & Whitney, Reed Smith, Venable, Sidley, DLA Piper, Arnold & Porter, Sheppard Mullin, and Sonnenschein.
And those are just the ones we know about.
But it’s also important to remember which firms are not on that list. Skadden and Cravath and countless others are going ahead with the expected pay raises for rising classes. Neither Squire Sanders nor Latham set the market for associate pay. They just gave firms another option in dealing with the financial crisis.
Firms need options because you don’t want to work for a firm that is part of our number two story of the year.
Second place melts away, after the jump.
Lehman went under on the same day that news broke that Heller Ehrman’s proposed merger with Mayer Brown fell through. One day later, we reported that Covington & Burling snapped up Heller’s IP department. Two days after that, we reported that Heller was in serious trouble, despite a firm spokesperson who said that Heller had no plans to shut down its D.C. operations. A week after that, Heller informed associates that the firm would be dissolving.
“Life moves pretty fast. If you don’t stop and look around once in a while,” you could be clocked in the back of the head by a global economic crisis.
Heller’s dissolution alone might have made our list of top 2008 stories, but the dissolution of multiple firms, and the fact that dissolution is even a possibility at some shops, makes this our second-place story of 2008.
Thelen dissolved about a month after Heller, and Thacher Proffitt went down about two months after that. And we’ve heard that there have been near misses along the way (Powell Goldstein springs to mind).
Heading into 2009, many believe that there will be additional major firms that go under. The real question seems to be, which one(s)?
But as terrible as dissolution is for the employees that (used to) work at these firms, the threat of dissolution is not what’s keeping Biglaw attorneys up at night. Our number one story of 2008 is the implicit threat that associates work under everyday.
Earlier: Prior ATL coverage of salary freezes