Second Quarter 2010 Report

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.

Notwithstanding, courting and combining among transatlantic monoliths continues unabated. The Hogan Lovells union was still just on their honeymoon when Sonnenschein announced that it would be merging with Dentons. In the meantime, Proskauer continues to publicly date SJ Berwin while Mayer Brown and Simmons may be taking a break. We are all eminently aware of the difficulties experienced in the aftermath of other landscape altering unions such as Clifford Chance/Rogers & Wells and Dewey & LeBoeuf, not to mention the modern day Titanic that resulted from the union of Thelen/Brown Raysman, and one might think that this history would temper the pace of trips to the alter. Nonetheless, the allure of one stop global shopping apparently continues unabated.

In the meantime, iconic American law firms like Simpson Thacher, Sullivan & Cromwell, and Davis Polk show no signs of slowing down and also no intention of significantly altering their respective platforms. These firms, each consisting of “only” about 700 of the most talented, ethical and hard working lawyers on the planet, remain the true AmLaw Rolls Royces. Indeed, we would venture to suggest that it may be wise for the rest of the AmLaw 200 to aspire to the model of the aforementioned RRs rather than that of the merged monoliths. To many seasoned practitioners, the benefits of providing one stop shopping simply do not outweigh the risks associated with attempting to maneuver Queens Elizabeth on less than welcoming waterways. As such, it was not surprising to learn that over 100 partners had elected to leave Hogan Lovells in the first few weeks following news of the merger or that DLA Piper, K&L Gates and Reed Smith are setting new records on both the incoming and outgoing lateral partner fronts simultaneously.

We predict that the firms that will experience the best fortunes vis-a-vis the rest of the market as this period of uncertainty continues will be the conservatively managed, mid-sized name brand reliables, willing to take risks but in cautious and well tailored fashion. Simultaneously, we foresee the increasing appetite for autonomy, maneuverability and efficiency spurring the creation of more high powered boutiques across all practice areas. And as the business of law marches on, the valiant efforts of our attorney underclasses to achieve parity will become more intense as women and minority groups continue to compel firms to focus resources on eliminating barriers and leveling the playing field. A recently released survey of women partners indicating that they are disproportionately dissatisfied with compensation highlights one important front in this ongoing struggle.

In sum, we are optimistic about the third quarter, but caution that there is still no easy sailing on the legal market horizon.

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