The 2010s have been fraught with challenges for firms. The decade began in the aftermath of the Great Recession, which helped push a few firms to the brink.
But there were plenty of other problems that caused firms to perish in the past ten years, such as mismanagement, over-extension, and over-expansion.
If anything has become certain over the last decade it’s that no law firm is too big to fail. Here are some of the biggest firms to crash and burn:
Howrey. Founded in 1956 in Washington, Howrey specialized in antitrust litigation. At its peak it had $573 million in revenue, $1.3 million profits per partners and a bench of over 700 lawyers across roughly 18 offices worldwide. Even as the recession raged on in late 2008, the firm hired 40 lawyers from the now-defunct Thelen. In July 2009 it acquired a high tech boutique in Silicon Valley. But just 18 months later, the firm collapsed.
Overexpansion, declining productivity, and lax management of client billings were all reasons cited for Howrey’s troubles. In early 2010, it’s then-managing partner told its partners the firm had missed its budget projection in 2009 by 35%. This set off a wave of departures that culminated with the decision in March 2011 to dissolve the firm.
Dewey & LeBoeuf. Formed in 2007 through the merger of highly regarded New York firms Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, Dewey & LeBoeuf was a powerhouse law firm, once ranking 22nd on the Am Law 100 with more than 1,000 lawyers.
But all was not as it appeared at the firm. Mismanagement left the firm more than $300 million in debt, thanks in no small part to lavish contacts given to attorneys and new lateral hires the firm made as it attempted to expand in the post-recession era despite a decrease in business. Dewey was unable to pay its lawyers and soon 300 of its attorneys headed for the exits. When it closed its doors in May 2012, it was largest law firm failure in U.S. history.
The firm filed for bankruptcy that month, but that wasn’t the end of the Dewey saga. It’s chair Steven Davis, executive director Stephen DiCarmine, chief financial officer Joel Sanders, and client relations manager Zachary Warren were all charged in connection to the firm’s collapse, with Sanders convicted on felony charges of fraud and fined $1 million. Sanders is appealing his conviction.
Bingham McCutchen. All seemed fine at the Boston founded Bingham McCutchen following the 2008 recession. It’s 2009 revenues increased 12% from the year prior to $860 million and its profits per partner were up 2% to $1.44 million. But there was trouble bubbling beneath the surface, and the firm would cease operations just a few years later.
Internal rifts followed Bingham Dana & Gould’s 2002 merger with McCutchen, Doyle, Brown & Enerson and again after its 2009 merger with McKee Nelson, thanks in part to multiyear compensation guarantees granted to the McKee group. By 2012, two main sources of work, on insolvency and on Deepwater Horizon oil spill litigation were starting to fade , and the firm posted a decline in profits for the first time in at least a decade.
In November 2014, it all came crashing down as 750 of Bingham’s lawyers, including 226 partners, joined Morgan Lewis & Bockius, effectively closing the doors on Bingham McCutchen.
Dickstein Shapiro. At its peak, the prominent Washington law and lobbying firm Dickstein Shapiro had more than 400 lawyers. Known for its regulatory, intellectual property, and litigation practices, the firm started to see trouble following the 2008 global recession, cutting staff and issuing salary freezes in the years following.
In 2013 the firm hired Republican former House Speaker J. Dennis Hastert to rebuild its lobbying practice but he resigned in 2015 after he was indicted on bribery charges. The firm explored mergers with several firms, including Pillsbury Winthrop Shaw Pittman to no avail. In 2016 Blank Rome acquired more than 100 of its lawyers and staff, leading to the ultimate dissolution of the firm.
Sedgwick. At one time, the San Francisco-based Sedgwick was a go-to firm for many insurance companies. But following the 2008 recession, the firm struggled with the changed legal market. As other firms contracted in the years following the recession, Sedgwick made a play for expansion with new offices in Kansas City, Miami, Seattle, and Washington.
Apparently it didn’t pay off. By the beginning of 2017 the firm lost 40 lawyers and the defections continued throughout the year, with the firm on the hook to repay the partners’ large capital contributions. The firm also shuttered offices in Austin, Chicago, New York, and Washington.
For much of 2017, the firm was in merger talks with U.K. firm Clyde & Co. but after those merger talks fell through, the Sedgwick announced in November it would close its doors in early January of the following year. In October 2018, the firm filed for Chapter 11 bankruptcy protection.
LeClairRyan. After 31 years in business, Richmond, Va.-based LeClairRyan shut its doors in late 2019. Gary LeClair and Dennis Ryan founded the firm in 1988 to work with startups and entrepreneurs. Over the years the firm grew to 25 offices across 13 states and Washington.
But this rapid expansion led to increased overhead expenses. Some partners have pointed to a lack of support for key practice groups coupled with excessive partner compensation that contributed to the years of declining revenue. Ultimately, they said, this prompted massive partner departures.
In a bid to save the firm, LeClairRyan inked an unconventional deal with alternative legal services provider UnitedLex to create ULX Partners, a joint venture where 300 of the firm’s professional staff were rebadged to ULX and then leased back to the firm.