Am Law Daily has what can only be termed a frightening headline today:
The Am Law 100 2010: Too Big to Fail?
Nooooo! Haven’t we learned that “too big to fail” is terrible? It’s bad for our economy when things are too big to fail — too often, too big means too inefficient to change:
Carrying dozens of offices through the worst recession in a generation might sound like a prescription for disaster. But heads of The Am Law 100’s most geographically diverse firms say that their business model is not only alive, but robust.
Have we learned nothing from everything that’s happened? Do these firms really think that the entire legal recession can be blamed on so-called “entitled” junior associates who had the audacity to accept the money firms were willing to pay them?
Check out these quotes from two of the most popular managing partners here at Above the Law:
The downturn hasn’t slowed down globalization, notes Peter Kalis, chairman of K&L Gates, which was nearly alone in posting revenue and profit gains in both 2008 and 2009. During that time, K&L Gates folded in three smaller firms, absorbed about 100 additional laterals, and opened several offices, including three–Moscow, Warsaw, and Tokyo–in the past five months alone. “Other firms felt a great need to hunker down,” says Kalis. “We saw [the recession] as an opportunity.”
“Some people would suggest that having offices in various countries could be more of a challenge in a recession,” says Robert Dell, chair and managing partner of Latham & Watkins. “We actually found the opposite.” The firm opened two new offices in the past several months, bringing its total to 26; meanwhile, revenue per lawyer and compensation-all partners surged (by 6 percent and 4 percent, respectively), even though gross revenue dropped by 5 percent.
I’m sorry, did I say they’ve learned nothing from the recession? Maybe I was wrong about that. Maybe they’ve learned that overexpanding is perfectly fine so long as you can shed all the excess bodies (careers, statistics, whatever; just don’t call them people) when things get rough.
We’ll see how this plays out long term. Top recruits can be fickle, but they also can have very short memories. In the short term, it seems like a lot of Am Law 100 firms are standing around like Kevin Bacon at the end of Animal House: “All is well. All is well!”
The Am Law 100 2010: Too Big to Fail? [Am Law Daily]