Patton Boggs, the once heralded D.C. lobbying firm, has been in trouble for more than a year now. It all started in March 2013 when the firm conducted significant layoffs, and things continued to spiral out of control from there. Additional layoffs followed, flanked by fleeing partners and the closure of the firm’s Newark, New Jersey, office. Profits have plummeted, so much so that Patton Boggs hired the Dewey & LeBoeuf turnaround team of financial advisers Zolfo Cooper and bankruptcy attorney Al Togut. Things certainly aren’t looking very good for the firm, even though managing partner Edward Newberry claims it’s all lollipops and unicorns over there.
Admittedly, first Newberry was afraid, he was petrified. He thought Patton Boggs could never live without cash by its side. But then he spent so many nights thinking how his firm went wrong, and he grew strong. He learned how to get along. His firm will survive — “healthy and profitable” — the same way all floundering firms do: additional layoffs are making their way down the pipeline, and it’s partners’ heads that will roll.
How many partners will have to find new homes? Let’s find out…
According to the National Law Journal, “nearly two dozen” Patton Boggs partners will be shown the door. Recall that back in March 2013, when rumors of partner layoffs swirled in the media, Newberry insisted that 18 partners hadn’t been laid off — no, they’d simply been told that their “performance [wasn’t] satisfactory.” This new crop of partners must have had some really unsatisfactory performance to have actually been handed pink slips (or perhaps they’re the partners who were told that their performance sucked last year).
Edward Newberry, Patton Boggs managing partner, said Friday that his firm would survive—healthy and profitable. The firm faces a new round of 15 to 20 forced reductions in the partnership and a handful of defections.
Patton Boggs has asked another 15 to 20 partners—about half equity partners and half income partners—to depart in the next few months. Those partners were not producing enough or contributing to the firm’s profitability, Newberry said.
In all, the firm will shrink to about 75 equity partners and 85 to 90 income partners. It will have about 360 lawyers then—25 percent fewer than it had at the end of 2012.
Please note that according to Newberry, not all of these forced reductions are true layoffs. Some partners are retiring, and others are simply “changing status within the firm” (and likely kissing their equity farewell). Not to worry folks, because all of these layoffs and de-equitizations were planned by the firm more than a year ago. As for the firm’s talks with Zolfo Cooper and Al Togut, firm chairman Thomas Hale Boggs Jr. says Patton Boggs just needs help convincing its lenders to provide the firm with some additional credit. All of this was planned, you see. Nothing’s wrong. Everything’s coming up roses at Patton Boggs.
In an interview with the Wall Street Journal (sub. req.), Boggs echoed those sentiments, saying, “Things are looking fine. Not great, but fine.… It’s been very team-oriented and very positive.”
At a partner meeting late last month, Mr. Boggs and Managing Partner Edward Newberry pledged to suspend their draws, the monthly payments to partners that make up about 55% of their projected share of annual profit. They also asked partners who could afford it to do the same. “It’s more a showing of the flag,” Mr. Boggs said.
Thus far, partners seem to be rallying around leadership, hoping that a financial restructuring and a merger could stabilize the firm’s future. A handful of partners have left this year and others who had been asked to depart are expected to go, according to the firm. No major defections have occurred in the past month, but some partners are in talks with recruiters and other law firms.
Three cheers for all of the team spirit at Patton Boggs, but suspending monthly draws doesn’t sound very positive. In fact, it sounds a little desperate. We’ll see how “team-oriented” this firm really is if we ever find out how many partners volunteered to give up their draws. Hopefully Patton Boggs will be able to work it out, or else we fear the next flag the firm will show will be the white flag of surrender.
Patton Boggs Will Survive, Even With More Reductions, Managing Partner Says [National Law Journal]
Lobbying Firm Patton Boggs Fights for Itself [Wall Street Journal (sub. req.)]
Patton Boggs plans to shrink some more; leaders will suspend draws in ‘showing of the flag’ [ABA Journal]