Academic

Say which grain will grow, and which will not

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

Big Law layoffs (stealth and open), frozen salaries, and eliminated bonuses, have sounded a drumbeat of woe the past few months. Still, I felt a fresh pang of sympathy when reading of layoffs at my former firm, Wilson Sonsini. Larry Ribstein has already blogged about the WSJ's front page story about the fall of Heller Ehrman.

The article attributes Heller's fall in part to the firm's reliance on big litigation cases that may be on the wane:

But by the mid-2000s, Heller had become more bottom-line oriented. It relied heavily on large-scale lawsuits, such as representing Microsoft Corp. in antitrust litigation or the Big Four accounting firms in securities suits. It was highly lucrative work but episodic. When cases settled, Heller's profits could dip. That put it at a competitive disadvantage to firms that were more balanced, with offices in many locations and broader expertise....

But its financial condition worsened in 2007. That winter and spring, over 45 days, it lost about one-quarter of its litigation business due to settlements, including its defense of Microsoft in the antitrust litigation and Ernst & Young LLP in securities litigation. Some Heller lawyers saw this as more than a temporary blip. They believed large-scale litigation matters -- the sort that can occupy 30 or more lawyers for years and that had been the key driver of Heller's growth -- were permanently on the wane, as companies increasingly used mediation or adopted other cost-saving measures.

Pre-academia, I'd always joked that my litigator husband and I were fully diversified. The conventional wisdom was that if times got tough, transactional attorneys would be vulnerable but litigation would up-tick. What do you think, Glom readers? Have companies really wised up to how crazy expensive litigation is? If so, why now? Whither the future of Big Law?

(Couldn't resist grabbing a Macbeth quote for a title after reading this dispatch from Davos.)

Full post as published by Conglomerate on January 27, 2009 (boomark / email).