In an article discussing the ousting of the chairman of Cadwalader [click here] - one of the new mega NYC based firms - detailing how their "profits per partner" were down to $2.7 million and even then had only reached that level because the firm had attracted some rainmaking lateral hires, it concluded with the following:
"Both White and Link [the now ousted chairman] were among the young partners who led a drastic
restructuring of Cadwalader in the 1990s. Concerned that the firm was
falling far behind other New York firms, they initiated Project
Rightsize, which led to the ouster of unproductive partners and
practices.
The firm has continued to take a notably aggressive stance on
productivity, paying top performers far more than other firms but
encouraging laggards to leave."
This article and its conclusion evidence a cancer that has infected the legal profession. It is something that should cause both those inside the profession and the clients who hire them to sit up and pay attention. The profession has lost its way and as a result its customers are paying dearly for it - both in out of pocket costs and in the quality of what they pay for.
For the most part, as the article about Cadwalder evidences, this whole phenomenon has been driven over the last decade or so by the New York large firm legal community. The NYC large firms cough and everyone coughs too.
And it is a prototypic NYC phenomenon that caused this out of control sea change in legal costs over the last few decades. NYC large firm lawyers see the money that their clients make, rightly or wrongly believed that they are just as smart as their clients and thus believed that they were entitled to keep up - think "Bonfire of the Vanities" on steroids.
Here is the plain truth, if you want to make the big bucks you should choose another line of work other than being an hourly rate lawyer. Become entrepreneurial - take risks like your business counterparts. Become contingent lawyers or get out of the practice and become a true entrepreneur - go into business.
But if you work by the hourly rate you shouldn't expect and don't deserve big bucks. Hourly lawyers are service professionals. They get the pleasure of earning a decent living and working a craft that has non-monetary pleasures that are - or least used to be - equally important. Hourly lawyers are entitled to make a nice living but that is it. They are are not taking any risk.
Our profession is losing its professional compass when the be all and end all is profits per partner. Where the kingpins of firms are the rainmakers and not necessarily the most skilled. This includes lawyers that once may have been superstars but because of the enormous profit pressures placed on them are now so pyramided and distanced from what real lawyers can and should do, that the skills and talents that made them great now actually lay dormant [of course they would never admit that to a client that they are marketing].
Large firms can pyramid all that they want with all of their highly paid heavily recruited young associates [most of whom, in the faustian deal they have struck, don't stay with a firm long enough to learn anything worthwhile] but here is another plain truth - the practice of law - in it highest and best form - is an intimate and highly personal process. It requires the senior most lawyer on the matter rolling up his or her sleeves and becoming intimately familiar with all of the details. Not just being filled in by subordinates at key moments.
Think of it this way - who would you want handling your death penalty trial? A lawyer who knew everything there was about your case or someone who had been filled in by a cast of thousands? The same is true in civil matters and, by the way, it is even cheaper.
Hopefully someday the marketplace [e.g. the clients who pay] will realize that they are paying a lot of money for a figurehead or name when they could pay less and get more by engaging highly skilled lawyers who practice the old fashioned way - providing intimate personal service to their clients. It may result in lawyers earning less, but the profession as a whole will be the better for it. Associates will not be required to bill ungodly hours and clients won't have to pay for the ridiculous bills. Senior lawyers will actually work closely with young associates and thus the traditions of great lawyering will be passed on.
The Holy Grail? Maybe. But the marketplace may ultimately dictate it. Here is hoping that it does.
Postscript: I initially drafted this article several months ago when it originally came out and sat on it because I wanted to see whether this was just a blip as Cadwalder had said or was the beginning of a trend. Since then, Cadwalder has been rocked by historic layoffs of lawyers (96 in one week) purportedly due to downturns in its financial services practice group and Cadwalder isn't the only firm dumping partners and associates by the dozens in these tight economic times. [click here for link to more recent article]. In days past, a firm would collectively tighten its belt and share the blows of such a downturn, knowing that due to the cyclical nature of business, one day's practice group superstar is tommorrow's dog and so on. Not so today.
We probably won't ever be able to return to those good old days, but my guess is that those firms who can best re-create that model and, most important, follow it, will over time gain a competitive advantage in attracting legal talent and clients.
To Cadwalder and other firms who have fostered or acquiesced in this firm culture that has now imploded - you reap what you sow. Perhaps lawyers with sensible views of who they are and what our profession is about will ultimately take the helms. Don't count on it - humility is not something that NYC cherishes.
Query: If these large law firms feel comfortable treating their lawyers as fungible commodities when will and why don't their clients do the same? The subject of a future post - I promise - how companies and their in-house counsel can create fungibility in their outside law firm hiring.
P.S.S. For those of you who regularly read my posts and may have wondered why I haven't posted for a while there are two reasons: (1) my game plan is to aspire to posting quality posts that discuss important issues confronting our profession - both as a culture and as practitioners of an important craft; and (2) over the last month and half I have been recuperating from my second hip replacement surgery [the by-product of too many years as a jock]. I am now back. Posts my not come weekly but they will come more regularly - as topics present themselves.
