Listen carefully and you will hear BigLaw breathing a collective sigh of relief as we continue to distance ourselves from the worst financial crisis since the Great Depression and the ensuing havoc that characterized the legal market of 2009.
While “tepid stability amidst continuing uncertainty” may best define the state of the legal market during the second quarter of 2010, stability of any sort has come as welcome relief from the historic tumult that characterized the brutal legal market of 2009.
As predicted, our law firms are now by and large leaner, meaner, and more competitive and also more focused on creating healthy, fair and diverse workplaces flexible enough to meet the needs of increasingly empowered personnel and clients alike. Layoffs are no longer the issue of the day and firms are taking advantage of the best buyer’s market in years to plug holes in practice capacity and acquire rare talent. Moreover, firms are continuing to branch out into emerging markets recognized as necessary hedges to the traditional bread and butter major-market corporate work that has sustained BigLaw for decades.
With 2009 — the most tumltuous year in the history of major law firms since the Great Depression — now a full quarter behind us, we are poised to assess the extent to which the myriad changes then implemented in the universe of BigLaw seem to have taken root, and prognosticate a bit as to what we are likely to see in the three quarters to come.
It would hardly be an overstatement to say that the 2008 debacle of Wall Street hit the world of BigLaw like a tsunami. In October of that year, Thelen’s management — which was already on its last legs after its ill-fated acquisition of Brown Raysman only one year earlier — began parcelling out entire sections of their firm. At the same time Heller Ehrman, whose partners had voted to dissolve on September 26, was closing its cafeterias and starting to remove coffee machines from its numerous offices nationwide. Like falling dominoes, one firm after another began throwing as much baggage overboard as possible in seeming desperation. By the end of the month, Katten had laid off 21 attorneys, Sonnenschein 24 and Clifford Chance 20. Even firm captains were jumping ship. Thacher Proffitt’s Vice Chairman lateralled to Greenberg Traurig and Thelen’s Chairman was reported to be in talks to join Howrey. Firms across the board were scaling back and in some cases eliminating their summer programs outright, forcing law students everywhere to consider debt forgiveness programs and alternative careers even before graduation.
By and large, BigLaw should be proud of the way it has reacted to the near collapse of our financial system as we appear to be teeter tottering away from the brink at least for the time being. To be sure, while we are at long last witnessing deals trickle back in and real transactions that require our servicing, bankruptcy and restructuring practices remain our life preservers. But once sacrosanct principles like no publicly disclosed layoffs have been left behind in the rubble along with associate salary and bonus wars. Also, alternative fee arrangements to the billable hour are becoming commonplace; skepticism of our financial sector clients and avoidance of the toxicity that has come to define it appears enhanced; partner level lateral market due diligence is virtually destigmatized; and practice area as well as personnel diversity and work-life balance and more humane work environments for all our attorneys and staff have emerged as the new holy grails. In short, our major law firms are now leaner, meaner, healthier and more competitive.