What it means to USA largest firms in bankruptcy (Zhao Yuan)

In May 28th, Dewey said America international law firm (Dewey &LeBoeuf LLP) filed for bankruptcy to federal bankruptcy court in New York Manhattan, officially declared a 100 year history of top law firms to end, also be USA history of the largest law firms in bankruptcy. According to court documents show, Dewey Lu Bo gross debt of $315000000, while the assets of only $193000000, has been unable to pay its debts. The New York based law firm in 2007 by Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & McRae LLP, the two firms merged, in the professional field of fame, heyday in the world with 26 representative office and has 1400 lawyers. However, with the fall of Dewey Lu Bo, a former industry giants in the fall, almost all of the partners have left fled, join the other law firms.

Dewey, Lu Bo bankruptcy will let the human sob, federal judge Richard Howell said, "this is the law very sad day". At the same time, Dewey Lu Bo decline also to all people with warning: this tragedy may not be the case, but exposed the deep-seated problems USA lawyer industry. In very long period of time, people tend to think that the lawyer industry, especially those who are good at business and securities business of large firms, which can resist the risk brought by the economic cycle. In the market when the firm stride forward singing militant songs, mainly to do the listing of companies and the merger and acquisition transactions, but once the recession is over, the firm bankruptcy reorganization lots of cases. In fact, one of the predecessor Dewey Lu Bo, Dewey Ballantine LLP is in the Great Depression by this pattern developed rapidly. However, in 2007 the global financial crisis seems to have broken America big firms that "be secure against assault" image. After they had 150 years of history in the 2006 Coudert Brothers LLP in San Francisco, bankruptcy, two large law firms Thelen and Heller Ehrman in 2008 because of poor business and closed, employs more than 500 lawyers Howrey LLP collapsed in 2010 due to financial difficulties, and then to today Dewey Lu Bo decline, these seemingly unsinkable "Big Mac" as the Titanic hit an iceberg and sank to the seabed in succession.

On the surface, big firms with Dewey as the representative of the collapsed slump, is because of the global financial crisis caused by the market, the business volume sharp decline, leading to income to support its huge spending. Be careful analysis, we see not hard, the bankruptcy substantial Dewey Lu Bo reflects is America large law firm drawbacks in the management and governance in a long time.

Law firm as a legal professional service provider, its survival and prosperity depends on two factors. In the law firm in the form of organization, from the beginning to be stressed that the "human nature", namely the organization trust between members and the cooperative relationship. The earliest law firm with the partnership form of organization, all partners shall bear unlimited joint and several liability of law firms operating in the process of debt, for one. So, only the same concept, trust each other's lawyers will join a law firm in joint operations, this ensures the organization cohesion and sense of mission from the inside. On the outside, the lawyer industry as a service industry, the inevitable cannot do without the customer trust. And to win the trust of the customers, the lawyer must be diligent, always loyal to the customer, to provide high quality professional services. As one commentator said, a law firm only valuable asset is its customers.

However, with some law firms bigger, stronger, the internal and foreign two based on the book seems to have been behind him. The partnership organization form in traditional law firms, while adhering to the "people", but to the unlimited liability, and is not the same as the General Corporation as the rapid expansion of the scale, absorbing a large number of new members. To overcome this problem, the law to create a limited liability partnership this form, let partners can also enjoy the benefits of company law in the limited liability system. Thus, firms can rest assured that the introduction of new partners, the care more is whether the new partners can bring a lot of business, rather than the partners and all other partners character.

In the course of time, will appear the lawyer industry in a not very good atmosphere. Large law firm to bring huge business lawyer as a gold mine, the only way to attract these lawyers into the apparent expansion for their own. In order to achieve this goal, each large firm opened at huge pay to win "outstanding talents", and even each other between the "digging people war", finally let oneself bear the heavy financial burden. For example, Dewey said even in the recession year performance, also to provide millions of dollars to pay a guarantee to the partner, in order to "maintain the morale of the troops". This practice violates the law firm mechanism of the mind, make people abandoned the partnership should be loyal, cooperative and the concept of equality, the law firms to maximize their own interests as a money making machine.

It is in this money profit thinking guidance, also greatly reduced large law firms in the customer service attitude and quality. Lawyers are no longer regards the customer is God, but regards as the customer can be exploited and big. "". In recent years, law firms behoove to their customers for hundreds of dollars per hour high fees, to allow customers to bear all the costs of their own, but rarely on the provided quality of service guarantee. If things go on like this, the core of many large law firms have gradually deviated from the requirements of service industry, improve work efficiency, reduce NO in operating costs and improving service level fluctuation kongfu, but put all my energy into extensive high paying dug growth strategy. When the economic situation is excellent, the customer enjoy generous pay these huge legal service fee, confused by the large income partnership people tend to be easily to create the illusion that, such a "fleece" pattern of growth can continue forever, and continue to wasteful spending. William Henderson professor of law as the Indiana University said, "just now the big firms issue lies in the past several decades of unbelievable success, which makes people refused to consider a new business model".

When the financial crisis struck, the law firm traditional customers -- large financial institutions have closed down or tighten their belts, the good old days gone for ever. Customers are starting to complain about the firm a costly bills, even for financial advisers audit bills of each spending or to switch to the cheaper but more efficient firms. In such a change, like Dewey's can not adapt to the old law firm eventually collapsed.

Dewey, Lu Bo bankruptcy once again remind the lawyer industry should keep its foothold: carries the same philosophy to overcome difficulties, with professional knowledge and occupation ethics provides the best service for the customer. The past economic prosperity achieved successful partner of a large number of rich lawyers and millions of dollars in annual revenue, but the crisis, the legal profession is now facing the huge transformation. Although the social and market demand for professional legal services will not go away, but in the long run, law firms only to provide more efficient service to survive in the fierce competition in the industry. Faced with this challenge, the big firms will not escape the choice: active change back to the source, or to accept the fate of being eliminated.

Source: Legal Network -- the Legal Daily

USA maximum firm bankruptcy exposure total liabilities of $315000000

2012-05-30 23:51:07Source: xinhuanet.com editor: Ye Hanmin[I want to comment

American Dewey said law firm for 28 days because of financial support and partner fled not filed for bankruptcy protection, which USA history of the largest law firms in bankruptcy.

　Bankruptcy liquidation

Dewey, Lu Bo on the same day to the federal bankruptcy court in New York Manhattan filed for bankruptcy. The firm said, after consultation with other firms, still could not find the acquisition of buyers, he decided to bankruptcy and liquidation.

According to court documents, Dewey Road, a total of $315000000 in debt, including $225000000 of bank debt, other creditors including landlords and former partner. Dewey, Lu Bo assets include $13000000 in cash, $255000000 in accounts receivable, a few pieces of art and about $11000000 in insurance investment.

Dewey, Lu Bo said, will leave to assist the liquidation of 90 employees, this program is expected to be completed in the next few months.

Former federal judge Richard Howell told "New York Times" reporter: "this is the law very sad day. Dewey, Lu Bo is a well-known institutions, there are many good lawyers, there has never been such industry leaders."

Dewey said in 2007 by the two firms merged, employing more than 2500 people at its peak, 1400 lawyers in 26 offices in the world.

　　Industry reflection

Dewey, Lu Bo sadly curtain call in the heat that caused America law. This is just an isolated incident, or industry issues worth pondering?

Some analysts believe that, Dewey Lu Bo fall of the root is not unique to this family, many large firms adopt similar business strategies, such as through the implementation of M & A, extensive growth with high salary, competition from other senior partner and low-level employees pay great.

"New York Times" quoted the analysts said, this undermines the partner mechanism of the mind, that is everyone carries the same philosophy to overcome difficulties. Many big firms are abandoned by the partner system should be loyal, cooperative and equality, put yourself into a money machine to maximize the benefits.

The bankruptcy outcome Dewey Lu Bo, make some industry analysts recall fall 1987 New York famous law firms Finlay combe buhler. The reason why firms go bankrupt, including expanding too quickly, the huge borrowing and generous reward "outstanding talents", all of these can be found in Dewey's.

Kirk, Ellis, former law firm partner Steven Harper said: "Finlay - Qom Buhler is a lesson, now seems to be forgotten."

　The giant fallen

Large American law firms Dewey said not only fallen in recent years. In 2008, San Francisco two large law firms because of slow growth of business bankruptcy. Last year, a Washington law firm due to financial difficulties disintegration.

Harper said: "the big firms have some sleep without any anxiety management will be the next, next year we will have it to give lessons."

This year, America law everyone is talking about Dewey Lu bo. In 2008 the global financial crisis and its induced recession hit Dewey Lu Bo performance. To overwhelm the law firm and the heavy debt.

Even in the recession year performance, Dewey Lu Bo to provide millions of dollars to pay a guarantee to the partners in which several people, each receiving $5000000, a heavy burden to the enterprise.

Dewey said although mismanagement, in the professional field is prominent. It has represented the players union and the National Football League and the National Basketball Association check evidence of both parties at court, was the metropolitan life-insurance company to provide legal consultation, on behalf of the Manhattan Nancheng development company in the World Trade Center reconstruction.

　Each pursues his onward journey

Reuters comments, lawyer groups "renegade" and took away the customers to competitors, it is not rare. But Dewey said the massive partner fled, and occurred in a short period of time, but some unusual.

According to Dewey's statement, the law firm, the first quarter of 2012 liquidity difficulties, resulting in 160 people the 300 partners in May 11 days before the "rush" to resign.

"New York Times" reports, Dewey Lu Bo partners almost all have travelled to other firms, in which 36 people to join the world's largest dla. Hundreds of newly minted lawyers and assistant lawyers have in the labor market bitter seek jobs.

In addition, no matter Dewey Lu Bo customers are going to hire another person, their lawsuit will be affected.

Dewey said an assistant lawyers wrote in court papers: "thousands of customers are looking for new general counsel, tens of thousands of copies of customer records are waiting to experience this program."

Source:Http://www.xtol.cn/HTML/2012/5/213408.html

America large law firm fading Revelation

Http://www.law-lib.com2012-5-20 21:46:01 source: wealth Chinese network

Dewey said the international law firm (Dewey & LeBoeuf) is a top law firms in New York City, but now it is struggling, shake and crumble, well-known industry paid perhaps will not protect. Previously, people referred to law firms usually think of decent and identity, and now appears to be at risk of start-up industry? Perhaps, we can from the fading history Dewey Lu Bo in beitou.

Stanford University School of law (Stanford Law School) Professor Robert Gordon is currently writing a book about USA law books. He said: "Dewey Lu Bo perhaps is an extreme case. But may also represent a trend. The extent of firms are far more than other industries. Many firms are promises they cannot afford to pay, and at the large sum of loan."

Of course, not all corporate law firms are going downhill, but influenced by technology integration, employee surplus, the structure factor, the firm's life isn't easy; but, as each big enterprise's customers are committed to slashing the legal expenses.

With Dewey Lu Bo out and the partner you pay one point one more exposure, firms industry restless culture also reveal to the public. In order to have good prospects of gain for corporate customers, the madness of the competition between firms, and the attractive salary commitment digging foundation, using various tricks to attract star partner from the competitors. This behavior has completely changed the traditional development partnership. Previously, only after years of internal training, experienced lawyers are eligible to become the partner.

University of Washington School of law (Washington University Law School ) law professor Blaine Tamana ha said: "firm partnership is to unite the loyalty of brand, but as partners began to wait for the right price to sell, everything changed. We still maintain the lawyer occupation facade. But when the lawyer himself and paid CEO or other wealthy Americans are compared, is in fact the blow one's own horn."

Gordon of Stanford University says, early in the last century eighty's: "become the partner can let a lawyer enjoys a high reputation, but won't let him overnight." But with the last century seventy's the demand for legal services is increasing, firms begin to discard "higher than the service and occupation" market values this romantic cloak of.

American National Association of legal employment (National Association for Law Placement, NALP, tracking the employment situation of the legal profession) executive director Jim leipold added: "the mid eighty's in last century, a large number of young lawyers to law firms, after the partner pay has been rising steadily." In order to be able to compete with the more attractive Internet start-ups, after ten years, firms significantly improve salary, snatch talent from top law school.

The bursting of the Internet bubble slowed the pace of competition, but laws and related business still exist in large numbers, so in 2006 and 2007, the firm new salary also experienced a rise. From 1997 to 2007, in the top law firms, is the so-called "big law firms," first-year salaries doubled, rising from $80000 to $160000. Although the company to hire 20% of law school graduates, the big city firms but for the whole industry set the tone.

Labor management firm TyMetrix recently to USA 4000 firms were investigated. According to the results of the survey, the top law firms in Pyramid, partner salaries has reached the top level of company leaders, charges $900 per hour.

"America lawyer" magazine (The American Lawyer) of the statistical data shows, 2010 in America top 100 law firms, the average profit per partner, $1360000, $741056 in 2000 doubled.

Gordon said: "a partner costs are skyrocketing, because they are involved in large financial transactions, banks pay very high. To put it plainly, is jealous of the high income people. They called it the League wages."

Leipoldt said: "in a recession, due to reduced demand for legal services, firms wages rising momentum eased. But the partners still enjoys a huge pay."

During the economic recession, USA jobs to reduce 45000, a large number of well-known firms have closed down, such as Holcim law firm (Howrey), Helen law firm (Heller Ehrman) and Si law firm (Thelen Reid) etc.. It can get seven digit salary partners, suddenly facing pay has shrunk circumstances, therefore, many people have to switch to other firms. According to industry experts reveal, big firms in order to consolidate their position, crazy from other firms recruit star partner, or even out of close to $10000000 a year. The results, the salary gap between lower paid employees and partners continue to expand.

Modun • A • Pearce is one of Dewey's highest paid lawyers, the annual salary of $8000000. He served as vice chairman of the firm, is the prominent mergers and acquisitions specialist. In 2007, his company Dewey law firm (Dewey Ballantine) and Lu Bo law firm (LeBoeuf, Lamb, Greene, & MacRae) with Dewey's law firm. Later, he left the merged firm, but declared the firm owes him $61000000, including a possible extension of unpaid salary, pension and investment in the firm.

Although Dewey Lu Bo opened a staggering amount of compensation to the partner, but there are still a large number of partners have left for better firms, leaving the firm's management, paralegal, young lawyer and retired people emerge of itself and perish of itself.

The firm consulting company Altman Weil manager Jim kottmann think: "too many firms boss only the pursuit of short-term revenue, rather than focus on long-term investment." He thinks, firms in law school graduate who had a huge investment, but "companies want to profit from his partner to wait until four years after the. By then, the growing graduates half job hopping."

So, he thinks "mobility is the trend", because the law school graduates are burdened with heavy debt, they "need to be repaid, and hope to add served in big firms experience in the curriculum vitae, before choosing a smaller firm."

Gordon and other legal experts think, big firm's problems can be traced back to the seventy's of the last century. According to Gordon's words, that year, big firms "unable to hold oneself back to reach a conspiracy", "salary data to provide legal publications American lawyer", the newly established. And this "about naked commercial success criteria". These numbers become the basis for calculating average profits per partner, then the firm rankings, the legal profession scholars think, this makes the further commercial firm.

University of Colorado (University of Colorado) the legal profession teachs Paul Campos to think: "it eventually evolved into a game, and the legal profession also reduced to the same and other business, but it is full of arrogance and conceit." Paul Campos is a blog site "law school" (Inside the Law School fraud again Scam) writers.

Finally, Gordon concludes, the salary gap continues to expand, partners, and employees of the firm with declining loyalty and decreasing seniority makes firms become "loose union", and "the partner is more like a free man."

Translator: Aaron Wang Hao

Source:Http://www.law-lib.com/fzdt/newshtml/shjw/20120520215915.htm

Source: Legal Network -- the Legal Daily

Website.Http://www.legaldaily.com.cn/international/content/2012-06/05/content_3618444.htm? Node=34039