When Law Firms Fail‪.‬

I can never get this straight: Is it "grow or die" or "grow and die"? In late 2008, the Heller Ehrman and Thelen firms failed. (1) Heller Ehrman, founded in 1890, had 730 lawyers spread across fifteen offices in the U.S. and abroad. Thelen, dating from 1924, had more than 600 lawyers in offices on both the Atlantic and Pacific coasts and in Shanghai. In mid-February 2009, other large law firms terminated 1,100 lawyers and staffers in only two days. (2) A week or two later, Latham and Watkins, which had 2,300 lawyers in twenty-eight offices, terminated 190 lawyers and 250 members of its staff. (3) Over a six-month period in 2008, Cadwalader, Wickersham and Taft, a 206-year-old New York based firm, laid off 131 lawyers, 20% of the firm. (4) Cadwalader and Latham are both aggressively managed firms that have been among the most profitable in recent years. Until last year, high-powered, high-priced consultants made money by advising law firms to invest in expansion, seek broader horizons, and jettison routine, high-volume, "commoditized" work. Firms were told that to prosper they had to double their size, move into new cities, open offices abroad serving multinational Fortune 500 clients, and specialize in high-end financial transactions. To hell with portfolio theory! (5) That was an old-fashioned, outmoded strategy used by the faint at heart; not the way to make big money.