Capital Calls

How Are Managing Partners Feeling About 2013?

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Is this just my weird perception, or are law firm managing partners being surveyed constantly? It seems that every other week, some law firm lender or consultancy or recruiting firm is touting the results of a managing partners survey. Managing partners have things to do other than respond to surveys — like, well, managing law firms.

Despite the proliferation of such surveys, we do appreciate the information and insight they contain. So let’s check out the recently released results of one of the most prominent surveys, the American Lawyer’s annual Law Firm Leaders survey….

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Dewey Know Who’s Next? (Reprise)

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The Dewey & LeBoeuf drama continues to unfold. As we mentioned in Morning Docket, there have been a few notable recent developments. Citibank just filed a vigorous response to allegations by Steven Otillar, a former Dewey partner, that Citi colluded with Dewey to take advantage of individual partners. Meanwhile, three former leaders of the firm — former chairman Steven Davis, former executive director Stephen DiCarmine, and former CFO Joel Sanders — have filed objections to the global settlement with former partners.

It’s not a pretty picture. And here’s what we’re wondering: Could it happen to another major law firm, sometime in the next twelve months?

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Dewey Collude With Citi To Screw Individual Partners?

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As we mentioned in the Labor Day edition of Morning Docket, there’s some interesting news on the Dewey & LeBoeuf front. The one former Dewey partner being sued by Citibank for allegedly defaulting on a capital loan — energy lawyer Steven Otillar, now a partner in the Houston office of Akin Gump — is opposing Citi’s attempt to collect on the debt, by arguing that he was “fraudulently induced” to borrow the money in question.

How much are we talking about? How does the debt compare to Otillar’s compensation while at Dewey? And what are Otillar’s specific allegations about “fraudulent inducement”?

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Commendable Candor from Greenberg Traurig

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The current CEO of Greenberg Traurig, Richard Rosenbaum, recently gave an interview to the Daily Business Review in which he discussed the firm’s recent capital call (among other subjects). We mentioned the interview in Morning Docket, but because it contains a lot of grist for the mill, it merits a second look.

The subtext of the interview — and, at one point, the explicit text of the interview — could be summarized as, “Look, we are not like Dewey!” The bad news is that such statements should even be necessary. The good news is that they seem to be true (at least based on the information currently available).

Let’s hear what Richard Rosenbaum had to say….

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Morning Docket: 08.21.12

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* That’s one hell of a “rainy day fund.” Greenberg Traurig is asking for $24M over the next two years, and has no plans to do it again in the near future. [Daily Business Review]

* Lots of law firms have been listening to that Petula Clark song about how great things are downtown, because that’s where their offices are headed. [WSJ Law Blog]

* Republicans are begging Todd “Legitimate Rape” Akin to quit, but he’s vowed to stay the course. “[A]bortion is never an option,” not even for his campaign. [New York Times]

* Dipping and squeezing is serious business in the condiment world, and that’s why there’s a patent lawsuit over this innovative ketchup packet. [Huffington Post]

* Career alternatives for attorneys: sci-fi salvaging savior? This entertainment lawyer is taking out-of-print fantasy novels and turning them into e-books. Sometimes being a nerd is pretty cool. [New York Daily News]

* Chris Danzig will be attending and live tweeting the Apple v. Samsung trial today. Follow him! [Twitter]

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Some Comments on Capital Calls (and a Closer Look at Greenberg Traurig’s)

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As businesses go, the business of law isn’t extremely capital intensive. Most of the capital in Biglaw is really human capital. As one bankruptcy lawyer put it, “It’s incredible how fragile law firms are. Unlike a company, the principal assets walk out the door every night.”

But law firms do need some capital. Those fabulous offices — and fabulous associates, at $160,000 and up — don’t come cheap.

Firms can obtain the capital they need to operate through borrowing; but credit needs to be used judiciously, lest a firm go the way of Dewey & LeBoeuf. And partners make capital contributions to the firm, most notably when they buy into the partnership.

But sometimes that capital isn’t enough. So firms issue capital calls to their partners, which brings us to today’s topic….

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