April 2015 Archives

The Current BigLaw Bubble

As favorable 2014 revenue, profitablity and compensation reports from our strongest large firms roll in and bonuses creep up towards levels not seen since shortly before the 2008 financial crisis, there is a sense of augmenting confidence that all is well in the world of BigLaw and will stay so for the indefinite future.  While the mighty get mightier, however, our weaker firms are steadily losing ground in the constantly contracting and consolidating BigLaw market, biting, kicking and scratching as they attempt to fend off relentless predators of their most productive lawyers in the fierce competition for superstar talent and proven rainmakers.

For lateral candidates, a key question must be which of our major firms are most likely to sink while the current bubble continues to inflate and even more likely to fall when it inevitably pops.  We continuously remind our candidates that the recent Bingham and Dewey dissolutions continue a now 15 year pattern of one AmFlawed 100 firm collapsing at the rate of one every one-and-a-half years, following the steady stream to the graveyard of other former BigLaw stalwarts including, since 1999, Brobeck, Heller Ehrman, Thelen, Thacher Profitt, Howrey, McKee Nelson, and Wolf Block – not to mention the disgraceful case of Dreier LLP.

As such, when seriously contemplating a lateral move, a candidate must undertake a thorough due-diligence of a prospective new firm’s financial and cultural health highlighted by an analysis of less readily apparent indicators of financial and cultural dysfunction through a probing of the contemplated firm’s leadership as well as its rank and file, ideally via prepared and pointed questions posed during carefully orchestrated face-to-face meetings.

We at Hanover Legal remain by your side in these unpredictable waters to assist in any way should the need arise.