Meanwhile, back on Earth and/or the rest of the internet, industry observers have been feeling a bit like voyeurs at a pre-mortem autopsy. Everyone agrees that the downfall of this once-great firm is hugely sad (well, nearly everyone), but there is less of a consensus about who or what is to blame.
Last week we asked the ATL readership for their take on where fault lies. Here’s what you had to say….
These were the multiple-choice options:
• Intractable cultural differences between the legacy firms
• General managerial ineptitude
• Guaranteed compensation deals for certain partners
• Excessive debt
• The recession
Obviously, these factors are closely intertwined. Moreover, the premise of the question is arguably based on a “just-world” fallacy, and perhaps we’ll never have a generally accepted version of causality. Nevertheless, there is an abiding human need to explain misfortune by assigning blame, and what we can try to do is observe and define the longer-term effects of this event.
What will other Biglaw firms learn from the Dewey story? Will the takeaway(s) be as nebulous as “transparent management is good,” or as specific as “guaranteed compensation deals for incumbent partners are insane”? Will anyone learn anything?
First, here’s a look at how respondents made their cases for the most-blameworthy factor:
1. General managerial ineptitude
“The ‘Steves’ are to blame, but ‘ineptitude’ is too kind a word to describe what they did at Dewey. Greed and unchecked power proved to be a lethal cocktail.”
“LeBoeuf management? Mean, spiteful bean counters. Also the day I was laid off [I] was asked by their event manager to put tissues boxes in all the conference rooms on our floor beforehand. Then we were fired. That’s a typical story.”
Though it may not have received the most votes as the root cause, the burning in digital effigy of firm management was certainly the most vivid theme of the survey comments.
2. Intractable cultural differences between Dewey Ballantine and LeBoeuf Lamb
“I worked at Dewey Ballantine pre, during and post-merger. Leboeuf personnel were given decision making responsibilities over all the departments. Without consideration of which methods might be better, we were forced to do things the Leboeuf way.”
“Steve Davis and his confederates were so insecure about the fact that LLGM wasn’t more prestigious than it was that they threw away everything that had made the firm what it was; in so doing, they destroyed it.”
“LeBoeuf was a great firm but was spoiled by the merger with this ugly beast that Dewey was just before the recession hit.”
Predictably, legacy Dewey Ballantine folks blamed legacy LLGM and vice versa. The former, however, were more vocal and numerous.
3. Excessive debt
“Debt is what killed Dewey. Debt is what killed most other firms the past few years. It will kill many more. I’ve heard that just three of the AMLAW100 operate without incorporating debt into their operations. Three! Many of them distribute all their cash to their partners at the end of the year, and then operate in the red until October or November. All it takes is a few partner departures or a collapse of one or two practice groups to destroy most firms.”
4. The recession
There were a handful of votes for this factor, but no arguments in favor of the proposition that the firm was a victim of general economic conditions.
5. Guaranteed compensation deals for certain partners
“An absolutely insane idea, especially in a shaky economy. What motivation does a rainmaker partner with a multi-million dollar guarantee have to hustle to increase his book of business? Likewise, what motivation does a service partner making $300k have to work harder when all (and I mean all) of the big money is being funneled to the rainmaker partners? And, how was this plan supposed to work unless revenues kept skyrocketing?”
“It destroys traditional notions of partnership, causes anger, fails from a financial perspective and prevents organic growth”
The responses here represented a virtual tie between “All of the above” and “Greed.”
And the winner is? A plurality of you chose the compensation guarantees as the villains of this story:
We wondered how widespread a practice these guarantees are, especially since lateral partner hiring has overtaken Biglaw as “a dominant business strategy.” We asked a renowned legal industry consultant and commentator, Bruce MacEwen, for his perspective. MacEwen characterized Dewey as an outlier: “No one I know — and I know a lot of people — has ever heard of guarantees for incumbent partners. Guarantees should be thought of as the equivalent of a controlled substance, and used extremely sparingly.”
There is, however, much about the Dewey saga that should serve as a cautionary tale for all of Biglaw: “Discomforting as it may be to executive committees far and wide, very little that’s come to light so far (incumbent partner guarantees excepted) is completely unheard of in Biglaw. Dewey just did everything to a greater extreme, and cut their margin for error to the vanishing point.”
Let’s close this story with an image (because visuals are a powerful way to tell the Dewey story). We took all the text responses to the survey and dumped them into a word cloud generator, which then sized the words depending upon how frequently they were mentioned.
They say that hindsight is 20/20, but you don’t need 20/20 vision to interpret this graphic of who’s to blame: