Tag Archives: BigLaw

Thank You, Joseph Shenker and Sullivan & Cromwell

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There are many reasons why Sullivan & Cromwell is arguably the world’s most prestigious law firm, but perhaps first and foremost is the fact that they always seem to lead the market in doing the right thing when it comes to their clients, vendors and employees.   The firm hires the most talented and ethical people to service their clients, pays over-the-market rates to their valued vendors, makes doing business with them a pleasure, and compensates their own people at the very top of the market as well. 

A recent instance of Sullivan & Cromwell leadership-by-example is the firm’s public stance against hiring individuals who have engaged in the activity indicative of support for the terrorist group Hamas that has infested America’s universities since Ocober 7, 2023, the day that Hamas and Palestinians under their control engaged in a murder, rape, torture and kidnapping spree in Israel that resulted in the death of over 1200 civilians, the torture and maiming of hundreds of others and the taking of over 250 hostages.  As reported in Bloomberg Law, Sullivan & Cromwell’s senior chair Joseph Shenker stated that the firm “ha[s] been following closely the events at the schools from which we recruit, and [we] have been in touch with the placement offices, deans, and trustees, as well as many concerned students.  Creating, or participating in, a climate of harassment, intimidation and discrimination is unacceptable. We have been very open about our firm’s views on these matters … We have been, and will be, extremely vigilant in our hiring activities to ensure we are only hiring those students we are comfortable will proudly represent the values and principles of our firm.”   https://news.bloomberglaw.com/business-and-practice/sullivan-cromwell-plans-vigilant-hiring-checks-after-protests

It is beyond question that Hamas is a death cult committed to the genocide of Jews.  As Chaim Steinmetz, the senior Rabbi of New York’s largest orthodox Jewish congregation, brilliantly summarized on Instagram earlier this week in the aftermath of the Israeli Defense Force’s rescue of a Moslem Arab-Israeli citizen from the dungeons of Hamas after 326 days in captivity: 

“Yesterday’s hostage rescue can teach you everything you need to know about the Hamas-Israel conflict.  Let’s see what Hamas is all about and what Israel is all about.   Let’s look at what the Hamas charter says:  ‘The day of judgment will not come about until Muslims fight the Jews killing the Jews.’  That’s what Hamas believes in, killing Jews. Not Zionists, not Israelis, but Jews.  Let’s look at the Hamas leader Yahya Sinwar.  He’s known as the butcher of Khan Yunis because he’s killed so many of his own Palestinians.  Hamas has a Stasi like secret police force that observes every person in Gaza.   Let’s look at Hamas’ objectives.  Sinwar wants more civilian casualties.  He’s written in private communications:  ‘No blood, no news’ and all he wants is the attention of the world.  Now let’s look at Israel.   Israel’s Declaration of Independence says that it will ensure complete equality of social and political rights to all its inhabitants irrespective of religion race or sex.  Israel believes in the rights of minorities.  Arabs serve on Israel’s Supreme Court, in Israel’s Knesset and in the Officer Corps of the IDF.  When you visit Israel, you’ll see Arab citizens in the hotels of Tel Aviv and the shopping malls of Jerusalem, and any serious observer could see this contrast in the rescue of the hostage Farhan Al-Qadi.  Al-Qadi is an Israeli citizen who is a Muslim Arab.  He actually was a security guard in one of the Kibbutzim before he was kidnapped by Hamas.  Israel sent the IDF in to save his life.  The contrast between Israel and Hamas is a contrast between caring for your citizens or using them as cannon fodder.  It is a contrast between life and death, and as the Torah reading tells us this week, we need to choose the path of life.  Hamas has chosen the path of death.” https://www.instagram.com/reel/C_NixQrxHSi/?igsh=MWlyZjJ4cjZwb2duZQ==

So why would anyone in their right mind, let alone a preeminent law firm, want to hire or otherwise affiliate with any individual who supports Hamas in any way?   As Judge Matthew Solomson of the US Court of Federal Claims stated shortly after the October 7 massacre:  “To me, it’s a simple proposition that just like no judge would hire anyone who endorsed the KKK or the Nazis, anyone who endorses or approves or otherwise gives comfort to — in writing — Hamas, should not be hired.” See https://news.bloomberglaw.com/us-law-week/us-judge-wont-hire-law-clerks-who-signed-anti-israel-letters

Nobody is questioning the right of students or other individuals who are privileged to live in the United States of America to publicly express their evil inclinations, idiocy or ignorance by demonstrating in support of Hamas.  But no law firm should hire these people.  So thank you, Mr. Shenker for stating the obvious:  “[W]e are asking people to pay [our attorneys] a lot of money for their critical thinking skills. If their critical thinking skills land them in that place [blaming the victims of the terror for the terror], then they have no place here.” See Elite Biglaw Firm Adopts Tougher Background Checks For New Hires Amid Campus Protests – Above the Law

2023 and Big Law’s Accelerating Contraction

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It was refreshing to hear Jonathan Harmon, Chairman of 189 year-old Richmond-based McGuireWoods, declare last week what most of his BigLaw peers are or should be thinking:  “We are looking to grow and aggressively looking to talk to firms who are of the mindset.  I believe that the market’s consolidating and that you’re going to have to have scale.”  See McGuireWoods ‘Aggressively’ Seeks Merger Partner, Chairman Says.   The extent to which McGuireWoods will be successful in its efforts to find firms to acquire or with which to merge remains to be seen, but we have no doubt that they are more likely to be successful than firms waiting for opportunities to come in over the transom.  Mergers and acquisitions are inevitably fraught with obstacles and challenges, and thorough market due diligence of merger and acquisition opportunities obviously maximizes the potential to find suitable partners while minimizing the risk of stagnation and failure.  As Harmon elaborated: “Finding the right firm to acquire, merge with, is hard,” recollecting an acquisition a few years ago that turned out to be a “disaster” as the new attoneys “weren’t culturally aligned” with the venerable Richmond firm.  Id.  You have to be aggressive, you have to expect that most of your conversations will not lead to a marriage, and accept that nothing ventured usually equals nothing gained and a passive approach is less likely to yield positive results.  As Harmon put it, “I’m more frank about it.  If you’re coy and you’re pretending ‘Hey, I don’t want to date,’ you may not get one.”  Id.  

The good news for Harmon and like-minded firm leaders is that there is a substantial array of attractive merger candidates for robust and healthy firms.  As to McGuireWoods, with gross revenues rising 16% over the last five years to its current level of just south of $1B and profits per equity partner increasing at an even faster rate over the same period to just south of $2M, there can be no doubt that they will be seriously considered as a merger partner by more big firms whether those firms choose to remain coy about their respective appetites for exploring or not.  Moreover, as the geopolitical climate continues to feel unstable and financial markets remain volatile and at levels substantially off their highs of two years ago, major players are likely to be less brash and confident about their ability to thrive on their own or remain competitive merely through organic or individual or small group lateral growth.  Finally, law firms are continually facing new competition from non-attorneys operating ventures seeking to provide comparable legal services at lower rates.  See id.   All of which will lead to more firms talking to one another, and more mergers and acquisitions. See also Law firm mergers gained steam in 2022, with more on the way in 2023, and Wake Up Call: Law Firm Mergers Apt to Rise in 2023, Report Says.  And see McKinsey’s 10 Principles for Successful Law Firm Mergers, which succinctly notes as follows:  “Market forces have led to the consolidation of a number of professional services sectors. In accounting, for example, the Big Four account for more than 60% of the U.S. market. There is good reason for this: research has shown that across industries, organizations with a systemic M&A strategy delivered better shareholder returns. Organizations that relied solely on organic growth, on the other hand, performed relatively poorly.  Legal services are not immune to this trend: consolidation is well under way, albeit not to the same extent as in other sectors. In 2017, the largest five law firms by revenue accounted for 8% of the American Lawyer 200 revenue pool. By the end of 2021, that figure had risen to 14%… [A]s market pressures intensify and the first $10 billion firms emerge, the case for M&A is becoming stronger.”  Id.

So excellent work, Jonathan Harmon, and kudos to you for being so refreshingly straightforward.  We are certain that McGuireWoods’ future is bright, and are on board to assist you and like-minded BigLaw leaders in helping to take your extraordinary firms to even greater heights!

 

Covid 19, Fall 2021 and BigLaw 2

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Since Hanover Legal’s founding in 2000, we have together experienced traumas that have shaken the foundations of BigLaw including the bursting of the dot-com bubble, 9/11, Enron, WorldCom, a war in Iraq and a global financial crisis — but none has impacted BigLaw like Covid 19.

When Covid made its ugly debut a year and a half ago, BigLaw’s reaction was predictable; fat cutting in the form of hiring freezes and layoffs, shedding real estate, re-prioritizing practice strengths and reinvigorized courting of old reliable and potential paying clients. No pundit however imagined that the following year and a half would see record BigLaw revenue and profits and firms leaner, meaner, with more cash-in-hand then ever before.  See, for example:  https://www.berdonllp.com/the-pandemic-paradox-law-firm-profits-rise-despite-covid-19/.;  and see https://www.law.com/americanlawyer/2021/01/25/the-lessons-and-implications-of-big-laws-stunning-2020-profitability/,  and https://www.economist.com/business/2021/07/15/americas-elite-law-firms-are-booming.

Moreover, BigLaw attorneys have been happier and more productive then ever as well.  By and large they are comfortable using the various video-meeting platforms and  don’t miss business travel and schlepping into the office every day.   And why would they?  Video-meetings are more cost and time efficient and pose no risk of contracting highly contagious and potentially lethal diseases, and what can beat working from home? And if any attorney is unhappy with their current firm for whatever reason, the cherry on the cake is that lateral hiring is booming .  See: https://www.law360.com/articles/1400812/lateral-hiring-plunged-in-2020-but-strong-rebound-underway,  and https://www.americanbar.org/groups/journal/articles/2021/new-data-shows-lateral-associate-hiring-happening-across-the-board/, and https://news.bloomberglaw.com/business-and-practice/surging-in-big-cities-lateral-hiring-is-a-hunt-for-higher-rates.

So as we ask the age-old question “Who knew?” we express our continuing gratitude for being privileged to remain on this journey with our BigLaw clients and reiterate our commitment to assist in any way while we navigate during these interesting times.