Not a chance.
Other firms fall into three rough categories:
- They could use some trimming but there’s been no sense of true urgency;
- They really need to do something like this but have been paralyzed by indecision and existential worries over what it would mean for their “culture;”
- They need someone to toss them a permissive lifeline and Mr. Wolf has just done them the favor.
Call it “cover,” call firms lemmings or sheep—I merely call it the answer to the lawyer’s favorite question in cases like this—but we will see a fair number more of these announcements. The only question is whether, as a wise managing partner I know well remarked yesterday, “whether it’s in the headlines or below the fold.”
For those of you left wondering, my nominee for the lawyer’s favorite question is, “Who else is doing it?” This is of course such a preposterously irrelevant and errant distraction on its face that it would leave Fortune 500 CEOs slack-jawed and questioning the fundamental common sense of the person propounding it. But we ask it, and think the answer actually means something.
To recap: Weil’s action was profoundly justified by economic reality; it not only comes from a position of strength but it strengthens the firm even more so. It was surely a lonely decision, but comfort will be found soon enough in ample and worthy company. Welcome to the new normal. Welcome to Growth Is Dead.
You knew there was a but coming.
Prominent commentators are arguing (Big Law’s Troubling Trajectory) that “big-firm practice has become just another business [and] most readers might react to Weil’s staggering partner incomes by asking why $2 million plus a year — or even half that — isn’t enough. It’s a fair question.”
Oh really?
First of all, who among you, dear readers, doubts that law firms are businesses and have been since before the days when Abe Lincoln hung out a shingle? As I recall my Dickens, the outrage of Jarndyce v Jarndyce was less the titanic length of the imbroglio than the endless gravy train of revenue it brought to the lawyers. This is not news.
But to the “$2 million plus a year” issue: First of all, who really cares—other than, with some justification, spouses—what Weil partners make?
Step back from Law Land: Say you’re debating between an Audi and a BMW. Does it enter your calculus how much the CEOs, or the SVP’s, of those car companies make? And if it did, what would deliver a stronger message about the quality of the firm? Higher pay or lower pay?
Stipulate that we agree on little, but I imagine my friend and I would warmly endorse the conviction that the prominence of The American Lawyer‘ annual PPP scorecard has become wildly unjustified.
That’s not the question. The question is whether if your firm lives and breathes on that landscape, you think you’re exempt from the market’s rules? In other words, what market-free zone does our commentator imagine the Weil Gotshal’s of the world live in?
There was a drumbeat theme to Mr. Wolf’s remarks (which is why I quoted him so extensively) and it was simply this: The market has changed and we must change with it.
Others who are no longer in the fray may sniff, but if I were a partner or associate in today’s market—recognizing with steely eyes and a gimlet heart what that market’s all about—my money would be on Darwinian realists like Mr. Wolf.
Acknowledging that I have no particular knowledge of Weil, other than its reputation as a firm with a premier insolvency/bankruptcy practice, I have to wonder whether these layoffs may have some relation to the new US Trustee guidelines on attorney fees and expenses. It is my understanding that these guidelines consider the blended rates of all attoneys within a firm (among other things), so there may be a component of this move by Weil that considers the impact of these guidelines on rates and what it could mean for the bottom line of the firm and some very prominent attorneys. In other words, they could be juking the stats to preserve the bottom line at a firm where 40 attorneys billed over $1000/hour on the Lehman bankruptcy.
Excellent article, as usual, Bruce. While the cuts may have been necessary to keep Weil’s profit numbers up in the short term, the firm has done nothing to better position itself for the “new normal” that clients are demanding. Until the big firms start entering into partnerships/joint ventures with LPOs and other lower-cost provider options, they will continue to lose market share. The new normal will increasingly not tolerate $400-$800 associates doing $50 per hour (and less) work. That ship has sailed.
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