Law Firms

Did ‘Financial Insanity’ and ‘Greedy Lawyers’ Doom WolfBlock?

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In interviews and e-mails, lawyers at the dissolving law firm WolfBlock are questioning whether the law firm was doomed by “financial insanity,” “greedy lawyers” and an “eat-what-you-kill” culture.

The Legal Intelligencer obtained the e-mails, distributed to the entire firm, and interviewed one of the senders as well as staffers whose last day at the Philadelphia firm is likely to be May 23, the date mentioned in letters sent by the firm under the federal WARN Act.

An Intelligencer reporter who visited the law firm describes the scene. Artwork has been replaced with paper cutouts of scenic pictures. A copy of Dogbert’s Top Secret Management Handbook has replaced one of the floral arrangements at the entrance to each floor.

In one e-mail obtained by the Intelligencer, former chairman Robert Segal said the law firm had tapped a line of credit at the beginning of the fiscal year to pay bonuses for the previous year. “When they felt the real earnings were inadequate, they just borrowed to pay themselves what they thought they were worth,” he wrote. Segal also charged that managers who replaced him spent “ridiculous sums” amounting to millions of dollars for business development and marketing.

“Senior leadership, who practiced financial insanity and, together with outsiders who stood to benefit from large fees, led their partners like lemmings to dissolution,” Segal wrote.

Retired partner Jerome J. Shestack also questioned high compensation in another e-mail cited by the Intelligencer. “The dissolution happened because of the abysmal failure of leadership and a few greedy lawyers unwilling to cut back on high compensation,” he said.

Of counsel Donald Joseph started the string of e-mails, writing that partners should have fought harder to change the law firm culture and cut partner compensation to ensure WolfBlock’s survival, the story says. In an interview with the Intelligencer, Joseph said he regretted making statements that put the blame on firm leadership for failing to say “no.”

He told the Intelligencer that WolfBlock had been declining for years. He blamed the “eat-what-you-kill” culture of large law firms, including his own.

One of the staffers helping clean up files was Kathleen Sonntag, a secretary with WolfBlock for 37 years. She told the Intelligencer the criticism is on point. “No matter how much they made this year, they needed more next year,” she said of the lawyers.

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