Are BigLaw Expansions Unsustainable? Lawyer Representing Howrey Creditors Predicts Dissolutions
Howrey and Dewey & LeBoeuf are among several law firms that rapidly expanded in the 2000s.
The Washington Post sets the scene and asks whether other firms will also crash and burn. “In its final years, Howrey snapped up large practice groups and entire firms at a breakneck pace, going from a one-city Washington firm specializing in litigation to an international player with 18 offices worldwide,” the story says. “Dewey built its legal empire with promises of multimillion dollar pay guarantees to lure star lawyers from other firms. … The sprawling firms proved unsustainable when the financial crisis struck and clients pulled back.”
A Houston lawyer representing Howrey creditors, Allan Diamond, predicts more trouble ahead for other law firms. “If you ask me, I think there are going to be a number of law firm insolvencies in the coming months,” he told the Post.
Former Howrey vice chairman Sean Boland, now at Baker Botts, told the Post that BigLaw is getting bigger. “Law firms have not been this big for very long,” he said. “We also haven’t seen a slowdown in the business environment quite like this one, ever.” He believes both Howrey and Dewey began to unvravel because of panic caused when some high-profile partners left. “This herd mentality develops and it’s over very quickly,” he said.
He questions whether some firms that are hiring Dewey lawyers could also be at risk from large lawyer acquisitions, the Post reports. “The question is, Do lawyers really know how to do good due diligence on their acquisitions?” Boland said.
