Biglaw

Boies Schiller Takes Big Hit To 2020 Profits

The firm won't be bringing in its usual haul as it regroups with a different mix of business.

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It’s not necessarily surprising, but the American Lawyer reported this week that Boies Schiller Flexner will all but certainly be dropping out of the Am Law 100 this year after 2020 revenues dropped 38 percent and profits were off 54 percent. The firm may still be delivering big compensation for associates, but the partners took a hit with profits per equity partner falling from $3.37 million to $2.29 million.

The firm told the Law.com outlet that the firm’s financial hit stemmed from the COVID-related slowdown in litigation, given BSF’s heavy mix of contingency fee matters, with roughly 25 percent of its hours wrapped up in long-tail matters that don’t pay without resolution. Though when they do pay, they can more than make up for years of effort. Meanwhile, American Lawyer was quick to note that the firm has seen heavy partner departures, many taking big-ticket clients and correspondingly significant books of business with them out the door. The two are in many ways related, with the firm’s contingency work making up a big portion of the portfolio in part because more “Biglaw like” work for clients like Apple left the firm. Losing some millions in billables in a year is still losing some millions in billables in a year, no matter how you slice it. On the other hand, revenue per lawyer — the number some cite as the more important figure in gauging firm health — was actually up almost 5 percent in 2020 so there are positives in the data.

Can reorienting the firm around this mix of business succeed? I typically infuriate the firm’s champions and detractors alike by responding, “I dunno.”

During the firm’s relative youth, it grew fast in a lot of different directions and with that growth came a lot of competing visions among the partnership for what the firm would become. Should it become a new Biglaw behemoth, a nimble mid-size, merge into an existing full-service firm, or cut back to a much smaller core? There’s a case to be made for and against each path and the firm had in its DNA the building blocks to potentially go down any of them. The “best” move is really only knowable in hindsight.

But I do know that I’ve never understood American Lawyer’s fixation on this talking point:

Others have left in part due to Boies’ controversial representations of disgraced producer Harvey Weinstein and defunct company Theranos, which particularly rankled the firm’s West Coast clients, sources have said.

That seems gratuitously negative. On the other hand, legal media is reporting on turmoil at Roche Freedman and every headline calls it “Boies Schiller spinoff.” BSF can’t avoid negative headlines in stories about other firms. On the other hand, the arrest of Joshua Schiller on a domestic violence charge and the subsequent revelation that he continued drumming up business during the firm imposed leave of absence is firm business that observers actually need to take seriously.

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As to those past matters, I’ve never heard those cited even from partners I’ve spoken with who left the firm. The recurring theme I’ve heard from those partners is that they thought the firm should have chosen a different strategic path. Which is fair! And had the firm gone down that alternative path, a different group of partners would have departed over the last two years. Everyone thinks that their preferred strategy would have been able to hold the whole firm together, and maybe they’re right but that seems presumptuous. I’m more inclined to believe the firm was going to shrink into something new one way or the other.

With COVID clearing up over the second half of the year, we’ll get an inkling of whether or not the firm is stabilizing into its new form next year around this time.

Earlier: Despite Changes To Their Compensation System, Associates At Boies Schiller Can Still Take Home HUGE Bonuses
Biglaw Partner Arrested On Domestic Violence Charge

Shaken by Departures, Boies Schiller Flexner Saw Revenue Plummet 38%, Profits Down 54% [American Lawyer]
Atty Says Boies Schiller Spinoff Ousted Him To Seize Crypto [Law360]

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HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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