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.
We may be a millenium from the day that BigLaw is healthy enough to enable its attorneys to train sufficiently for a spot in the real Tour de France. But we certainly took a spin in the right direction when three members of Hogan & Hartson, namely Warren Gorrell, 55 (Hogan’s chairman), Stephen Immelt, 57 (partner in Hogan’s Baltimore office) and Dennis Tracey, 53 (managing partner of Hogan’s U.S. offices) hammered unofficially but with ample BigLaw fanfare through one particularly beautiful stage of the celebrated bike race, culminating atop a pristine peak amidst the Alps.
After almost a decade of continuous ascent in the categories of revenue, profits, salaries and bonuses since the last deep doldrums we experienced following the collapse of the dot-com bubble, BigLaw’s current plunge from the stratosphere feels to most of our players to be more perilous than ever. The prevailing sense of fear was exemplified this week by the venerable Stroock & Stroock & Lavan in announcing that as part of its keep-the-boat-afloat strategy, it is offering its incoming associate class a $75,000 payout to any rookie who elects not to jump on board, eclipsing the significance of Skadden’s historic offer earlier this year to pay associates at a rate of 33 percent of base to take a premature sabbatical.
As we at Hanover Legal enter this new year and look back on BigLaw in 2008, we are reminded of the bibical tale of Lot’s wife glancing towards Sodom and turning to salt. So in the hope of avoiding a similar fate, we’ll keep our retrospective analysis brief.
As Marc Dreier, the sole equity partner of Dreier LLP, faces federal charges of transferring $113 million in bogus securities to two hedge funds, an impersonation charge filed against him in Toronto as well as a lawsuit filed by the Securities and Exchange Commission to recover the $113 million, the firm he created, namely Dreier LLP, sits in receivership pursuant to the order of United States District Court Judge for the Southern District of New York Miriam Goldman Cedarbaum and faces an additional civil suit filed in the Southern District by Wachovia Bank alleging that the firm and Dreier himself defaulted on a $9 million revolving credit note made in connection with a $14.5 million credit agreement and a term note in the amount of $5.5 million.