Law Firm Partners: Seeing the Future

In “A Lawyer and Partner, and Also Bankrupt,” James B. Stewart of the New York Times [http://www.nytimes.com/2014/01/25/business/partner-in-a-prestigious-law-firm-and-bankrupt.html?_r=0 ] yesterday contextualized the plight, even for large-firm lawyers, of the constraining forces in the legal profession, while linking the fall-off in law school applications to this “widespread malaise.”   Stewart highlights the story of Gregory M. Owens, a 55 year-old successful Wall Street lawyer and former partner at Dewey, Ballantine, Bushby, Palmer & Wood, and after a merger, Dewey & Leoeuf.  Mr. Owens, who still works at a “eminent global law firm,” White & Case, has just filed for bankruptcy after being demoted to a nonequity “service” partner.  Service partners neither share the risks nor rewards of the law practices and generally do not have their own clients; thus, their salaries are held to levels far beneath those of equity partners.  When Mr. Owens declared bankruptcy, his listed annual salary $375,000 a year and, while clearly more than that earned by most, it is not sufficient to satisfy his New York City-based expenses, which include upwards of $10,000/month in child support and alimony, $7,500/month rent, and all the rest.

The recent growth of the service or nonequity partner (by the end of 2012, 84% of the largest 200 law firms maintained service partners, up 20% since 2000) is no doubt troubling for aspiring large-firm lawyers.  It signals that these firms are having trouble maintaining the high salaries of the lawyers already in their firms.  The service partners are the most vulnerable of all, as they are often not the rainmakers, and “not economically viable,” according to an expert in law firm management.  Scott Westfahl, professor of practice and director of executive education at Harvard Law School, suggests that, in order to protect their job security, these law firm employees must develop a “deep expertise that’s hard to find” elsewhere.   Professor Westfahl warns that, even with this additional expertise, “[t]here’s no job security”  —   even full equity partners are under growing pressure by clients who are demanding more accountability, resulting in more and more partners being “de-equitized.”

One suggestion offered by an equity partner interviewed for this article for those in practice today: periodically reinvent yourself and be prepared to work “more hours than rainmakers” to justify maintaining high salaries.

Given this current picture of the large law firm, what other suggestions might be gained from Mr. Owens’ story, for those of us involved in legal education as either professors or potential law students?  Perhaps we all might realize that “following the money” may not necessarily make for a successful career.  Maybe if law professors structured their curricula to support new lawyers who “follow the people” — both individuals and small business people in our communities who need but cannot afford legal assistance — these new lawyers would see that they could build satisfying lives in the law, ones that, while not necessarily supporting staggering material wealth, would nonetheless support interesting and appreciative clients, constructive and supportive relations with colleagues, gratifying intellectual challenges, a decent way of life, and constructive participation in our society.

2 Responses

  1. I really resonate with Professor Scharf’s call to “follow the people.” Perhaps the reason that lawyers are so little valued today compared to when our country was founded is that we sold our souls starting in the 1980’s to the addiction to wealth. See the Sunday New York Times Sunday review article on wealth addiction http://www.nytimes.com/2014/01/19/opinion/sunday/for-the-love-of-money.html

  2. A number of law firm partners work as if they believe things will revert to business characteristically, the majority of those who are paying attention consider we are headed to a “new-fangled standard” in our future.

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