Did ‘Financial Insanity’ and ‘Greedy Lawyers’ Doom WolfBlock?

B. McLeod
May 14, 2009 8:31 AM CST

“Like lemmings.”  I guess he noticed that too.

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Philly Lawyer
May 14, 2009 3:06 PM CST

Joann, your total lack of compassion for the many lawyers, secretaries and administrative support staff who, as a result of the dissolution of Wolf Block,  have lost their jobs in the midst of a recession is truly staggering.

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BigLaw Partner
May 15, 2009 6:29 AM CST

More of this kind of thing is on the way at large firms (like mine) where an elite clique of highly-compensated partners, most of whom are legacy from earlier days of the firm and whose compensation is not tied to production but rather to “team,” “firm” and purported client “leadership,” control an opaque compensation scheme that rewards, well, whatever they deem is worthy of reward.  There is no transparency regarding comp-setting standards (because there are no standards), which in turn breeds suspicion about favoritism, which in turn creates and environment of mistrust that directly results in a lack of the teamwork so vital to servicing large, corporate clients and surviving hard times.  In a rising economy, these systems can work (and obviously have worked), but when the tide goes out like it has, these systems become exposed for the virtual Ponsi schemes they are, and with no firm-wide esprit de corps, ethos of collective reward and sacrifice nor plane old good business practices ever having been institutionalized, the firm is unable to cope, continues to run on cronyism and favoritism and eventually turns in on and consumes itself.  Partners in BigLaw everywhere - get ready.

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BigLaw Partner
May 15, 2009 6:47 AM CST

Couple more things: (a) I’ve given a lot of thought to the lack of transparency in compensation setting in most large law firms in comparison to what I would imagine is the same lack of transparency in other large business settings and considered why, if lack of transparency works in a large corporate setting (where every senior officer (analogous to partners in a large law firm) certainly doesn’t know how the game is played in terms of who got what raises/bonuses and why), then why doesn’t it work in a large law firm setting.  Said another way, if large law firms consider themselves to be run like large corporations, where perhaps there is little transparency in comp setting, then why does transparency matter so much in a law firm setting?  Without going into much depth on the topic, the main reason is that distributable profit in a law firm inures directly to the partners, dollar-for-dollar, whereas in a large corporation, the money brought to the bottom line typically vastly exceeds the sum of the salaries and bonuses paid to the the top officers in the company.  Thus, partner comp. can be viewed as a zero-sum game in which the comp decision makers hold tremendous power.  When that decision-maing process is opaque or even invisible to the rank and file officers, the results are predictable, as described in my earlier post.  So, to all those managing partners and executive committee members at BigLaw out there who think, “Hey, if corporate America sets comp list this, why can’t we?,” I offer you an alternative world view; and (b) if my firm’s IT spies are monitoring this transmission (which the probably are), I don’t think our firm is going under, OK?  And I like my job, so don’t fire me!  Thanks.

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Outsider
May 15, 2009 3:09 PM CST

I work at a small firm (about a dozen partners), and our policy is to split profits (after bonuses to associates) equally (with a small kicker to the partner who handles administration).  Our philosophy (which is apparently outdated) is that every partner brings something to the table, and by equalizing compensation we can foster the concept that clients are firm clients, not the clients of individual attorneys, and eliminate, to the extent possible, the idea that if you work on a matter that you did not originate, you will not be penalized.  If only rainmakers are rewarded, then they will have a hard time getting others to work on their clients’ matters.  It seems to me that “eat what you kill” has become counter-productive; if you destroy the collegial aspects of the practice, why would anyone want to work at the firm?

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BamBam
May 16, 2009 1:51 AM CST

#9, Outsider - and if one of your partners netted 2 or 3 big clients, he or she would be on the phone with BigLaw trying to score a position with a bigger part of profit share.  While your system works if all people are relatively equal, when one person contributes more of the ingredients to the pie, that person will nearly always want a bigger slice too.  (There are people who are happy with less, even in law, but they are few and far between.)

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B. McLeod
May 16, 2009 8:59 PM CST

BamBam, I think there may be quite a few people who have learned to be “happy with less.”  Huey Long used to use an example of eating at a table, and his point was, when somebody has eaten as much as they can possibly eat, they don’t really gain anything by refusing to step back from the table.  (For law firms, substitute “trough”).

It can (and for some people does) get to a point where the extra money is just a pointless game.  That’s a good time to look around and think about what it really takes to be happy.  When you stop and think about it, a NY cabbie today enjoys indoor heat, plumbing, electric lights and appliances, culinary choices, air conditioning, transportation options, and entertainment (audio CDs, movies, and television) that, 60 or 70 years ago, would not have been available to the wealthiest of the crowned heads of Europe.  It is not difficult, in our society, to have a very nice quality of life, without needing to be among the nation’s wealthy.  In truth, it is one of the things I really like about this country (of which, I am a greater admirer than I can easily express).

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