I’m not your go-to person for an analysis of the legal profession or the economics of law firms. But the recent collapse of Dewey & LeBoeuf, resonates with me because I hear in its story the consequences of operating without a systems perspective and or a sustainability mindset.
As the New York Times reported today, the firm filed for bankruptcy last night. “With historical roots stretching back a century, Dewey — the product of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae — employed at its peak more than 2,500 people, including roughly 1,400 lawyers in 26 offices across the globe,” according to the Times.
But the firm came apart because of a series of actions and policies that undermined its ability to sustain itself.
Many observers say the root causes of Dewey’s fall are not unique. Several of the largest firms have adopted business strategies that Dewey embraced: unfettered growth, often through mergers; the aggressive poaching of lawyers from rivals by offering outsize pay packages; and a widening spread between the salaries of the firm’s top partners and its most junior ones.
These trends, they say, have destroyed the fabric of a law firm partnership, where a shared sense of purpose once created willingness to weather difficult times. Many large firms have discarded the traditional notions of partnership — loyalty, collegiality, a sense of equality — and instead transformed themselves into bottom-line, profit-maximizing businesses.
“Because the partnership lacks any shared cultural values or history, money becomes the core value holding the firm together,” said William Henderson, a law professor at Indiana University who studies law firms. “Money is weak glue.”
Doesn’t it seem like the firm treated the values of partnership as externalities, when it might have placed those values at the center of its management approach? If it had, it might have found greater resilience in the face of the challenges that many law firms have experience over the last few years.