Gary Rosen

One firm just started pocketing 20 percent of partner pay.

Many lessons can be drawn from the collapse of Dewey & LeBoeuf. We’ve learned, for example, that it’s dangerous to have a law firm name that’s highly susceptible to puns. (Dewey know why that is? Howrey going to find out? Heller if I know.)

Another lesson: avoid excessive dependence upon bank financing. When a firm starts to spiral downwards, that spiraling can be accelerated by a bank calling a loan, not renewing a credit facility, or otherwise taking steps to protect itself that, while reasonable for the bank, can be damaging to the firm.

Firms have responded by turning to their partners for more financing. An increasing number of firms are issuing capital calls to partners or requiring high capital contributions.

So perhaps we shouldn’t be surprised to learn that one law firm has instituted a new policy of withholding 20 percent of partner pay….

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