Law Firms' White-Shoe Blues

Dewey & LeBoeuf can’t win. In late March an embarrassing exodus of partners prompted the global law firm to announce a management shake-up. In explaining the reshuffle to Bloomberg News, the head of Dewey’s corporate department, Richard Shutran, mentioned that the firm earned about $250 million last year. Whoops. That was a lot less than what Dewey had reported a few weeks earlier to the legal trade publication American Lawyer, which is now revising its financial database to reflect reduced results for Dewey in both 2011 and 2010. John Altorelli, one of more than 60 Dewey partners taking their practices elsewhere, told the Am Law Daily blog that he sees two potential futures for his former colleagues: a significant downsizing or “a firm busted up into a bunch of little pieces.”

The turmoil at Dewey isn’t an isolated event. Elite corporate law firms—Wachtell, Lipton, Rosen & Katz; Cravath, Swaine & Moore; Sullivan & Cromwell; and a few others—thrive on their scrupulous maintenance of quality and reputation. Beneath that exalted caste, though, a dozen large and prominent partnerships have called it quits in the past decade. They include Howrey & Simon; Thacher, Proffitt & Wood; Heller Ehrman; Thelen Reid; Jenkens & Gilchrist; Coudert Brothers; Brobeck, Phleger & Harrison; and Arter & Hadden. Many more, like Dewey & LeBoeuf, confront existential challenges that were unimaginable just a few years ago. J. Stephen Poor, chairman of Seyfarth Shaw, an 800-attorney firm in Chicago, sums up the predicament of corporate law firms he refers to as “the 99 percent”: “We have to improve or die.”