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William C. Altreuter
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Friday, September 12, 2014

I ran into one of the former partners of the firm where I once worked at the deli the other day. He was a big deal back then, because he had a big institutional client, and then that client collapsed and suddenly he wasn't such a big deal. He landed on his feet, more or less, and then the firm blew up. Seeing him got me to thinking about what fragile entities law firms are, even though they seem substantial. When it blew up (a couple of years after we'd left) that firm was over 150 years old, but when they blow up all law firms are revealed as being less substantial than Papier-mâché. Yesterday news hit that Bill Savino and three other partners at Damon Morey are walking away to join a Rochester-based firm, and this seems like a fairly significant seismic event in the local legal community. Damon says it is the third largest firm in the area, and I suppose it is. Whether it will endure after losing a big chunk of the work that it is largely known for is an interesting question, and the answer is likely to come down to whether the partners that remain are committed to practicing together. Law firms depend on synergies-- if everyone merely tends his or her garden and expects compensation in excess of actual contribution then they are in an unsustainable posture, but because lawyers are so clever we are pretty good at constructing operations that operate in exactly that way-- for a while. I suppose the paradigm is Dewey LeBoeuf, but there are plenty of other examples.
Peter S. Marlette, Damon Morey’s managing partners, confirmed their departures and said he was sorry to see them leave, but he noted Damon Morey continues to have 85 attorneys among its 160 employees. “We’ve got a firm that’s filled with excellent attorneys and terrific clients, and we will continue to serve our clients as well as we always have,” he said.
Well, there's part of the problem right there: the 75 employees who are not lawyers (lawyers, mind you, not partners) are pretty much pure overhead. So too are some of the 85 lawyers. Ideally associates and paralegals are profit centers, but associates expect to become partners at a rate that typically outpaces their ability to expand the practice. Some leave-- the time spent training them is a lost cost. Overhead will kill you: Class A office space doesn't come cheap, and neither does Westlaw, or photocopiers, or computers, or software (I wonder what the license for 160 copies of MSWord runs?). The service that comes and waters the plants, the money laid out to sponsor the Zoo, or Shakespeare in the Park, or tables at the Heart Ball-- it adds up pretty quick, and meanwhile you have partners who reckon that the client that that retained them 25 years ago is their client, not the firm's client, and that therefore they should get the slice with four pieces of peperoni, not the slice with two, or the slice with just olives, or the plain slice.

I hope Damon circles the wagons, I really do, chiefly for the sake of the 75 people who are not lawyers, and for the sake of the people who are not partners. And I wish Bill Savino well.

| Comments:
When nearly half your staff are regarded as a "lost cost", I reckon your business is a lost cause, although once you've gotten past four or five partners, you've also changed the meaning of "partnership" in a way that devalues that, too.
 

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