A Start of a Trend? Big Law Firms Ask Partners for More Cash
When Dewey & LeBoeuf announced last fall it was withholding some profit distributions to partners, it may have been something of a trendsetter.
The idea was to build up the law firm’s capital base. Others followed Dewey’s lead, the Wall Street Journal reports (sub. req.). Clifford Chance asked partners to contribute as much as $150,000 to increase capital. DLA Piper reduced some partner payouts and told more than 200 nonequity partners that they should change to equity status and contribute more than $100,000 each.
Now law firm consultant Peter Zeughauser says other big law firms are likely considering similar moves. “I wouldn’t be surprised if half of the top-grossing firms were either in the process of doing this or looking hard at it,” he told the newspaper.
Some law firms want more cash to stay strong during the economic downturn, the article says. Some fear they will have trouble paying bank credit lines when clients are slow in paying fees, a typical situation between now and the middle of the year.
Steven Davis, the chairman of Dewey & LeBoeuf, explained the thinking of leaders in his firm. “Look, we’re dealing with an unprecedented crisis here,” he told the Wall Street Journal. “Our clients are stressed, and that makes us stressed.”
