The prestigious international law firm Dewey & LeBoeuf is going bust, as 67 of 300 partners have jumped ship since January. The firm’s troubles began after Dewey and LeBoeuf, two separate firms, came together in 2007 and started reporting disappointing financial performance shortly thereafter. As a result the firm has been slashing partners’ salaries. At first, partners disappointed by reductions in their previously guaranteed compensation packages packed up; now most of the firm’s lawyers are bolting for the doors before the firm collapses entirely.The NYT interviewed Michael Trotter, a well-respected lawyer and author on the economics of law firms, about the issue. Not surprisingly, Trotter says that Dewey’s fiscal crisis and ongoing bankruptcy reflects the woes facing the entire legal industry:
There are now far more capable lawyers and law firms than there is work for them to do. The financial costs of legal services have gotten so high that most clients are determined to reduce them. Many legal services have become commodities that can be supplied by a large number of firms with sufficient quality to meet the needs of most clients in most situations, and corporate general counsel now know that they can get what they need at a lower cost if they force the major firms to compete for the work.
With declining profits and grueling 70-hour work weeks, law has long since left behind its genteel heyday as a fulfilling and patrician lifestyle. The legal profession is just one of many undergoing seismic changes in the face of transformational technologies and new economic realities. No doubt many enterprising young lawyers will find creative ways of dealing with these changes, but in the meantime, we wish the 45,000 students graduating law school this year the best of luck.