Proskauer Chief: ‘Revolution’ Is Coming, Not Everyone Is Ready

As Proskauer Rose celebrates 150 years, the New York law firm’s leader is trying to position it for the “equivalent of the Industrial Revolution” being brought on by the rise of artificial intelligence.

“We can’t hide from it, and we’re running towards it as fast as we possibly can,” Timothy Mungovan, the firm’s chair, said of Proskauer’s approach to using AI tools.

“I do believe that it’s only a matter of time before there is consensus on the demand side—the buy side of the legal economy—where they will expect practitioners to use it and to be able to deliver results better, faster, and cheaper,” he said in an interview. “Firms that are able to do it first and best are going to separate from the pack.”

Mungovan, who took the firm’s helm last year, is a litigator known for representing private investment funds, as well as Puerto Rico’s Financial Oversight and Management Board. He faces uncharted territory as technology challenges the industry’s longstanding business models and ratchets up the cost of competing at the highest levels.

Timothy Mungovan

Photo: Proskauer

Mungovan begain preparing for the revolution early as the firm leaned harder into trial work beginning in 2017 as a buffer against generative AI tools’ potential ability to take on tasks traditionally done by lawyers.

“An obvious hedge was to do what AI can’t do, and we know AI is not going to try a case,” Mungovan said. Proskauer has focused on making sure it has a “deep trial capability,” particularly in the antitrust space, which is driving the firm’s litigation practice, he said.

In terms of meeting AI where it is, Mungovan said the firm is “very focused” on using it to deliver cost efficiences to clients, and with their consent “we use it whenever and wherever we can.”

Recent Growth

The firm, whose fiscal year ended last month, is expected to outpace last year’s $1.4 billion in gross revenue and $4.5 million in profits per equity partner. It has remained among the country’s 50 largest law firms by revenue over the last decade of massive growth for Big Law’s top players.

Mungovan attributed much of the firm’s recent growth to its private credit and its investment funds practice—advising the likes of Ares Capital Management, Sixth Street, and Pemberton Asset Management—and specifically work focused on the secondaries market. He also touted Proskauer’s asset management litigation team, focused on work driven by sponsor clients and funds that would prefer to avoid disputes and publicity.

“It’s a quiet, stealth practice that’s not just incredibly capable and experienced, but very profitable for us,” Mungovan said.

The firm was founded in 1875 by New York lawyer William Rose and renamed 55 years later when Judge Joseph Proskauer came aboard. Mungovan is among the majority of its roughly 235 partners who joined from other firms: He jumped to Proskauer’s Boston office from Nixon Peabody in 2012.

“We have people that come in, like me, who are laterals and have contributed to the firm—but the firm doesn’t differentiate,” he said. “You’re the new person and you’re the legacy; you’re in the cool kids club, and you’re always going to be other and an immigrant. It’s not that way at all.”

Proskauer has found opportunity as some of Manhattan’s oldest firms struggle to keep pace. The firm in September nabbed four partners from Cadwalader Wickersham & Taft’s finance practice, launching a Charlotte office to house them. It added two former partners from Schulte Roth & Zabel, the storied New York firm that merged with McDermott Will & Emery this year.

The firm is also competing for talent on Wall Street, hiring Paul Weiss Rifkind Wharton & Garrison partner Sarah Stasny in June to lead Proskauer’s US private equity transactions practice. Its long term success as a leading adviser to the professional sports world is attracting poachers from top deals firms.

Davis Polk & Wardwell on Monday announced that it hired Proskauer partner Jon Oram, a prominent sports deals lawyer who spent more than 25 years at the firm. Proskauer last month saw Kirkland & Ellis snag partner Jason Krochak, who was part of a team that advised the ownership of the NFL’s Buffalo Bills on a minority investment this year by Arctos Partners.

The surge in sports deals plays on the firm’s strengths in the investment space, Mungovan said.

“The way that the practice has been run and built, it has tentacles across the firm,” he said. “We’ve got a very deep bench with a 60-year track record of representation in the sports arena that nobody can even come close to matching.”

Like a Regular Business

Proskauer isn’t talking merger as firms like Cadwalader explore tie-ups as a lifeline in an increasingly competitive legal services industry. It’s also not mulling outside investment, such as the private equity deal under consideration at McDermott.

“I would rather not be the first mover on something like this,” Mungovan said of firms considering outside investment through a managed service organization model. He said he’s not familiar with the details of McDermott’s talks but noted that the MSO model has already been adopted in the healthcare industry and by other professional services providers.

“Looking at other organizations and industries, we would have to be mindful of what has changed for them as a result of doing something like that,” said Mungovan.

Still, he said recent consolidation among large firms and other moves to generate cash highlight the challenges facing managing partners.

“Law firms are struggling to compete in an increasingly competitive marketplace where the investment cost to be able to compete both for talent and the infrastructure continues to increase significantly,” Mungovan said.

“Firms historically have not structured themselves in the same way that most operating businesses have,” he said. “The best and most significant law firms are looking to run more like regular businesses in as many ways as possible. We’re doing the exact same thing, we just don’t talk about it externally.”