Biglaw, Lateral Moves, Layoffs, Litigators, Manatt, Phelps & Phillips, Partner Issues, Partner Profits, Real Estate, Secretaries / Administrative Assistants, Sheppard Mullin, Staff Layoffs

What’s Going On At Bingham McCutchen?

On our recent post about bonuses at Bingham McCutchen, some commenters complained about our coverage of the firm. Here’s what one said: “What this article fails to mention is that NO ONE made their hours, it’s THAT slow. Good job, ATL, for eating whatever it is Bingham pays you to NOT report [on bad goings-on at the firm].”

Actually, we’re perfectly willing to report on negative developments at Bingham (or any other major law firm). Just email us or text us (646-820-8477), and we’ll investigate.

There’s certainly a lot to cover over at Bingham: tumbling profits, partner departures, and unfortunately timed staff layoffs. We’ve collected some reporting from around the web, which we’ve combined with inside information from ATL tipsters at the firm. Let’s have a look, shall we?

We’ll start with the decline in partner profits. Over at Thomson Reuters (sub. req.), Casey Sullivan has an article with this provocative title: “Bingham losses worst in 20 years: chairman.”

It’s not a great title, since Bingham didn’t actually lose money in 2013; rather, the firm saw declines in revenues and profits (for the first time in 20 years of growth up to this point, according to firm spokesperson Claire Papanastasiou). Anyway, here’s the report from Thomson Reuters:

The big Boston law firm Bingham McCutchen, facing diminished work in some practice areas as well as partner defections, has seen its revenue tumble by $110 million in 2013, according to the firm. Bingham chairman Jay Zimmerman outlined the issues confronting the firm in an interview with Reuters ahead of the release of the 2013 financial figures reported by the American Lawyer.

Calling it the “most challenging financial year” Bingham has had in two decades, Zimmerman attributed the downturn to the settling of large cases, such as claims over the BP Deepwater Horizon oil spill, and the changing business landscape after the financial crisis.

Revenue at the firm was down over 12 percent, and stood at $762 million compared to $872 million in 2012, according to a Bingham spokeswoman. Pay for equity partners would be cut on average, by 12.8 percent, from $1.7 million to $1.5 million.

Misery loves company. As Casey Sullivan notes, other firms are suffering too:

By no means an exception, the 123-year-old Bingham is a prime example of the ills afflicting major U.S. law firms. Over the last two years, firms such as Patton Boggs; Weil, Gotshal & Manges; and Fried, Frank, Harris, Shriver & Jacobson have been similarly affected.

In January, for instance, Patton Boggs reported to its partners that its 2013 revenue was $278 million, a 14 percent drop from $318 million in 2012, according to an internal memo obtained by Reuters.

As we know from Patton Boggs, partner defections go hand in hand with declining profits. A firm can get caught in a vicious cycle: a dip in profitability causes partner departures, which in turn cause the dip in profitability to deepen. Is that what’s happening at Bingham? From the Thomson Reuters report:

Bingham’s woes have been heightened — as they have at law firms like Kaye Scholer, Fried Frank and Patton Boggs — by a spate of partner defections. In summer 2013, an 11-partner securities enforcement team left for Sidley Austin, and at least five co-heads of other practices have left since then.

Zimmerman said he was disappointed by some of the departures, but noted there is more partner movement in the legal market these days. He also said that more departures were expected as the firm is “actively managing its business.”

Some of the partners had been asked to leave the firm, a Bingham spokeswoman confirmed.

That’s a fair point; it’s all too easy to view every lateral partner move as a coup for the new firm and a loss for the old firm. At the same time, five practice co-heads is a lot of leaders to lose — and the defense of “we wanted those partners to leave” does not have a happy history.

The American Lawyer has been covering some of the most high-profile departures out of Bingham. Here are some highlights from Am Law’s lateral moves column, “The Churn” (sub. req.):

  • January 31: Partners Kenneth Lore, Glenn Miller, Jeffrey Scharff, and Martin Siroka (real estate), plus five counsel and associates, to Katten Muchin Rosenman in New York and Washington;
  • February 11: Partners Raymond Marshall, Krystal Bowen, and David Cannon (litigation), to Sheppard Mullin in San Francisco; and
  • February 14: Partner Of counsel David Gershon (securities and general corporate), to Manatt in San Francisco (which he joined as a partner); partner Daniel Passage and of counsel Francisco Flores (structured finance), to Winston & Strawn in Los Angeles.

There are some notable names here. Kenneth Lore served as co-chair of Bingham’s real estate practice, as noted by the WSJ Law Blog (which broke the news of the real estate group’s move). Raymond Marshall, a former president of the State Bar of California and a 36-year veteran of Bingham, served on Bingham’s executive firm committee.

Here is what one ATL source had to say about Marshall’s departure:

With former State Bar president Ray Marshall leaving for Sheppard Mullin after 36 years, and only 74 attorneys remaining in the SF office, what is happening to Bingham?

Bingham résumés are circulating….

We reached out to Bingham for comment. Here is the firm’s statement on Marshall’s move:

While we wish Ray the best, we continue to strategically and selectively invest in our firm in all offices. In big law today, it is not uncommon for partners to change firms. In the past year alone, we’ve added a number of strategic hires across the firm — including an eight-partner IP team led by Richard de Bodo to our Santa Monica office, a seven-lawyer investment funds group in Asia, leading derivatives partner Dan Budofsky to our New York office, three antitrust partners in Washington and London, and four lawyers to our corporate and IP practice groups in our Silicon Valley office, among many others. We also further invested in the firm with the election of 10 new partners in January.

We mentioned the Bingham new-partner news here, noting the group’s impressive diversity across practice areas and offices.

Moving down the totem pole, let’s hear from some non-partners at Bingham. One associate is angry about Bingham’s move to a new model for secretarial support:

Can you guys please report on this? Bingham switched its secretary model to “teams” of “legal administrative assistants.” Partners will have dedicated “LAA”s but everyone else, of counsel, associates, paralegals, will no longer have a secretary and instead are to use a “team” of LAAs.

We actually reported on this previously, when we covered Bingham’s recent staff layoffs. A memo describing the new secretarial model in greater detail appears on the next page.

How are lawyers reacting to the shift? Not well:

Everyone is annoyed, and it screams cost cutting. There is absolutely no benefit to client service or efficiency, no matter how hard they try to spin it. And they laid off [several] secretaries in Boston last week, including 4 who were laid off during the snow storm on February 5, after schlepping to work in the snow, only to be handed a pink slip. You can imagine how much that boosted morale.

We reached out to Bingham about laying off people during a snowstorm. Here is the firm’s statement on the cuts:

There is never an ideal time to let someone go, and a lot of thought and consideration goes into these. It’s true that we conducted the planned layoffs during the snow storm and some of the people affected came to the office that day (as they would any other day), while others did not. Those who came in the day after the storm were informed when they returned to the office.

Fair enough. We can’t let this brutal winter bring the entire world to a standstill (which is why Elie Mystal and I schlepped up to Hartford in a blizzard for our debate at UConn Law, sponsored by the school’s chapters of the Federalist Society and the American Constitution Society). But it’s still unfortunate when people receive bad news on an already bad day.

So that’s the latest news at Bingham, from partners to associates to staff. We’ll continue to monitor the situation at the firm. If you have information you’d like to share with us, please email us or text us (646-820-8477). Thanks.

(Flip to the next page for the full memo on Bingham’s new model for legal support.)

(hidden for your protection)

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