Whereas the demise of Am Regulation 200 agency Stroock & Stroock & Lavan dominated the headlines this yr, 2023 noticed the top of a wide range of midsize corporations and boutiques as nicely.
Two corporations with roughly 100 attorneys—Schnader Harrison Segal & Lewis and Daughtery Lordan—vanished as their attorneys scattered to rival corporations, albeit for very completely different causes. And quite a few boutiques fell sufferer to the pressures of being small in a aggressive market or the shortage of enthusiasm for taking on agency management.
That mentioned, every agency failed because of a singular set of circumstances which will include classes for equally positioned corporations sooner or later. As 2024 approaches, we reviewed our reporting on legislation agency failures this yr to unpack what occurred to the corporations that known as it quits.
Companion Exits and Pension Obligations
Companion departures and pension obligations had been central to 2 of this yr’s largest legislation agency failures. Stroock took a considerable hit when it misplaced a 43-lawyer chapter group to Paul Hastings in 2022. The group accounted for 1 / 4 of the agency’s income, an inner supply told the American Lawyer.
The 147-year-old New York agency continued hemorrhaging companions to close by rivals and finally announced its dissolution on the finish of October, with former companions and employees additionally citing financially draining pension obligations, a burdensome accounting system and poor merger negotiations as causes for the agency’s failure.
Hogan Lovells finally absorbed 35 of 45 remaining companions after merger talks with Pillsbury Winthrop Shaw Pittman and Nixon Peabody fell by way of, though some staff had been left with out jobs when the 140-employee agency closed.
In August, the practically 90-year-old Philadelphia stalwart Schnader Harrison Segal & Lewis introduced it was dissolving in coordination with its financial institution and different stakeholders. The agency’s headcount had shrunk from 165 attorneys in 2014 to 109 in 2022; its web site listed 91 attorneys on the time of its dissolution.
Philadelphia recruiter Liz Shapiro informed the Legal Intelligencer that the agency’s demise was tied to years of dropping company work by way of the departures of company companions. Others locally noticed Schnader Harrison’s failure because of the encroachment from bigger, out-of-state corporations. “It was that the town was a reasonably protected authorized market. We had been good at resisting out-of-state legislation corporations from D.C. or New York planting flags, however for those who go searching you see extra out-of-state corporations buying and planting flags right here,” Kleinbard managing companion Matthew Haverstick informed the Authorized Intelligencer.
In a extra distinctive state of affairs, Lewis Brisbois spinoff Daughtry Lordan failed inside three months of opening. The labor and employment group initially launched in Could as Barber Ranen, poaching greater than 120 Lewis Brisbois attorneys, however leaders John Barber and Jeffrey Ranen resigned the subsequent month when the New York Publish surfaced offensive emails between the companions from their days at Lewis Brisbois.
The scandal triggered a wave of exits that finally benefited the likes of O’Hagan Meyer, Ogletree Deakins, Dismore & Shohl and Gordon Rees Scully Mansukhani. Regardless of a June rebrand to Daughtry Lordan, the agency shut down in August when its remaining attorneys left for O’Hagan Meyer.
Lack of Management Succession
Just a few corporations failed for the age-old motive of getting nobody round who wished to take the reins from an outgoing chief, though some would-be agency leaders who declined the function view the transfer to a brand new agency as a chance for themselves and their shoppers.
The 40-year-old Philadelphia enterprise legislation agency Dolchin Slotkin & Todd shut down in July after its main companions moved to close by Semanoff Ormsby, whereas others on the 12-lawyer agency discovered alternatives at comparable Philadelphia corporations.
Following the retirement of managing shareholder Jerry Dolchin, son Zachary Dolchin opted to maneuver his follow to 26-lawyer Semanoff reasonably than taking on agency management. “I believed it was in the very best pursuits of my profession and my shoppers to take [my] follow to a bigger agency,” Dolchin informed the Legal Intelligencer. “Our shoppers might be higher served at a agency like Semanoff reasonably than persevering with at Dolchin.”
In New York, the retirement of Ganfer Shore Leeds & Zauderer’s co-founding companion Steven Ganfer—and the upcoming finish of a Midtown Manhattan lease—led to the agency’s closure in July. The litigation boutique launched in 1979 and completed existence with 28 attorneys, the New York Law Journal reported. Companions moved to close by corporations; co-founding companion Steven Shore informed the NYLJ the break up was amicable.
And in October, Richmond enterprise legislation agency KVCF dissolved as its 10 remaining attorneys moved to Williams Mullen. Managing companion Thomas Voekler cited administrative burden as a driver for the agency’s dissolution in an interview with the National Law Journal, in addition to an ending lease time period and eight months of conversations with Williams Mullen. He described the agency as “very like-minded.”
Stalled Recruitment
An incapability to draw the suitable expertise contributed to the demise of a number of boutiques this yr. In November, mid-Atlantic litigation boutique Ward Greenberg introduced it could stop operations on the finish of the yr.
“One of many challenges of being a boutique is ensuring you may have [human resources and expertise],” co-founder Eric Ward informed the New York Law Journal. “Specifically, you need to have adequate numbers of attorneys to have the ability to adequately employees instances.”
Of the agency’s 19 attorneys, 10 headed to Hodgson Russ, which is taking on the agency’s Rochester lease. The opposite 9 are going to Freeman Mathis Gary, which took the agency’s leases in South Jersey, Philadelphia and Delaware. Administrative employees are break up between the 2 corporations.
Additionally in November, nationwide distributed legislation agency Rimon acquired the attorneys of six-attorney IP boutique Davidson Berquist Jackson & Gowdey of northern Virginia. The agency struggled to draw youthful companions and was nearly totally staffed by companions, co-founder Don Jackson informed the National Law Journal.
Monetary Troubles
Phoenix legislation agency Jennings, Strouss & Salmon shut down in August after 81 years of operation, ending because the seventh-largest legislation agency within the Phoenix metro space in accordance with the Phoenix Business Journal. Previous to closing, the agency noticed departures to Quarles & Brady, Spencer Fane and Gallagher & Kennedy, with Quarles touchdown former managing lawyer Jeffrey Gardner. In an American Lawyer interview, Gardner cited Quarles’ “nationwide, full-service platform” amongst a number of causes he joined the agency.
PNC Financial institution put the Jennings Strouss into receivership on Aug. 22 after the agency drew down $3.4 million of a $4 million credit score line in lower than three months, in accordance with courtroom filings surfaced by AZ Big Media.
Whereas not out of enterprise, Philadelphia legislation agency Sacks Weston filed for Chapter 11 chapter safety in August because of money owed exceeding $16 million. On the time of the chapter submitting, the agency owed $14 million to litigation funder Virage Capital Administration after defaulting on a mortgage value $6 million. The agency additionally owed $150,000 to Jordan Litigation funding and $200,000 to PNC for a credit score line, the Legal Intelligencer reported.
Final yr, former companion Scott Diamond and lawyer Jesse Cohen pled responsible to fees of stealing agency funds by diverting funds from shoppers. Diamond was sentenced to 6 months in jail and 6 months of home arrest whereas Cohen acquired three years probation.
Elevated Competitiveness
Some corporations and companions seemed on the transfer to a better-positioned competitor as a optimistic for his or her shoppers and their very own careers.
Bethesda-based company tax agency Paley Rothman dissolved in April after 51 years of operation, with most of its former attorneys becoming a member of Lerch, Early & Brewer and others going to comparable close by corporations.
“They’ve numerous comparable follow areas, the place we will create a deeper bench power and succession. That they had some follow areas that we didn’t, which permits us to raised serve our shoppers,” James Hammerschmidt, former Paley Rothman co-president, informed the National Law Journal.
One other Maryland boutique shut down in April when seven of eight attorneys from Towson actual property boutique Sagal Filbert Quasney & Betten joined Pennsylvania’s McNeed Wallace & Nurick. The latter agency thought of the transfer neither an acquisition or a merger, though the previous Sagal attorneys remained of their suburban Baltimore workplace.
