aw, thanks kash. you're gorgeous btw :)

Um, White & Case's profits leveled off from $1.7 million per partner during the 2007 bubble year to $1.6 million. Is that the apocalypse?

"This would not have happend at a firm called 'Latina & Case'"

-- SotomayOR!

Yeah, 3, that 1.6 million was last year's number, and has been distributed to the partners who are now using it to pay their mortgages that are larger than the equity in their homes. The work that generated those profits is disappearing or being otherwise concluded with nothing to replace it. However, the bills the firm has to pay still come due every month or pay period.

Biglaw is out of money. This year, I would not be surprised to see them come in at under a million PPP.

#4 - Now thats funny.

No, ATL used to be the place for real news and gossip, not regurgitation of what someone else regurgitated from what someone else wrote.

Poor planning is the problem. These fool NYC law firms were stocking up on corporate associates well into the end of 2007 even though all signs were pointing to recession.

It's just a matter of terrible management by biglaw OMPs.

My policies will create or save 4 million jobs. That means that only 196 million of you will be unemployed.

White & Case was a declining firm long before the credit crunch hit.

Its over for the cogs of the finance/gobalization machine. Something else will come along but the golden age of big law is done. Time to get back to being normal.

http://www.drudgereport.com/flashpfn.htm

"TOLD YA SO'

Comment removed by moderator.

The bubble continues to burst!

5,

Let's say the partners make $700k a year. They would need a $3m mortgage to feel the heat. I call bs.

8 - The fools at Paul Hastings were also rushing into new markets at the same time (Chicago, Milan, Frankfurt). They are FUCKED!

RoguePHAssociate

You have to wonder to what extent the "biglaw crisis" is an overblown media invention. See comments 3 and 15.

Re: White & Case's profits leveled off from $1.7 million per partner during the 2007 bubble year to $1.6 million. Doesn't it look like the partners are laying off young and old associates et al. in order to be able to sustaine their own lifestyles?

Doesn't Partner Emeritus work for them?

15:

If the partners of White & Case weren't feeling the heat already, then they would not have been the subject of the NYT article.

It amazes me that associates continue to believe that a "small" decline in PPP doesn't matter, and that partners are just being greedy when they fire people folowing a small decline in PPP. Fact is, law firms are constantly competing to keep partners with business. A small drop in PPP can result in a large drop in funds available to retain existing partners with business or attract lateral partners with business. Over time, those partners with business who are not compensated at market will leave a firm, leaving the firm with a bunch of partners without business. This is why White is in trouble, why it had to fire associates, and why it had to fire partners.

Biglaw is running out of money. We are hearing about them first because of the reason that 10 identified.

5.

Generally, I don't think the problem is that BigLaw doesn't have enough money, period. I think it's that they don't have enough money for everything else after they pay themselves their personal shitload.

#16

I don't know much about how White & Case expanded, but as I understand PH's moves... of the 3 offices you cited only one was a "new office" per se. Milan and Franfurt were acquisitions.

Acquisitions bring their own client book to the firm (growing the total pie) whereas a new office in Chicago likely has to drum up new business to justify its existence (eating some pie before growing it).

I realize my economics are oversimplified, but not quite as simple as your snide remark.

-PH truthsquad

Don't worry, I'm sure Obama has another "historic speech" planned just as soon as he's done pandering to Muslim fundamentalists. And Michelle will wear a stylish dress for us on Oprah just after she's finished binge-shopping in Paris.

Don't blame me. I voted for Clinton... then Palin.

The ship be sinking...

Great reporting Kash. I especially liked the part where you read an article in the New York Times, cut it up a little bit, and reprinted it under your name on a shitty blog.

20: has it ever occurred to you that PPP will be taking a hit at some level at every firm? The point is this old line is just a BS excuse given by partners for why the firm has to maintain overinflated PPP. It doesn't do a partner that has been working at a firm for 20+ years any good to leave his position at one crappy big law firm to go to work for another.

If you think this blog is so "s**tty," then stop reading (and commenting). Bye-bye.

I approve of the focus on White & Case but the reporter doesn't do a good job of explaining why. They were one of the firms that pioneered law as business. They went further and faster than others in treating practice areas as "profit centers" and trying to be all things to all clients. They dispensed with the idea that lawyers aren't in it just for the money and they were happy to just close deals, deals, deals no matter whether it was appropriate to do so - this made it much easier for businesspeople to treat lawyers as scribes rather than as trusted advisors who were valued as much for their business judgment as their strict legal advice. Once the business commmunity learned to treat lawyers as fungible, then it made it much harder for lawyers to go toe-to-toe with important clients in arguing the perennial "just because its legal doesn't mean you have to do it..."

Without going too far, I think you can trace the rise of Big Law starting in the late 70s/early 80s with the financialization of the US economy and treat them as both necessary to have helped us arrive at the current collapse of the US economy (excess debt being the pillar of that).

White & Case is a great way to chart that story. Others did it better (Skadden, Latham, etc.) and worse (Baker & McKenzie) and their talent pool and relationships never allowed them to play consistenly with the big boys (Wachtell, Cravath, etc.), but they rode the wave as far as it would take them and now they have to accept the state of affairs they have created, which means shrink, shrink, shrink to survive.

At least this guy had the guts to be up front about the situation, unlikke Weasel-in Chief Bart Winokur, who lied about Dechert layoffs until he could not lie any more.

The slight decline in PPP at almost every firm during a recession mitigates the risk of partners lateraling away from any particular firm.

25: My favorite part is when she waited 3 days, so that the story can age like fine wine.

What ATL isdoing is a combination of fear mongering, and rubbing everyone's shit in their faces.

Kashasslobster is in fine form today.

Bravo, Bravo.

20 is for the most part right, past and current PPP numbers are not very relevant in biglaw's business model. Biglaw doesn't make widgets, or have inventory, or can count on many future receivables, its livelihood is completely subject to its ability to bill and collect receivables for services going forward. Those services and receivables have declined dramatically. Its not like other service professions (such as medicine) where the services are necessary (most folks won't cheap out on a heart bypass) and top talent is expected (cue the Dr. Nick Riviera jokes from the Simpsons). Most of biglaw's work is fungible, a commodity and can be done by a laborforce that is overextended. At some points clients that review their needs and determine that they do need services are wise to that fact.

I shaved my taint this weekend.

Is White & Case a peer firm?

The problem is that all the animals running these big firms thought that they were entitled to 10-20 percent annual increases in profits, for doing the same work they've always done. Is a firm in which partners made $1.6 million last year really in trouble?

These firms aren't General Motors, they're not bleeding money. They do not need to cut staff to stay afloat. They just can't bear the thought of their profits and their climb up the AmLaw 100 ladder slowing, even during a recession. Greed on this scale is no longer related to what the money will buy, but it is simply a scorekeeper among narcissistic egomaniacs.

They raised rates without reason -- each citing their desire to attract only the bet-the-company cases and deals. They shed the bread-and-butter counseling and commoditized work, hoping to become the next Skadden or Cravath. These firms took pride in the fact that they no longer were the regular counsel to large companies for most of their legal issues, but were essentially hired guns for specialized high-impact work (see, e.g. Bingham's Jay Zimmerman).

This shift undermined the fundamental relationship between a law firm and its client, in which the client views the lawyer or law firm as a counselor or advisor -- an informal business partner of sorts. Without this long term bond, cash-strapped companies will jump ship for any number of reasons, but unjustifiably high rates in hard times really offends their sensibilities. It shows a complete lack of understanding of the client's situation and problems, which is at the core of a successful attorney-client relationship.

Moreover, ALL of the AmLaw 100 firms can't suddenly become the go-to lawfirms for the biggest deals and cases at the same time. The shakeout will be ongoing for a while, and law firms will end up doing one of a number of things. They will fold, because their high rates and narrowly focused practices are unsustainable; they will shrink, leaving only those narrow practices in which they are market leaders; or they will cut rates and reconfigure themselves as the general law firms that had worked as a model for decades.

22 - Since those two acquisitions have been a total bust, your point makes a distinction without a difference. What about Greg and Seth's "brilliant" move to aggressively expand PH into the top 15 at the worst possible time?

Could just be media hype. By a very large percentage, attorneys at biglaw firms are still employed.

Join me! Good! I can feel the evil flowing inside you!

22 is correct that acquisitions should bring their own books of business but look at what happened to Heller and most likely will happen to firms like DLA - you can't just buy locations and rougue partners that you think may bring in business. The older, established firms that truly operate globally because they service the Fortune 500 globally will survive - they may look a little different when the dust settles but they'll be here. Others will fracture completely.

Hugh Verrier should resign, or commit suicide.

-Senator Charles Grassley

Similar article in The American Lawyer last week, pickued up by the WSJ Law blog:

http://blogs.wsj.com/law/2009/05/29/does-holland-hart-offer-a-biglaw-rocky-mountain-high/

Question is, can any large firm really sustain itself nowadays?

I eat taints and spit crack across the 'hood.

22:

Your "PH truthsquad" signature is probably the most ironic thing I have heard in awhile considering how PH operates. Thanks for brightening my Monday with a good laugh. Now go take some summer associates out to lunch and tell them how bright their future will be with your firm.

Ooooh. Only $1.6 million in profits per partner. These firms have really shipwrecked on hard times.

41 - You could add "and most likely will happen to firms like Paul Hastings."

I love that they are paying me as I write these "snide" posts!

RoguePHAssociate

[quote]8 - The fools at Paul Hastings were also rushing into new markets at the same time (Chicago, Milan, Frankfurt). They are FUCKED!

RoguePHAssociate[/quote]
------------------------------------------------------------------------
You are not a rogue associate. You are a pissed-off former associate. We know who you are, and yet you wonder why you still don't have a job.

Frankfurt and Milan are two of the most profitable offices per head in the firm right now. We aren't "expanding" into Chicago, that office is almost 4 years old (and doing great btw, employment cases are up).

-Uncle Paul

42 -- Mr. Verrier has outlived his usefulness on this planet. Hope he dies in a grease fire on his next vacation to St. Bart's.

Maybe a smart PR move by White & Case - others who tried to pull off stealth layoffs have not only managed to hurt their reputations - they breached termination agreements by telling the world all layoffs were performanced based. Explain that in your next interview!

Long live United Lex! Always thought that BigLaw couldn't get away too much longer with charging $300+/h for having first year ass-ociates fill out dumb-ass summary charts of jack shit commercial contracts in a corporate due diligence. Someone in India will tell you for $8 if a target's 300 or so commercial contracts are dated, signed and contain a change of control clause.

37: You have missed the forest for the trees. You are right that once upon a time many firms did maintain long term relationships with corporate clients, and that the firms stopped doing that. But you're wrong about why they stopped. Firms had long term relationships with their corporate clients because the individual lawyers at the firms had long term relationships with the individual executives or counsel at the corporate clients. When corporations began to lose long term employees starting with the layoffs of the 80's and continuing today, including layoffs of those executives and counsel, law firms, which themselves had begun to lose long term lawyers due to lateralling, lost those long term relationships.

Because neither corporate clients nor law firms are likely to ever offer "jobs for life" anymore, those long term relationships are not coming back. Thus, the firms really only have two options, fold or shrink. Your third option of cutting rates will only result in the firm doing commodity work, and lower income for all in the firm, because there is no long term relationship left to leverage in today's world.

Biglaw is now a rapidly contracting industry. It will not exist in the form which we are used to much longer.

48 - hmmm, you sound like a cyber bully. "We know who you are" and you are suggesting you are hurting this person's chances of getting a new job???? Damages, damages, damages.

I sense a sizable shift in work from these top-20 or top-30 firms (in profits, not quality), to regional firms where the quality is excellent but the rates (and staffing) make much more sense.

These Wall Street firms (and the wannabe's) are the legal world's equivalent of Countrywide Mortgage, which also made huge (ephemeral) profits earlier in the decade.

Incidentally, the NYT piece quotes the comments on ATL and includes several cites to this blog and lawschucks. Not bad for a shitty blog that cuts and pastes half its stories from other sources.

48 - You are obviously some trolling PH partner. Why should we believe you when everything out of the collective mouth of PH is a lie, including "and" and "the"?

p.s. My buddy in Chicago tells me they are "dead quiet" right now and have been for over a year.

Why is there no news on Magungo and Latuka?!!!

48 - You are obviously some trolling PH partner. Why should we believe you when everything out of the collective mouth of PH is a lie, including "and" and "the"?

p.s. My buddy in Chicago tells me they are "dead quiet" right now and have been for over a year.

No, W&C ppp aren't going from 1.6 to 1.5 in 2009.

Right now, all over the land, the financial officers of biglaw firms are showing the management committee two spreadsheets - 1 - what will cash flow for the year be if billings stay where they were in march april may (seasonally adjusted) and 2 - what will cash flow be if billings continue down at the rate they declined from last year's march april may.

2 is not survivable for many big law firms (say 25 of the v100), because of a dirty trick the partners 5-15 years ago pulled. They borrowed against receivables one year, many years ago. This allowed a huge distribution then, but robbed the later (now current partners) of one year's income. They have been in effect one year behind ever since.

2 leads to covenant defaults later this year, or jan next, and the banks are in no mode/condition to be nice. They will demand personal guarantees from the partnership, and those partners who can bail will. Even worse, 2 will lead at some firms to a cash flow crisis at some firms (missed payrolls) in oct-nov.

For a number of big firms with debts, 1 isn't survivable either. Say 15 of the v100.

So what's a law firm to do? Cut the only expense they can cut easily - staff and associate compensation and partner bonuses. Bank loans do not have covenants regarding associate layoffs, but they often have covenants regarding partner departures. So you don't layoff many junior partners, but you do cut them to the bone. Oh, and most partners survive on quarterly, semi-annual bonuses of some sort, and right now, today, at many firms, those are zero.

They can't cut real estate costs, because the leases are usually for 10 years.

What does this mean?
a) another big round of layoffs in the aug/sep time frame, with far less generous severance. Almost no summers will get hard offers.
b) income partner layoffs in the same time frame, except as limited by bank covenants.
c) no on campus hiring (there will be some firms that go through the motions, but no one will be hiring).
d) A mad scramble among the true rainmakers to identify those biglaw firms that are not that financially levered/real estate levered, as places to jump to if things go south where they are. These discussions are already occurring among the more proactive partners (under the guise of "comparing notes with our colleagues at other firms")
e) somewhere between 15-25 v100 firms fail between oct 09 and mar 10, with the majority occurring in the jan feb time frame. Instead of weekly layoff stories on ATL, you will read weekly firm collapse stories on ATL.

The firms that aren't levered to death will do extremely well in 2012 and beyond, although they will be much smaller. This is because all of the partners at all of the failed firms are now associates in effect at the ones that will survive, and those surviving firms will get to cherry-pick the true rainmakers.

You think it's bad being 27 with 200k of debt and unemployed?. Picture being 54 with 2,000k of debt and unemployed.

53 - Yes, this is a perfect example of how they operate over here at PH. Fear, intimidation and bullying are their specialties.

How is Sidley Austin doing in Chicago? Have they had to do layoffs?

54 is right - several recent partner defections at DLA Piper to regional firms - expect to see some surprising defections in DLA Texas where a few boutiques will be started.

60

What office are you in? You could not beat the NY office for these categories. Morale here could not be lower.

I don't get this. Business has never been better!
Oh, wait. I'm part of the new paradigm.

This warm weather is making me thirsty! Thank god for these frozen margs. MUCH better than the weak coffee that my old firm used to generously provide. Makes the work more fun too.

#16:

Can't speak for the pthers, but Chicago has more work than they know what to do with.

65: Can you ship some of that work over to NY? We are dying here!

65:

Then you are the only PH office with that problem. I know corporate associates billing zero hours per month on the West Coast. And these are the ones that survived the layoffs!

59: Wow!

Dear Solo Guy,

Please go charge your friends and family full price for a small-time residential closing, all the while promising to give the "friends-and-family discount" and follow that up with a chamber of commerce meeting.

No one here cares about you.

65

Can you also ship some of that work to ATL?

65: What about DC??? Do not leave us out!

Seriously, why not just post the link to the article? It's not like the blog post added any insightful commentary.

69: Sucks being a fungible biglaw drone, eh? Your bitterness is understandable. I'll remind you of the following: My clients are large firms; I can take real vacations and days off whenever I want to without fear of cancellation; partners at law firms suck up to me when I deal with them; I take home more than you do with a tiny fraction of the hassle; and, as noted above, I drink frozen margs instead of coffee while I work.

Now back to your closet-sized office before you get laid off! Not that you can stop the axe from falling on your superfluous neck.

*SLURP!*

65 What about us in LA? As the home office, don't we come first!

59 hit the nail on the head and did it in less words than the Times. Impressive.

67-They may have survived the last PHJW cut, but watch out for the next one! I can tell you that they have already begun a new round of stealth layoffs here in NY.

The ship be shrinking...

Speaking of shrinking, Huge Derrier looks like he could use a new jacket.

The ship be shrinking...

Speaking of shrinking, Huge Derrier looks like he could use a new jacket.

Is this the end Latham?

69 pwn3d by 73.

5 bucks says that conference table is really the Eye of Sauron.

I know there will be less 'BigLaw' how much less who knows? There are still real chances to make a difference...

Death Penalty Case Reveals Failings in Alabama

http://www.nytimes.com/2009/06/09/us/09bar.html?_r=1&hp

76

One of the PH associates recently hit in NY had a fairly respectable book. Do not assume that will save you!

2, I agree wholeheartedly with your assessment of the PYT known as Kash. I have also developed a huge crush on her for both her mind (thank you, ATL) and her body (thank you, Facebook).

I am actually in the middle of composing an airy pop song in her honor. I plan to submit it to the Black Eyed Peas for their consideration. Is there a word that rhymes with lobster?

Uh-oh... looks like Paul Hastings needs to review their current employee morale...

Things don't sound quite as bad as at Thompson Hine, but, then, Paul Hastings was a much better firm to begin with and had further to fall.

It's like I've been saying to the Thompson Hine partners... I'm not the disease in your firm, I'm a symptom.

Thompson Hine has a terminal case of incompetence/mediocrity in our management. Sounds like Paul Hastings is getting sick fast.

(note to the partners - Wii arrgh yor lauferm. Ewe r sik from the insidez. Ewe cannnnot staup us.)

85 - They don't give a shit about morale over here. PPP rules!

Dear 16,38,47, 60,63,65,66,67,70,71,74, and 76 (as of writing).

You are all the same person. You cannot accept that you spent all your time on ATL, did crappy work, did not respond to deadlines, turned down work because you were "busy" even when your hours were horribly below budget, and that these were the reasons you were fired.

What's more, you can't understand that these same traits are what are keeping you from a new job, especially combined with the fact that you acquired no experience while you were here and you spend all your interview time making excuses.

The only person who was responsible for getting you experience and keeping you busy was you. The firm's longterm goals did not cause any of your failings. If you applied yourself 1/2 as hard to your work as you do to your ATL posts, you would have been more successful.

83 Maybe if that jackass of a partner making 5 mil per year would finally land a bankruptcy case, we would have something to do.

Hi partners. You're going to call off your rigorous layoffs. You're going to publicly state that there are no economic problems at the firm. Or these associates are going to take your balls. They're going to send one to the New York Times, one to the LA Times press-release style.

We research your motions, we review your documents, we conduct your due diligence, we draft your correspondence. We work while you sleep. Do not fuck with us.

86,

If you are correct about how PH is treating everyone, then the firm is probably only a paycut away from associate anarchy. Thompson Hine went way too far shitting on employees every way they could think of and, as a result, I throw stones at the partners as much as I want and my fellow TH associates laugh, post agreement, or remain silent. It's nice.

On the flip side, if you aren't right and PH is struggling like many but not quite shitting on everyone just for the fun of it, you put yourself at serious risk of being outed by one of your fellow associates and generally lambasted by PH people defending the firm.

Proceed carefully. If your fellow associates don't generally share your opinion, you're at real risk of being discovered.

Also, if your firm's IT people are any good, your risk of getting caught goes up. At a minimum, you need to know how they would try and find you, what anonymous browsing is, and other means of camoflauging your tracks that I won't disclose publicly (Google is your friend on this if you need more info). Tread carefully.

Fortunately, my bosses are morons.

Re 87

This is a typical example of the pompous old goats running this place.

http://abajournal.com/news/billable_hour_hullabaloo_is_overblown_drinker_partner_says

73/solo guy -- what is your practice area? (i.e. big firms are your clients). seriously, I'd like to know.

93: Patents. Large clients will happily pay good fees for quality drafting and prosecution. And it is easy to charge less than the bloated biglaw firms and still make a good income. (Do the math, with a quite reasonable hourly rate and well under 2000 hours.) The work can be done anywhere, like by the beach, and overhead is very low. And I love the smell of frozen margs in the morning! Smells like... success!

Fuck you 87. I billed my budget and still got canned. Stop blaming the associates for PH's atrocious management!

93: Patents. Large clients will happily pay good fees for quality drafting and prosecution. And it is easy to charge less than the bloated biglaw firms and still make a good income. (Do the math, with a quite reasonable hourly rate and well under 2000 hours.) The work can be done anywhere, like by the beach, and overhead is very low. And I love the smell of frozen margs in the morning! Smells like... success!

The Drinker partner is correct. Clients could have and would have demanded an alternative to the billable hour years ago if they were truly unhappy about it. Right now everyone wants to cut costs, so billing gets a lot of attention. Nonetheless the real concern these days is reducing the amount of the bill, the form is a secondary consideration.

Firms are leying off not because they have to, but because they can.

97 = absolutely correct.

However, lawfirms are experts at padding the bill under the current billable hour system. The form is secondary, but I'd wager that changing the form away from the billable hour is the best way to consistently lower the amount of the bill and give GC's confidence that lawfirms aren't playing hide the ball.

99 -
It just can't work in most cases. There's too much unpredictability in law. It would be like a home builder signing a contract to build your house before he's seen the size and design.

88:

Get a clue.

100,

Basic client intake procedures give lawfirms information on the "size and design of the house" in most instances.

Though, I do agree that there are instances where there is too much uncertainty.

For most things, clients are no longer willing to take on the risk of bill padding under the billable hour. If lawfirms are unwilling to take on the risk of setting a flat rate for evolving work, then where do we go from there?

87:

You are wrong on this one. I left PH for another firm, and I posted some, but not all of the posts you cited. It does not surprise me that you are this far out of touch with reality though.

When I was there, PH had tons of associates ready and willing to do the work and develop their careers, but the work just was not there. Why can't you just admit that rather than making such a childish post?

Moreover, the partners refused to allow me to bring in any of the clients I was able to land. I was an associate and had about $80k worth of potential business. They told me no, we only want rate insensitive clients. So how was I supposed to keep myself busy -- "my responsibility" as you claim. I went to another firm, brought in that business, and am now slowly adding to it.

I am guessing your bitterness comes from the fact that you don't have any rate insensitive clients, and instead you are living he depressing life as another PH partner's bitch. Good luck to you.

102, have you ever actually practiced law? The billable model works because clients are constantly asking for things, calling with questions, changing direction in a deal, etc. Or there are new developments in a case. Moving away from the billable hour model won't work for most work, and I'm shocked that anyone who practices law at a large firm would think that it does.

"Basic client intake procedures give lawfirms information on the 'size and design of the house' in most instances."

No they don't, that is just wrong.

104,

If you don't think any changes are necessary, then you just keep right on riding the old, crippled and failing business model. Let me know how that works out for you.

Most attorneys with any experience are able to arrive at a general estimate of what a piece of work will require. If you feel that a new client is like building a house without plans or instructions, that would be a shortcoming in your professional development. Most attorneys have this rather basic skill.

If clients are constantly asking for stuff, the answer would be a flat rate with optional a la carte add-ons.

Don't know why 102's question was so confusing for you..

88:

Are you even at PH NY?

104,

So, your firm actually accepts clients that hire you to do 'some sort of work of an unspecified variety towards an unstated goal'?

Your strategy towards a major acquisition/deal is so poorly thought out that you frequently have to change direction?

Huh. That's funny. Most sophisticated clients expect their attorney to understand the work and take the correct approach from the beginning.

Your clients must be very understanding...

59 = Great Post --

All lawyers have to sell is their time. It's a terrible business model difficult to leverage and hard to monetize -- you can be very successful by going with low overhead and staying content with a few hundred grand in income. Or by going on contingency. But it is hard to bill enough to justify $1 mm plus. A few can do it. Most cant

103 - I had a similar experience. Unless the potential client is insensitive to both their inflated rate structure and the gross padding that goes on there, they really aren't interested.

109- But they practically encourage us to pad and in any case, it is what we do to survive.

107: Are you an actual practicing attorney, with your demonstrated (lack of) reading comprehension skills? 104 correctly pointed out that in many deals, the CLIENT often changes direction/strategy/goals, which leads to much uncertainty as to the scope of the work.

You'll begin to understand this when and if you move beyond the grunt doc review assignments that fill your days.

Anyone else wondering what is up with those weird clown statues in the photo to the right of Verrier?

Maybe if they spent less on creepy office art they could avoid some of the layoffs...

111,

Usually, when a client decides to change course midstream in a deal, it is because the attorney was giving them bad advice from the get-go.

If your deals are frequently changing midstream, then you are a crap attorney that set a shit strategy to begin with.

If the client truly did change the scope of the work, then a flat fee arrangement (potentially with optional a la carte items) should address that.

What you've done is show yourself to be bad at managing your deals. How exactly is it that your ignorance and need to start over in the middle of deals is tantamount to a rousing defense of the billable hour model?

Anybody who writes "First?" is not.

113 is correct. Any attorney worth his nameplate will take time at the beginning to understand the deal and play an integral role in forming the strategy.

Good strategy = happy client that brings return business

Shit strategy = changes become necessary midstream as shit strategy threatens to fuck up the deal.

Clients don't want to change their deals midstream. Clients want their deals to proceed to closing with as few surprises as possible and towards the goal they have set.

This is basic stuff. Understand your client's project and goals, set the best strategy, and execute.

Rarely major changes happen midstream. Most of the time, tweaks are so minor they wouldn't imperil the profitability of a flat fee arrangement.

Major changes to a deal in progress are typically signs of an incompetent attorney at the beginning of a deal.

51 - I agree. I have yet to understand why biglaw clients are willing to pay the price for junior and midlevel associates to fill out and spell check charts.

Are any of you who are clamoring about how law could work without the billable hour considering anything other than cut and dry corporate transactions? I think that there is an area of law that is much harder to predict. I think some people call it litigation. I'm not sure though. Any help?

Anyone who can't draft a flat fee agreement that accounts for changes in the scope of work is a moron and doesn't deserve to have clients.

At that point, you really don't deserve to call yourself an attorney. Drafting a clear fee agreement is about as basic as it gets.

Sounds like some of the status-quo-whores are grasping at straws to defend the billable hour system.

I guess "this system allows me to overleverage the firm and work my associates like dogs to inflate my PPP" isn't a terribly palatable argument to make. But, at least that argument makes sense.

Arguing that legal work can't be done under a flat fee arrangement? It's nonsense and makes you look stupid.

Solo guy - fellow patent prosecutor here. How did you start your practice, bring in first clients, etc.?

-Biglaw patent cog interested in solo escape

As a deferred incoming associate, should I just give up now? Kill myself? Move to Mexico?

117, I don't see why some aspects of litigation couldn't be based on a flat fee. Couldn't a firm negotiate with a client that a summary judgment motion will cost $100k, document production will cost $500k, etc., based on the partner's experience with cases of the client's size, and charges those fees regardless of hours billed?

117, I don't see why some aspects of litigation couldn't be based on a flat fee. Couldn't a firm negotiate with a client that a summary judgment motion will cost $100k, document production will cost $500k, etc., based on the partner's experience with cases of the client's size, and charges those fees regardless of hours billed?

121,

You're forgetting, 117 is the same person that thinks most deals have major changes midstream.

He doesn't know what he's talking about.

121 -
Sure they could. I'm just saying that they won't. It would result in a haphazard operation, administratively cumbersome, and frustrating for clients. To speculate further, It would logically also result in an explosion of contract attorney work, which would have a whole separate set of consequences.

While LegalMatch also bemoans the unprecedented number of layoffs among the legal industry and consolidation of law firms, perhaps the correlation of the rise of solo practitioners and small law firms is correlated to the increase in our business which principally serves these firms. If you, like so many corporate unemployed, find yourself out in the "employment market," hanging out your own shingle is something to consider.

123 -
No I'm not the person that was debating you before.

- 117/124

Mr. Verrier said he....considered three options, in consultation with a group of core partners.....[and] couch layoffs as decisions based on poor performance;"

Unbelievable that White & Case is admitting they considered stealth layoffs.

And another thing. If you think law firms are incentivised to screw their clients now, (i.e. padding hours) just wait till the faster the work gets done, the more money the firm makes. I'm sure quality would be great and associates would be treated very well.

-117/124/126

I don't understand what great incentive law firms have to couch terminations as performance based. It should be easier and less confrontational to tell an associate that, sorry, there simply isn't enough work right now and we'll do what we can to help you find a job elsewhere.

Incoming Columbia 1L here. What should my current mental state be? Nervous, worried, fucking scared to shit? Cautiously optimistic that i'm fucked but not as fucked as the classes of '10 and '11?

MY LIFE IS FUCKED. I AM LITERALLY SCREWED FOR LIFE AT 25. WILL NEVER HAVE A HOME, A FAMILY, NOTHING!

CANNOT TAKE THIS MUCH LONGER....THERE ARE OTHERS LIKE ME.

130- If you're interested in becoming a lawyer, you should be optimistic. If you're going to law school to get a job that will allow you to pay off law school loans, then you should be shitting your pants.

Paul Hastings' PH50 is PH no more....and don't forget the 15-10..what a joke!!

simple litigation often IS handled on a flat fee basis- i.e., defense of auto accidents. Some insurers will pay their outside counsel a fixed fee to handle certain cases. Ditto for debt collection and other routine litigation that will not require more than maybe one deposition, a couple subpoenas at most, and a trial.

For anything more complex, there are just too many variables for the lawyer not to get paid based on how much effort went into the case, and the billable hour is the best way to measure this.

Don't like it? Insulting lawyers won't help you. Go convince some CLIENTS to insist on this arrangement.

133 - PH = pretentious biglaw shithole.

131,

I know it can seem overwhelming, but don't panic. Objectively speaking, as long as you have your health it's pretty damn hard to be "screwed for life" at 25.

This economy is definitely a major setback, though. No doubt about that.

Paul Hastings = home of the rate and padding insensitive client.

130 --

Time to read the Paper Chase by John Jay Osborne (or maybe the movie if you can find it) and/or 1L by Scott Turow. It's old school, hit the mattresses kind of days, where class rank and Law Review will matter.

Not a PH defender here, but can anyone really point to a single BigLaw firm out there that doesn't pad their bills?

Really?

I find the lawyers who claim to (a) be unable to deal with some sort of fixed fee arrangement and (b) have corporate clients, to be (c) funny.

Speaking as someone who has been on both sides of the equation, every bill by the hour lawyer on this board should be aware that every one of your clients must do internally what you claim is impossible - budget for legal fees.

Every one of your clients is predicting (with great, if somewhat false, precision) what you will charge. Every one. On every matter. And it fries their ass when you don't hit their numbers. Because they have to explain to their boss why you didn't come in on budget.

The only reason most outside lawyers find this information dumbfounding is that they have never had a job other than being a bill by the hour professional, and they have absolutely no idea how their corporate clients work. Even after having worked for them tor 20 years. Your corporate clients don't take a shit without a budget for toilet paper.

You think it's hard predicting how much some run-of-the-mill employment litigation or contract dispute will cost? Not only do your clients do that, but they also have to predict the size of markets five years down the road for products that don't exist yet, and then bet millions and millions on the prediction.

So, um, cry me a river.

To put a finer point on it for those of you who represent venture investors, they are betting millions of real dollars with essentially no information at all, and yet you can't tell them how much documenting their preferred stock/voting rights agreement will cost? You should understand that they can be somewhat unsympathetic to your plight.

Making the unknowable knowable is easy - break it down. Your client hires you for litigation - propose to them a series of block purchases for a fixed price.

For example - 10k per month gets them incidental consultations that don't require written memos/opinions - powerpoint to guide the more complex discussions but that's it. Nothing that can come back as a formal malpractice claim.

Then for any other big item - discovery/depositions - a fee for each approved in advance.

And contract/finance lawyers, don't get me started. I could predict the bill for a financing to within 10% if you told me who was involved and whether secured debt was involved, and who was issuers counsel (issuer's counsel is always the wild card in terms of costs, the dumb ones run up huge bills).

If I had to quote a block price for 10 deals, I could get the bunch to within 10%.

Again, cry me a river.

PH = monogrammed wire hangers..

It's amazing how long it took for ATL's editors to pick up on this.

140 - giving an object lesson in how lawyers are shitty business people.

Thanks for the much more eloquent explanation - I pretty much got stuck at being shocked that basic client intake (understanding the matter and anticipating the approach) was such a foreign concept to most here.

-123/118/etc

140,

Could you explain you point about doing work that could/couldn't come back as a malpractice claim? Consultation don't, but memos, etc. do? What is the relationship of PowerPoints to that, too?

127---why is that unbelievable? At this stage of the game, why hold back?

Wait a second. Did White & Case continue to hire summers for permanent positions at the same rate as prior years in 2007? What about 2008? What about laterals?

If this @$$hole saw the writing on the wall in 2007 when he took over, why did the firm continue business as usual? What a load of crap!!

I was fired by HV face-toface several years ago. He is a stone cold SOB. After informing me that I was being let go, he pulled out a legal pad and said, "Let's get down to horsetrading." I have zero, repeat, zero doubt that his conscience was stirred by the thought that he was putting numerous people's lives on the line.

I was fired by HV face-toface several years ago. He is a stone cold SOB. After informing me that I was being let go, he pulled out a legal pad and said, "Let's get down to horsetrading." I have zero, repeat, zero doubt that his conscience was not stirred in the slightest by the thought that he was putting numerous people's lives on the line.

I was fired by HV face-toface several years ago. He is a stone cold SOB. After informing me that I was being let go, he pulled out a legal pad and said, "Let's get down to horsetrading." I have zero, repeat, zero doubt that his conscience was not stirred in the slightest by the thought that he was putting numerous people's lives on the line.

59 deserves its own post.

Safe bet that after summers leave there will another round of W&C layoffs

59,

Holy shit. Great post.

To the tool saying how people got fired because they didn't bill, etc.: I hope you stay in biglaw--you deserve that life.

There are three ways firms make zombie partners. The first is by cronyism. The second is by accident.

A rising tide of money into a firm lifts all partners. As a result, partners make it into the equity ranks because (a) they hung around long enough; or, (b) there was so much money flowing in at the time that it was easy to make some "good guys" partner; or, (c) once upon a time they had enough business to qualify as an equity partner. Eventually many of them get lifted to income levels far above their value in the market. They become zombie partners.

Over time (good times anyway) concepts within the firm about what constitutes a minimal or "decent" income begin to diverge more and more from reality. Eventually you're sitting at a meeting wondering why a partner (hereinafter "Frank"), a highly competent partner without question, is going from $750,000 to $825,000 when he has essentially no business, couldn't get a job for $400,000 if he tried and whose contribution to the firm, if you put back on him his share of the overhead paid by other partners' associates is written in red ink and hasn't been in black for a decade. And when you point out that you got offers for $2 million / yr, nobly turned them down, that all you're asking for is $1.5 million / yr, and that you'd still be putting $500,000 net into the firm, you're accused of making a "cash grab"; of not understanding the firm's culture; of not knowing what it is to be a partner; and, of not knowing what it is to be loyal.

"How can Frank not be expected to share in the firm's good fortunes? Our founders expected all partners to do better by being together than they could do individually - that's why we're all here." "What has Frank done to deserve what is in essence punishment? He just bought a new house in Belize you know! What would he do?" "Why do you need such a big increase; we don't like greedy partners and by the way doesn't your wife work?" I fielded all those questions and more at my last firm. Here are my answers.

Frank is already being paid far more than he could make individually. Relative to his value in the market he's actually sharing MORE in the firm's fortunes than any other partner. Even if we cut Frank to $500,000/yr he'd still be getting a 25% premium and anyway over a 10 year period he's already made millions more than he could have made elsewhere. And since when is not getting a raise from grossly overpaid to very grossly overpaid punishment? And my suggestion that he be cut to $500,000/yr is an insult? On what planet? Finally, why do Frank's spendthrift ways weigh in his favor yet my frugal ones weigh against me?

I left. If they want to pay for Frank and the other zombie partners to live far above their abilities fine but I'm not going to pay for it.

And that's really the point. If some partners are to be paid 2x + their value then some other partners have to be paid less. The rejoinder of "well, you're making $1.3 million and Frank's making half a million less; isn't that enough?" again misses the point. It's not about relative income, or pecking order; it's about worth.

Relative income is a worry of collectivists and egalitarians. It's not a worry of those trying to attract, incentivize and retain the best people for the enterprise. And despite what many here tend to write, the biggest problem faced by modern firms is not that they're too tough; it's that they're too nice. Or think they are. One consequence of making zombie partners is that firms are often forced to pull up the ladder on deserving senior associates.

Numerous law firms are now infested with zombie partners. Some are overrun. In too many firms management is paralyzed much like the government of California. They've got to make hard choices about partner compensation but they can't deal with conflict. They can't kick the can down the road any further because it's a cash business and they can't borrow anymore. They don't know how to govern in hard times because their leaders have only governed in good times when you could solve any problem, or at least stop the whining, by throwing money at it. They have to find a hero; like the one who propelled the place to where it was in its heyday. Otherwise, they're toast.

The only advice I have is to look for firms that understand the need to satisfy the ambitions of their keepers. Good luck.

It demonstrates a certain degree of confidence to offer oneself up to the New York Times for a feature story like this. In light of that confidence, it's reasonable to infer that White & Case is on pretty solid ground compared to where they were 8 months ago. I'd say that another round of layoffs is very unlikely.

co-sign on 150's suggesting re: post 59. i'd like to hear more reactions to his/her post, any dissenting views, etc.

146, yes W&C hired summers at a very high rate in 2007 and 2008. One of those years (2008, I think), they massively over offered OCI candidates, resulting in a summer class 50% bigger than the year before. Apparently, the summer class in 2009 is still a decent size, though with fewer perks, obviously.

Summer class at WC is 59. Perks are perky, lunches still with cant-eat-enough budgets, and no skimping on bar tabs. PLENTY of work.

See 157. Failing firms don't give interviews like this. White & Case must be on very solid footing to willingly step into the spotlight on something like this.

139

True. But given the fact that all the associates here are now terrified for their jobs, the padding (judging by the billing summary report I just reviewed) has become grotesque. Even PHJW's "rate insensitive" clients will begin to balk.

Rate insensitivity rules!

82-Am I supposed to be moved by a man who will be executed for blowing his girlfriend's head off with a shotgun blast? I would rather focus on big law.

I know who 48 (Uncle Paul) is. He's a real shitbag, associate devouring bully in this office.

Fuck you Uncle Paul!

153-Good post. You have insight, keep it coming.

Uncle Paul = PH's Bdev dept

Uncle Paul = PH's Useless Bdev dept

Uncle Paul = PH's Useless Bdev dept

143/144.

My point about non-written advice is again from experience on both sides. Written legal opinions/memos sent to clients are 99% cost, 1% substance, substance which the client already knows. I therefore never ask for them except for the customary stuff at the end of a transaction. I call counsel for spitballing and for negative reactions - holy sh*t you didn't think of x. I expect some background legal research may be required for a later phone call but I make it clear that this is debate, not gotcha. If I got objectively bad advice in such circumstances the worst I would do is not hire them again. I want the spirited debate, not ass covering.
My point about powerpoint is that a writing to list what is to be discussed is useful, but not the substance of the discussion. Just bullet points. That way everyone can deny whatever they have to deny. Again, my point to counsel is I am hiring their experience and judgment, not their opinion committee. We will get to them later.

And I can write my own ass covering memos to file after we hang up. (actually emails to myself - send ass covering emails to yourself through your company's email system - they will be there for the next 10,000 years).

165: Yet they continue to hire them (Media Coordinators, Sr. Media Coordinators, etc.) week after week. Such useless, self-important shitbags.

No. 59 did a pretty good job explaining why the financial predicament of many firms cannot sustain a major revenue hit without very large expense cuts. While not all firms use debt, revenue drops of the sort that may befall many firms in the near future could very easily overwhelm the entity.

Since expenses at a law firm are basically fixed costs like support staff salries and pensions (yes, most of your secretaries and mail room clerks have guaranteed pensions that are grossly underfunded) and equipment and real estate leases (which in most cases are not easily cut and there is no hope of subletting space in this environment) and professional salaries, the professionals are the only viable source of cost reduction. Unlike many other businesses, a service business does not have a built-in drop in costs (materials, procurement, utilities, overtime, etc.) associated with reduced revenues.

Consider the "usual" thinking (probably applicable to most firms outside the most profitable) where revenues are divided roughly equally in 1/3 increments to fixed costs and support staff, associate salaries, and partner compensation. Since neither of the first two are going down -- and might be going up without layoffs, withdrawn offers, etc. -- every dollar of lost revenue is a dollar of partner profits. So, a 33% drop in revenue -- certainly well within the realm of current reason -- wipes out entirely all profit. That does not mean going from $1.6MM to $1.5MM, that means going from $1.6MM to zero. Then, the partners with most important books of business look elsewhere so they can keep some of the rain made from that book, and the firm implodes.

Think it can't happen to the best of the best? In the early 1990s, Goldman had a capital call on its partners. Their take that year, even for newly elected partners that had not yet shared in the wealth, was a few hundred thousand dollars of negative income. Goldman survived because of the loyalty and belief in that profit-making machine left very few partner defections. I don't think very many, if any, law firms would repeat that feat.

169 - That's a well-written piece of yours. The flaw is that no law firms are reporting ANYTHING EVEN CLOSE to the collapse in profits you are alluding to. Even if they are fudging numbers, it wouldn't account for the HUGE discrepancy between the scenario you have sketched for us and their reality.

To take one example, White & Case profit declined from $1.7 million to . . . $1.7 million.

153.

Big law firms aren't actually big firms, just lots of little ones working under a joint marketing agreement. I've worked at both biglaw and what was then the big 8 accounting firms, and the big 8 are truly big firms in a way that is incomprehensible to law firms.

Only maybe 15 accounting firms have a shot at auditing the fortune 500, and maybe 25 at the the largest 2000 public firms. If you work at at one of these firms as a cpa, you know this.

But most of big law is actually groups of 8 to 10 with 2 at the top. Even if your department has 50 in it, its really 5 departments. There is nothing that big firms do that boutiques can't do except for marketing. And firms don't like referring work to competitors so they open offices and practices everywhere to avoid that.

The rainmakers stay because (a) they understand that power comes from billing and clients and they would rather do that then waste time in firm management and (b) a rising tide lifts the annoying boats, but so what.

However, the downturns suddenly reverse that. The profitable group leaders suddenly find that half their income is being pissed away in idiot ineffective bureacracy and the supposed marketing beneftis are just that. You can't audit IBM yourself but you can get legal work from IBM yourself.

So all of a sudden, the actual rainmakers become annoyed enough to get involved. And when the managing partner tells them next March that they have to personally guarantee the bank loan, well.....

87.

You obviously have a lot of time on your hands to be trolling ATL and posting such drivel. Now shut the fuck up and get some rate insensitive clients!

Love,
Seth and Greg

170, the flaw in your thought is the use of the word "reporting".

172 - You got it!

Love,
BAB

128 has a good point that no one seemed to address.

- 128

By the way, there is something else that drives biglaw that will probably also end.

CEO compensation at public companies is correlated with only one thing: size. Not profitability, not growth, not any other measure of success, just size.

Once biglaw firms started to have a "ceo" the same dynamic appeared. If the firmed merged its way to bigger numbers, the ceo naturally had to make more. And the folks in the trenches weren't paying attention so long as things were going well.

But now that they aren't, why do you have that office in Prague?

You are loved, 128. It's not your fault.

By the way, my friends, chin up. It is much much worse outside of the law firm world than you can imagine.

The statistics coming out of China are completely fraudulent - and China has a history of not being a nice place to be when things are bad and you're chinese.

US electricity demand will drop in 2009 for the first time since 1945. Not Jimmah Carter, not Paul Volcker with 18% interest rates (my firm made hay in the days of 18% interest rates) not the commies, not nothing has ever caused US electricity demand to fall. But now it has (and it has in China also).

China has become a net exporter of oil. Let that one rattle around in your brains for a few days. they don't really have much oil.

More container ships are anchored off Singapore by tonnage than all the ships that existed in the world 50 years ago.

The amount of oil sitting in tankers in the gulf would, and is, making Victor Chavez weep, notwithstanding GS's efforts to manipulate the price of oil in front of the US driving season (it won't work). And the effort will kill a few more hedge funds and maybe GS.

The only difference between the winter of 2009-2010 and the winter of 1932-1933, the only difference, is the FDIC. It's is a big difference, but it's the only one.

Otherwise BoA, JPM would already be gone and you actually would see hls grads selling apples.

I work for a partner at biglaw house, and said partner has lost the bulk of his book (one client accounted for 50%+ of his business and has taken their work, or what little is left, elsewhere). Our group has suffered layoffs, but my open question to everyone is do you think a partner like this will be booted out of the firm at some point if he can only generate $2-4 mm in billables as opposed to $7-9 mm before?

You are loved, 128, I am sure, although I suspect those who love you find you a little needy, but in any event, how would the quality issue you raise be different from the quality issue raised in any supplier relationship?

You send me crap, and I catch you, I send my business elsewhere.

You lawyers are sooo special. it's a tough world out there.

We call it work because it's work. If it was fun, we would call it fun.

179, a partner with $2-4 million in business can always find a home, particularly if the partner can take a paycut and live with moving off the executive committee and other trappings of success. The partner may get back to being close to be as profitable as before if the partner fired the junior partners (who can suck up a lot of profit) and associates who did the other $5 million work...

180 -
I hate to refer to the building contractor again, but its the only other work I can think of where faster work = more money. And in that industry you have to get several levels of government approval before you can even start your project, then every stage of your project has to be inspected by government officials before you can move to the next. I'm sure that's not because anyone worries about quality in that business though. Nah. No way.

P.S. Please respond quickly this time. I'm very needy.

181 - what if the partner is still supporting a handful of lawyers? my math tells me that a half-dozen associates eats up most of that revenue.

I don't get it. Short of a Heller Ehrman, TPW or Thelen flame-out biglaw looks pretty damn good compared to the rest of the economy. Bankers and our other friends in finance really had their heads handed to them. Compare their situation to that of Davis Polk, which is considered to have been hit very hard. Their PPP dropped from somewhere like 2.3m to 1.9m. Not too shabby for the worst year since the great depression.

The only people who call that a sinking ship are those annoying people from the legal consulting firms (I am looking at you Hildebrant international!) who are desparately machine-gunning their hokey articles in hopes someone will fall for it and hire them to restructure their firm.

To sum up: (1) if biglaw is a sinking ship, sinking ships look pretty fucking good, (2) the business cycle exists, and (3) if you see an article or something where someone from a consulting service says biglaw is dying, it is just some fool trying to drum up business.

er - 182 - the issue you raise is universal except for the bill by the hour (lawyers and defence contractors). You watch your suppliers like a hawk, and you reward the good and cut off the bad.

Lawyers think their work is intrinsically different from everyone else. It isn't.

Airbus and Airfrance have a bunch of people at the pitot tube maker right now. And that manufacturer is done (and it's biglaw firm just lost a client). And at a bunch of other pitot tube makers, there's a bunch of "I told ya so" meetings going on. And hundreds of people are dead. So jeeze, you docs got some typos?

185 -
That was somewhat incomprehensible. But near as I can tell you merely wanted to confirm my point that quality is a major issue in construction?

- 182

184. 2008 wasn't the year. 2009 is part of the year, 2010 is the rest of the year.

Let's widen the scope a bit. Examine with me the prestige-whore circle jerk that big law has become. Nepotims is a factor, sure, but a small one. In reality, big law, like the Street, has been run by a self-perpetuating oligarchy of ivy league grads and idiot heirs that collectively left common sense and actual know-how at the door. The rainmakers of the V100, the boys who actually worked/work their asses off to make profit and generate business are the exception, not the rule. A house of cards, even if the cards have triple Yale degrees, is still a house cards. Don't get me wrong, there's nothing inherently wrong with a top-notch education. Acing standardized tests is, after all, a highly marketable skill. My point is that prestige has to be based on something tangible: a firm or an investment house with real value and real worth, headed up by real lawyers and ceo's who know how to do their job and do it well.These could be Harvard and Wharton boys, or they could be from [pick your favorite T100]. Prestige without a solid foundation amounts to a bunch of overweight pimply faced SA's who can't write me a decent research memo but somehow find the time to write a novella on ABL about how Sotomayor hates white people.

P.S. Cooley sucks. It sucks the steaming pile of human feces I stepped over in the subway the otherday. It is a gut maggot school, without the guts.

Big Law is poised to take off in next six months. A lot of pent up demand out there from deals that are just waiting to heppen. I think a lot of firms are going to be in a pinch to hire more associates by the end of the year when things pick up even a little bit.

I hear the DC office is still really slow. Any truth to those rumors?

I am a former White & Case attorney. Fortunately I escaped that wretched firm before the current round of bloodletting began. To this day, I thank my lucky stars that I was able to leave that firm before the financial markets collapse and that I was successful in finding a position with another international law firm with much nicer work colleagues and a better and more viable business model.

The NYT article portrayed Hugh Verrier and the partners at White & Case as somewhat sympathetic characters overtaken by events in the international financial and credit markets – (supposedly) regretting making painful decisions about firing counsels, associates and support staff in these difficult economic times. Well, let me tell you, from someone who knows these characters personally, that there is no reason to feel sorry for them! At all! Frankly, I am glad to see the collapse of the White & Case partnership occurring, and relish the fact that the White & Case partners are “suffering” (though their level of “suffering” is not what a typical American would consider “suffering”). The only persons I feel sorry for in this whole pitiful situation at White & Case are the counsels, associates and support staff who have been fired by Verrier and his cronies (often in the name of “poor performance”) in a desperate attempt to preserve the partners’ current level of draws from the partnerships’ profits (which are dwindling). We all know that there is a global recession occurring right now and that law firms will have to restructure and adopt a new business model to survive. The question is - how does a particular law firm restructure to remain viable and which employees at that law firm do you layoff as part of this process? It has been clear that the cutbacks at White & Case are not affecting the persons who should be affected the most - the cronies of Verrier who have no viable business plan or book of clients. Rather than truly cut the "fat" at White & Case (namely, the partners who are cronies of Verrier), Verrier would rather force a large number of counsels, associates and support staff to bear the brunt of the cost cutting measures so he and his cronies can continue to make their outrageous equity draws off the backs of the partners, counsels and associates who actually bring in business (even in these tough economic times). In the long term, White & Case will need those partners, counsels, associates and support staff who have been recently (and are continuing to be) cut, when the deal flow resumes. However, in typical White & Case fashion, the counsels, associates and the support staff (and now certain partners out of favor with the Verrier cadre) bear the brunt of the cuts to continue to support the lavish lifestyles of the White & Case partners.

From someone who has seen the inside workings of White & Case, the White & Case partnership (like the partnerships at many Big Law firms) is an archetypal “dog-eat-dog” world. The partnership is structured on an “eat-what-you-kill” compensation structure. Unfortunately, for many White & Case associates and counsels, the partners whom they work for do not give those junior attorneys any credit for the work that they bring in. The White & Case partners are the only persons who get compensation “credit” for matters brought in. Thus, the White & Case partnership has devolved into an “eat-what-the-associates-and-counsel-kill-but-don't-give-them-any-credit-for-it” partnership. When White & Case associates and counsels get too close to the client, the partners typically fire them under the pretext that their performance was “poor.” That way, the White & Case partners keep control over their billings without relinquishing any of the credit to any of the junior White & Case attorneys. What typically happens at White & Case, when the matter partner retires or otherwise leaves the firm, the client relationship is lost since no junior White & Case attorneys were mentored or groomed to take over the client relationship when the primary client relationship partner moved on (for whatever reason). This structure has also resulted in no sense of loyalty from the White & Case partners to the White & Case counsels or associates that work for them. The White & Case counsels, associates and support staff are just “cogs” in the machinery of the firm that can be discarded easily when a downturn occurs – without any consequence of how much those persons contributed to the success of the firm in the past.

One issue affecting White & Case right now is a secretive partnership cull being planned. In March, Verrier announced that 10% to 20% of the partners would be forced out of the White & Case partnership. Since that time, there have been no further details about the partnership cull announced. In fact, no details about the partnership cull have been distributed internally among the partners. Needless to say, this secretive process has resulted in a significant decrease in morale among the White & Case partners. See The Lawyer – June 1, 2009 - “White and Case Cull Silence is Sapping Partner Morale” (http://www.thelawyer.com/white-and-case-cull-silence-is-sapping-partner-morale/1000912.article). The White & Case partnership cull should be interesting. It is putting Hugh Verrier in a quandary! Who will he pick to get cut?? - his cronies (majority) who supported him for chairmanship of the firm last year but are not rainmakers and have no viable business case for being partners, or his detractors who opposed him for chairman of the firm but are the real rainmakers and the business force for keeping White & Case afloat right now. It will be interesting to see which partners at White & Case survive the impending carnage and what happens to fabric of the White & Case partnership during the process. As you can imagine (based on the references in the NYT article and other articles posted about White & Case on other law-related websites), the White & Case partners do not like or trust each other. My guess - the White & Case partners will turn on each other even more than in the past - ripping the White & Case partnership apart - and the majority of the partners left after the bloodletting will be Verrier's cronies.

It will be interesting to see what happens to White & Case (and other Big Law firms) over the next year or so. I foresee the collapse of a few of them – including, potentially, White & Case.

In closing, I have to share with you two of my favorite postings about White & Case on one of the law-related blogs (not from me so I take no credit):

1. Those of us who spent time in the Moscow office are not surprised to see a purge of this magnitude. Hugh Verrrier ran W&C Moscow with a tender regard for his favorites, and an iron fist for everyone else. If the comments above are anything to go by, he's continuing the policy in NY. A dictatorial regime can work under some (usually desperate) circumstances, but it's demoralizing on a daily basis. One W&C lawyer told me that every time he had a meeting with Verrier, he came out feeling "anally violated" due to the abuse heaped on him. This lawyer eventually left the firm for a more pleasant environment elsewhere. In the last few years of HV's Moscow tenure, many other lawyers made the same decision. I sympathize with those being laid off - but if it helps them find a better place to work than the petty Stalinist regime that is W&C, then in the long run it's all to the good.

2. How can we forget Comrade Verrier's reign of terror in Moscow or the Age of Anal Violation as it was known locally?! We [White & Case] don't stab you in the back like most other law firms. We stab you straight through the chest as you come through the revolving doors!

Peace everyone!

191 -
You're kind of a bad writer. No wonder they forced you out.

50 - I have to agree with you. The New York Times article was a brilliant public relations move by W&C. It resulted in Verrier portraying himself (and the other management of White & Case) as sympathetic characters, making decisions (almost against their will) about peoples’ futures by saying that these difficult decisions were “gutwrenching,” “very painful,” and “hurtful” for him. But, anyone who knows the inter-workings of the W&C partnership and the personal characters of the W&C partners involved know that the exact opposite is true. Verrier and the other surviving W&C partners do not care at all what happens to the attorneys and staff they have let go!

lol@189. Biglaw won't begin to expand again until 2012 at the earliest. Where is this magical engine of growth that will drive deals?

There is no capital in the system.

194 - There's dry powder on the sidelines. And the longer deals are delayed, the cheaper asset prices become. At some point, possible soon, the price will be right.

Great post 191! That piece of shit HV would fit in nicely at Paul Hastings.

192 -

Hi Hugh Verrier. Welcome to the discussion board.

As a county law librarian, I work mainly with solo, small law firm lawyers and self-representing litigants.

I feel sorry for the law firm librarians affected.

But daily, I work with many lower/mid-classes people who can not find/afford legal representation. Overall, county law libraries in California does a good job at empowering people. But just like giving people a wrench doesn't make them auto mechanic, giving people access to legal information is still far from giving them actual representation.

Isn't it funny how lawyers complains about not having jobs, while many people are complaining about not able to find lawyers to represent them?

— Toshokan Kanchou, California

http://community.nytimes.com/article/comments/2009/06/07/nyregion/07law.html?permid=135#comment135

Here are some comments on, and responses to, various parts of the New York Times article (including quotes from HV):

1. "'I greatly regret having to take these actions,' Mr. Verrier wrote." - Knowing HV personally, I seriously doubt that. See comment 147.

2. "Nearly 600 people, 279 of them lawyers —
including seven of 73 partners in London — have been fired so far in what Mr. Verrier described in a rare
interview as a 'gut-wrenching' process". - Well, maybe if your gut wasn't so large, it wouldn't be so gut-wrenching for you.

3. "'Sometimes it was people who had recently joined the firm, but sometimes it was much-more-senior people at what seemed to be a natural break in their careers,' Mr. Verrier said of those who were let go." - "Natural break in their careers"!! - HV, what are you talking about? Let the attorney decide what is a natural break in his or her career. He or she doesn't need your help in deciding that.

4. "'There were tough judgment calls,' he admitted, adding that he tried as best he could to preserve the firm’s culture" - Preserve what firm culture? You mean a firm culture of backstabbing and cronyism? Then, I guess you have preserved the White & Case culture.

5. "'It’s a very painful thing to have to go through,' said Mr. Verrier, a husky man in pinstripes. 'It’s hurtful to
read the criticisms directed at the firm — and at the partners — when this is a great institution that, under
economic pressure, had to adjust.'” - So sorry, HV, to have hurt your feelings when you just tossed 600+ people out on the street!

6. "Mr. Verrier said he saw the storm approaching shortly after he took control in 2007, and considered three options, in consultation with a group of core partners: Do nothing, which risked the firm’s survival; couch layoffs as decisions based on poor performance; or own up to the crisis and bid large numbers of lawyers a harsh but needed goodbye." - Reality check here -- In fact, W&C has gone through a series of "stealth layoffs" since 2007. I know a number of very good ex-W&C lawyers who were let go for economic reasons under the pretext of "poor performance".

And to commentators 154, 157 and 158 - You are not correct. HV did not agree to be interviewed because W&C is on "pretty solid ground compared to where they were 8 months ago" (154) or on a "solid footing" (158). HV's sole purpose in granting the interview was to try to generate some sympathic support for firing the largest number of attorneys and support staff of any international law firm. W&C is not on solid ground - it's foundations are shaking like it is experiencing an earthquake. Expect more layoffs and cutbacks to be announced in the Fall after the summer program is over.

198 - this is a thread about biglaw. Do you really think any of these people give a shit about low/middle class people, or justice of any kind?

Biglaw cares about a few things, and poor people and justice are not amongst them.

ATL, can we please have a thread on practices/boutiques that are not failing. What about the 100-200 largest firms? What about IP boutiques? Seriously, can we have something other than a regurgitated article about how "the ship be sinkin"

Seriously, you are really disappointing me lately.

153 nailed it.

"One consequence of making zombie partners is that firms are often forced to pull up the ladder on deserving senior associates."

Exactly. A 20 year lawyer without a book is a ten year lawyer hoping to make partner, and get a chance to build a book. And those 20 year partners know this, so that is why they start strangling 5 year associates in the crib. Better not to have any competent alternatives running around in 5 years, you know what I mean?

Those of you who worked in biglaw remember those guys and gals, don't you? The lawyer well into middle age, who had no business and really, really went at those senior associates all of the sudden, for no seeming reason time and again? Crib-killers.

WC is desperate for work, there are empty offices on every floor and the phones are not ringing. all the good associates are trying to jump now while the ones that can't get jobs elsewhere are hoping for the best.

184: "Their PPP dropped from somewhere like 2.3m to 1.9m. Not too shabby for the worst year since the great depression."

The problem with looking at these figures is that they are a year behind. The economy collapsed in the 4th quarter of 2008. So these numbers that show 1.9 million or W&C dropping to 1.5 million only take into account one bad quarter. We'll see how they do in 2009, with 4 bad quarters.