Over the past few months, we’ve offered extensive coverage of Bingham McCutchen, the once high-flying law firm that’s now struggling to survive. Bingham has remained mainly mum during these trying times.
This week, however, managing partner Steven Browne — who took over earlier this year from Bingham’s longtime leader, Jay Zimmerman — has been on a charm offensive. He gave interviews to the Boston Globe and the Wall Street Journal, which along with the American Lawyer ran long pieces on the state of affairs at the firm. We’ll share with you the new and most notable material from all three stories.
Before we get to the substantive stuff, though, let’s check out the Wall Street Journal’s interesting choice of a photo for its Bingham piece….
Was the Journal (or its photo editor) trying to get a dig in at Bingham? If so, it was clever, because there’s an innocent explanation for the picture choice. The caption reads, “Bingham’s lawyers were busy during the recession, handling litigation tied to the financial crisis and the Deepwater Horizon explosion” (the pictured conflagration).
Now, on to the highlights from the recent Bingham coverage, organized under a few headings.
1. Is bankruptcy on the table for Bingham?
It was quite provocative when Reuters previously reported that bankruptcy might be on the table for Bingham if its proposed merger with Morgan Lewis doesn’t go through. It turns out that this reporting was accurate — but shouldn’t be overblown, according to Steve Browne.
Browne told the Wall Street Journal that while bankruptcy is a theoretical possibility, the firm’s finances have improved, and Bingham should be able to continue operating on its own even if the Morgan Lewis deal doesn’t come to fruition. He told the Boston Globe that bankruptcy is “not any strategic alternative that I’m interested in pursuing.” We should hope not!
According to Am Law, one of Bingham’s top restructuring partners, Edwin Smith, has briefed some of his colleagues on the bankruptcy possibility. But Bingham told Am Law that one shouldn’t make too much of this: “We as a partnership discuss all scenarios in the spirit of cooperation and transparency — even highly remote ones such as bankruptcy.”
2. What brought Bingham to the brink?
Bingham fared well during the financial crisis, but in the years afterward, work dried up. Bingham tried to cut costs, but one of its big initiatives on that front came at a bad time, according to the Globe:
Billings slowed. At the same time, Bingham last year opened a $22.5 million facility in Kentucky, moving several secretarial, accounting, and information technology positions from Boston to the South where rents and salaries are cheaper.
Bingham, like many law firms, is trying to manage costs as corporate clients bargain shop, pushing back against standard hourly rates that can reach up to $1,000 an hour, and demanding discounts for routine legal services. But the costs of the Kentucky offices hit Bingham just as revenues were squeezed, said Browne.
Costs related to launching the Kentucky facility have contributed to what the American Lawyer reports is a $100 million debt load. Bingham said that it expects to have “zero net debt at the end of the year.” That sounds good (although Am Law notes that it doesn’t take into account certain long-term obligations).
3. What is partner attrition looking like lately?
As legal recruiter Dan Binstock told the Globe, “There are a lot more people taking calls [from recruiters] and listening than there were three months ago.” So the partner exodus from Bingham isn’t over just yet. In fact, earlier this week Akin Gump increased its haul of Bingham partners in various overseas offices.
On the bright side for Bingham, “[t]he pace of lateral activity out of firm has slowed significantly in recent weeks,” according to Am Law. Presumably partners are taking a “wait and see” approach to the Morgan Lewis machinations — and sticking around for year-end bonus payments.
4. Tell us about the controversial perks.
When a firm experiences a downturn, people love to hear about the excesses that partners enjoyed before the dark days. Bingham partners partook of perks — and not in equal measure, as it turns out.
According to the Globe, top partners were chauffeured around at partner retreats in Lincoln Town Cars, while rank-and-file partners got relegated to the bus (ewww). According to the American Lawyer, top partners enjoyed preferential use of apartments rented by Bingham at Trump Tower in New York — a sore subject with other partners, who raised the issue last year at the partnership retreat in Bermuda. (Bingham told Am Law that it no longer rents such apartments but had done so previously to “accommodate those who would frequent or remain in another city for lengthy periods of time and where the benefit of avoiding the cost of hotels [and] meals out makes sense.”)
5. What’s next for Bingham?
The partnership will meet in Scottsdale, Arizona, in early November, for the annual partners’ retreat. The Morgan Lewis merger will be discussed at the retreat and voted on at some point in the next few weeks. (We have previously reported on some of the possible sticking points, including capital-contribution and compensation issues.)
Meanwhile, Morgan Lewis is holding its annual partnership meeting this week, also in Scottsdale. The firm is not expected to vote on the Bingham deal at this time; the timing of any such vote remains unclear.
Good luck to Bingham as it works to put itself on firmer footing. The improving finances and slowdown in partner attrition bode well. If you have information you’d like to share with us about the firm, you know where to reach us.
Once-booming Boston law firm struggles to survive [Boston Globe]
Bingham McCutchen Law Firm Weighs Options [Wall Street Journal]
Bingham Faces Internal Battles Amid Uncertain Future with Morgan Lewis [American Lawyer]