Within the world of mega-law firms, the quick implosion of Dewey & LeBoeuf LLP stands without peer as a cautionary tale of the failure to adapt to a changing legal market.
The lessons taught by the firm’s startling demise were discussed at length on Sept. 12 by two Columbus School of Law alumni who spent their entire careers with the firm, but who are now elsewhere.
Donald Murray, 1984, and Eric Blanchard, 1999, had both made partner at Dewey & LeBoeuf by the height of its prestige. The firm’s roots trace back to 1909 when it began as Dewey Ballantine. Nearly a century later in 2007, it merged with another firm to become one of the ten largest law firms in the world, employing 1,400 attorneys in 26 offices worldwide.
Five years after the merger and the accelerated growth it brought, Dewey & LeBoeuf is in bankruptcy. Nearly all of its partners are gone, Murray and Blanchard being among a group of twelve that joined Covington & Burling, where both men still practice.
What went wrong?
“When you start chasing hot markets, that’s when you get into trouble,” remarked Blanchard, who told his audience of Securities Law Program students that Dewey, like many large firms, could not resist the temptation to move into booming new practice areas in which it had little experience and no clients.
But overgrowth or being “all shingled up” with offices in expensive exotic locales was only part of the problem afflicting mega-firms such as Dewey & LeBoeuf, the speakers said.
A sea change in the legal profession at large that devalued loyalty also played a significant role. In recent years, it became commonplace for senior attorneys to jump firms every few years, trying to bring business with them. The explosive growth in the hire of “laterals” was expensive for employers.
For their part, clients began to refuse to pay hourly billing rates for first-or-second-year associates, demanding instead the higher-priced involvement of senior partners on matters that did not demand their services. “Clients have really changed the dynamics by bringing the profitability out of the practice,” said Murray.
Both CUA Securities Law Program graduates suggested that while the economic model that used to support mega-sized law firms may be eroding, there is still robust business for smaller, more flexible and boutique firms. Professor Lipton told the students that job opportunities in the securities field may well pick up again, due to the existing busy capital markets, the hope that firms have now learned their lesson and the understanding that many more corporations are providing legal job opportunities for in-house counsel.
Despite the missteps that led to the crumbling of Dewey & LeBoeuf LLP, Murray admitted he still misses his early days in the firm, an era that was distinguished by a remarkable esprit de corps when people put the firm first and their own agendas second.
“It was a great place. It really was the people,” he said.
The program was sponsored by the Columbus School of Law’s Securities Law Program and Office of Career and Professional Development.