Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Law Firm Turnarounds
Dewey & LeBoeuf LLP, the 20th largest law firm in the country according to the 2012 NLJ 250, is in the process of dissolving with a future bankruptcy declaration almost certain. According to the firm's management, in 2011 it had more than $900 million in revenues with average profits per equity partner of about $1.8 million. The Am Law Daily reported that those statistics were substantially overstated and had to be restated to $782 million in revenue and $1.04 million in average profits per equity partner, still impressive statistics for a law firm. (Dewey says that the former numbers were and are accurate and are due to methodological differences.) How could such a prominent law firm end up in such a mess?
If Dewey's situation is consistent with other law firm financial crises, it fell victim to a series of different issues that individually might have been manageable, but together may prove to be insurmountable. Typically law firms in crisis face more than one of the following critical challenges:
- Loss of key clients;
- Loss of key partners;
- Regulatory or legislative change affecting key practices;
- Excessive reliance upon debt;
- Overhead expenses out of control;
- Overly rich benefits provided to former partners via an unfunded partner withdrawal entitlement;
- Compensation systems not perceived as equitable or pay levels significantly below market;
- Loss of confidence in firm Leadership/Management;
- Inattention to client/practice concentrations;
- Failure to react to market shifts;
- Reliance on billing rate increases at twice the rate of inflation as primary means to increased profits.
The occurrence of one of these problems, if corrected quickly, is unlikely to cause a law firm to fail, but the simultaneous convergence of two or three, or an inability to adjust quickly, can spell doom for a law firm ' a business structure that relies primarily on the shared trust of its co-owners and thin capitalization.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.