What's Going On At Dickstein Shapiro?(Plus a leaked severance agreement.)
Plummeting profits, defecting partners, and layoffs of associates and staff -- is this firm in trouble?
Over the past year or so, we’ve heard a steady trickle of negative news out of Dickstein Shapiro. The trickle has turned into a stream, so it’s now time to share what we’ve learned.
Let’s start with the numbers — grim numbers. Yesterday the Legal Times reported on what it described as Dickstein’s “worst year in more than a decade.” Revenue fell by 20 percent in 2013, and net income dropped even more sharply, by 35 percent. According to the Legal Times, the firm’s 2013 net income of $36 million is the lowest the firm has seen since before 1998, its first year on the Am Law 200.
Chairman James Kelly tried to spin this performance as “restructuring” and “investment,” as the firm focuses on its core practice areas. According to Kelly, “We made a strategic commitment to be a market-leading specialty firm. We decided we’re not going to be everything to everyone.”
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“Everything” would appear to include “employer.” Let’s hear about the firm’s headcount cuts — affecting partners, associates, and staff — and check out the severance agreement that one source leaked to us….
Back in February, we shared with you the list of the firms that had the most partner defections in 2013. Dickstein Shapiro took the top spot, with a whopping 17 percent of partners leaving between October 1, 2012, and September 30, 2013. Over the full calendar year of 2013, the partner attrition ran even higher — 19 percent among equity partners and 22 percent among non-equity partners, according to Katelyn Polantz’s Legal Times piece from yesterday.
Here are some of the more notable Dickstein defections from the past year or so (some mentioned in the Legal Times, some obtained from elsewhere):
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- Five energy and transactional lawyers — partners Larry Eisenstat, Patrick Lynch, and Jonathan Odell, counsel Deborah Carpentier, and associate Diana Jeschke — left for Crowell & Moring in July 2013.
- Intellectual-property partners Keith Sharkin and Clark Lackert left for Reed Smith in August 2013.
- Insurance partners John Schryber and Andrew Weiner also moved to Reed Smith, in October 2013. They were later followed by three associates: Julie Hammerman, Alexis Storey, and Kristin Davis (no not that Kristin Davis).
- Another insurance partner, litigator David Elkind, joined Orrick just last month.
That’s just a sample of the partner departures. Feel free to note others in the comments.
In fairness to the firm, the partner losses that Dickstein has experienced over the past year reflect a mix of defections and dismissals (i.e., partners the firm wanted to shed). We’ve heard from our sources that the firm de-equitized around 15 to 20 partners near the end of 2012, and some of those partners ended up leaving the firm in 2013. Additional partners were asked to leave the firm during the course of 2013, including seven partners who were dismissed in July 2013.
What about associates and staff? They have not been spared. Per the Legal Times, Dickstein Shapiro shed about 20 percent of its total lawyer headcount during 2013. Since partners departed at a rough rate of 20 percent (19 percent for equity and 22 percent for non-equity), associates presumably departed at a similar pace as well.
And some of those associate departures were involuntary, although discreet. We covered significant lawyer and staff layoffs at Dickstein last May, but a tipster tells us that such cuts have been taking place at a steady pace over the past few years:
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DS has stealthily been laying off attorneys and staff since the downturn in 2008. [New York has been especially hard hit, with the firm moving] its NYC attorneys to a single floor and [subleasing out some] space. The headcount has gone from over 100 down to the current 39.
This source wondered about the long-term viability of the New York office. We reached out to Dickstein Shapiro for comment, and the firm defended its Gotham outpost:
We are committed to and excited about our presence and our significant practices in New York, and we are confident and comfortable that we have the right mix of people and programs to best serve our clients. Growth in our practices and expansion into new service offerings will continue to be driven by strategic assessments of how to best serve our clients, our people, and our Firm.
The May 2013 layoffs, which hit New York especially hard, weren’t the last. In the summer 2013, a staff reorganization in Los Angeles resulted in the loss of some secretarial positions. More recently, earlier in 2014, some associates were laid off.
Don’t believe us? We have a leaked severance agreement that one of them sent to us. Check it out on the next page….
