Ruden McClosky Leaders Say 'Nice Guy' Culture Has Hurt the Bottom Line
Ruden McClosky has been hit hard during the economic downturn, dropping from 172 lawyers in 2008 to a little more than 100 by the end of March.
“In the past year, the firm has been hit hard by the national financial downturn, enduring office closures, mass defections, layoffs, pay cuts and holdbacks,” the Daily Business Review reports. “A final straw for some partners, apparently, was recently being asked to sign personal guarantees to back up the firm’s credit line.”
Observers point to a number of reasons for the problems, including a focus on real estate and concentration of power in a nine-member management committee that reacted too slowly to the recession, the story says. But firm leaders who spoke to the publication identified another reason for the firm’s troubles: its “nice guy” culture.
That culture led to perks such as offices for lawyers that were 50 percent bigger than those at other law firms, free health insurance for employees, and free long-term disability and life insurance for partners. “But the firm has slowly started to run a tighter ship, slashing salaries and workers, and consolidating office space,” the story says. The free insurance coverage remains, however.
Another aspect of the “nice guy” culture: The firm has extended credit to many clients who can’t pay their legal bills, “a key factor contributing to its financial woes,” the story says. The law firm also gave clients the same leeway in 1989, and the plan succeeded, according to Michael Krul, chair of Ruden’s corporate and finance department.
“Every client we helped out, they are still our clients,” Krul told the Daily Business Review. He said Ruden McClosky “remains a strong, viable statewide law firm.”
“We’re not going away, we’re not falling apart,” he said.
