so…that happened

by sam on 05/12/2012

Apologies, but I need to have a little digression from the photography, and while I’ve posted a few links on twitter and Facebook, I have too many thoughts to get out.

Approximately three years ago, I got laid off from my job as a lawyer at a big new york firm. At the time, I was devastated, because I LOVED my job. Sure, it had its stresses and its late hours and its…personalities, but by and large, I liked what I did and I was good at it. The story at the time was that, since I wasn’t going to make partner, it was time for me to leave. In a recession. As I understood it at the time, they were trying to avoid getting tarred in the legal press for mass layoffs, so they started with the most senior associates and tried to tie it to ‘other’ explanations. The decision was made by someone (or someones) in upper management without consultation with the team I actually worked with, as the partners I was actively working on deals with had to find out from me that I had been canned. That made things a bit…awkward, particularly given that one partner had a ‘state of the relationship’ meeting with the GC at one client only a day earlier, where the GC apparently spent time talking about how glad she was that I was back on the team after returning from overseas.

I spent two years unemployed, looking for a job. Happily, about a year ago I started working again at an ‘alternative’ legal services firm that seconds its employees full time to companies, so I spend my days doing interesting work up in Stamford at a big multi-national company.

In the past few weeks, the firm that laid me off, Dewey & LeBoeuf, has been in the news quite a bit. Because they’re imploding in a spectacular fashion. On the front page of the New York Times. From what has been reported, as well as what I’ve heard from a few former colleagues that I remain in touch with (who have all managed to find new firms, thankfully), it’s largely due to gross mismanagement on the part of the post-merger firm.

Some background. I worked for Dewey Ballantine, which merged with LeBoeuf Lamb in 2007. As the story went at the time, Dewey had a bunch of debt but a stellar name, and LeBoeuf had solid financials. Even though the Dewey name came first in the post-merger firm, that was due to a quirk of Thomas E. Dewey’s estate requirements, and the merger was really a takeover by LeBoeuf – as evidenced by the fact that the post-merger leadership was headed by the LeBoeuf team.

So – to the current day. In order to attract some top talent from other firms, the leadership handed out a few payment guarantees. A few of these things are typical at any firm, but they should be limited because they otherwise undercut the entire nature of a partnership structure. But the vaunted, fiscally conservative post-merger management apparently decided to start handing out these guarantees left and right, including to incumbent partners. When they did their unusual bond offering in 2010, they didn’t disclose this. They apparently DID disclose that they ‘eliminated’ 300 lawyers post-merger, so their attempts at obfuscation discussed above were clearly just that. The Dewey debt pre-merger pales in comparison to what was apparently run up in the post-merger environment. As the story has been reported, none of the partnership were informed of the guarantees until last October, at which point there was mutiny. The Manhattan DA is apparently investigating the leadership to see if they did anything criminal.

What’s come out in the press is that they gave out 100 of these guarantees, then ran out of money to pay them as the economy took time to recover and more and more clients got stingier with external legal spend. So guarantee-less partners stopped getting paid altogether. Those partners, obviously, were going to look for any reasonable exit plan, creating a vicious cycle where the firm had less and less income (because a law firm has no ‘assets’ other than its legal talent). Earlier this year, FedEx apparently cut them off and the cafeteria stopped accepting the in-house payment system. And as partners start leaving, the chances that their clients (who move with them) will continue to pay outstanding bills to the old firm drops dramatically (sure, they have an obligation to pay, but they’ll focus on the new firm that they want new work from).

I’m torn between extreme sadness for a 100-year reputation that I helped contribute to for a few years, and the schadenfreude that comes from seeing the people who decided that I was an expendable resource that they could brag to investors about cutting get hoisted on their own petard. Mostly sadness. And horror at watching the slow-motion train wreck wreaking havoc on peoples’ lives (particularly the staff) because a few people were so freaking greedy.

What a shame. I now count myself lucky because at least I got some severance and COBRA coverage during my unemployment. In any event, I’m not spilling any secrets at this point, given how much of this has been written about in the press, but I just felt the need to get my thoughts down on (virtual) paper.

I’m also starting to feel a little weird, as I moved to Dewey from Thelen Reid & Priest, which went bankrupt about 3 years after I left there as well. My resume is starting to look like a graveyard.

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