✏️ Legal Pad
Nobody Owns a Lawyer
Weil, Gotshal & Manges is 95 years old. It has about 1,200 lawyers in sixteen offices, brought in $2.1 billion last year, and paid its partners an average of $5.6 million apiece. It ran the Lehman Brothers, General Motors, and Enron (great buy, dad) bankruptcies. On October 28, its leaders told the partners the firm should wind down. No bankruptcy. ZERO debt. The legal world correctly called it an implosion. What actually happened is simpler: the talent went home one night and didn't come back. As a solo practitioner, this is where I get to punch low on Big Law.
Weil made a killing cleaning up after the 2008 financial crisis, then sat on the money and cut lawyers while everybody else was hiring. It fell behind on head count, revenue, and profit. Last year partner profit at the top 100 firms grew 14 percent. Weil's grew 4 percent. In March the firm elected private equity partner Ramona Nee to take over in January. By August she'd told leadership she didn't want the job. In September its top dealmaker, Michael Aiello, left for Cravath. More than 30 partners have walked this year. A merger with Willkie Farr fell apart, and days later the firm announced it was done. As of this week, Nee is reportedly close to joining Kirkland & Ellis, the rival Weil could never catch, and taking a team with her. Albert Togut, the bankruptcy lawyer who handled the Dewey & LeBoeuf collapse in 2012, put it best: "A law firm's most valuable asset is its people. If they go home one night and don't come back the next day, it's over."
Here's what makes this story different than any other corporate hostile takeover or M&A that they teach us lay people about in business school: Weil paid these people millions. How does a $2 billion business let its best employees walk across the street and take the customers with them? In any other industry, the answer is a noncompete. In ours, the answer is that a noncompete would be an ethics violation.
Rule 5.6(a) of the Rules of Professional Conduct (Rule 407, SCACR, here in South Carolina; North Carolina's Rule 5.6 is the same) says a lawyer shall not participate in offering or making any partnership or employment agreement "that restricts the right of a lawyer to practice after termination of the relationship," except for retirement benefits. That's it. No one-year, fifty-mile radius. No "you may not solicit clients of the firm." Weil couldn't have held its partners if it wanted to, and neither can Kirkland.
The rule isn't there to protect lawyers. The comment to Rule 5.6 explains that a restriction "not only limits their professional autonomy but also limits the freedom of clients to choose a lawyer." The client picks the lawyer. The client can fire the lawyer. When a lawyer leaves a firm, the client decides whether to stay or go, and the file follows the client. New York's highest court said the same thing when the bankruptcy trustees for two dead firms tried to claim the departed partners' pending cases as firm property: "A law firm does not own a client or an engagement, and is only entitled to be paid for services actually rendered." In re Thelen LLP, 24 N.Y.3d 16, 22 (2014). The court's shorter version, borrowed from a 1943 ethics opinion: "clients are not merchandise."
Given the swirling notions of private equity coming into our field of practice, that ’43 quote is going to get trotted out a lot. But it’s true. Shockingly, my next lawyer trick might be telling clients to ask their lawyers who really owns the firm…
💡 Sidebar
Lawyer Trick No. 233: Don't Tell the Cop His Cologne Is Cheap
When I was in high school, one of my teachers lived in my parents' neighborhood and gave me a ride home from practice one evening. We got pulled over. The officer came to the window and asked, "Mr. Jackson, have you had anything to drink this evening? I smell the odor of alcohol emanating from the vehicle."
Mr. Jackson, stone cold sober, didn't blink. "If you smell alcohol, it must be that cheap ass cologne you're wearing."
I was sixteen. Hearing a teacher say that to a man with a badge was like handing an arsonist a lighter. I still think about it. As an attorney, though, I can't exactly tell you that's strong legal advice. Hilarious? Yes. Beneficial? Doubtful. Larry got away with it because he was sober and the officer had nothing else to go on. Professor Reynolds, who has appeared in this space before, had the better line: never argue your constitutional rights with a police officer in the middle of the night. That's what they build courthouses for.
If you haven't been drinking, a polite "No, officer" will do just fine. Otherwise, don't lie, don't argue, but don't volunteer information you aren't legally required to provide. Be boring. Boring and polite generally doesn't get you arrested. If it does, call me.
⚖️ Closing Arguments
An Ode to a Railroad Town
My parents are selling my childhood home in Cumberland, Maryland. They bought a place here in Greenville about a month ago, and the Cumberland house sold faster than anyone expected, which gave my mother the leverage she needed to get me home for the first time in about four years. Years ago, I promised her one last visit if they ever actually sold the house. She held me to it and good on her.
So last week we loaded up Ashley, Charlotte, and Pat and drove to Western Maryland. My out-of-office message read: "I am driving to Western Maryland with my wife and two children under the age of four. If I make it there and back, which is far from a given, I will respond to all messages upon my return." We made it, which is why you're reading this.
It was the first time my kids saw where I grew up, and presumably the last. That’s not a melancholy thing, just realistic. Once my parents leave, there's no reason for me to ever go back, and I'm glad they'll be down the road from their grandchildren instead of a day's drive away.
The itinerary was built around food, as every trip home should be. Curtis’ Coney Island was number one with a bullet: skinny hot dogs, pillow-soft buns, homemade mustard, chili meat sauce, and onions. My order since childhood is two “with” (meaning onions), fries, and a Cherry Coke, and it is the best hot dog I’ve ever eaten. Watching my three-and-a-half-year-old eat that same order was a top five parenting moment for me. Beyond that, we rounded out the trip with a steak sub with seasoned lettuce from D'Atri's, Sand Springs Saloon up in Frostburg, and Gianni's buffalo chicken pizza. And two stops at Sheetz, which I can't explain to anyone who hasn't lived near one. It beats the brakes off Wawa and it’s not particularly close.
Cumberland is a railroad town and was the literal gateway to the west in the 18th and 19th centuries. In 1755, General Edward Braddock and a young British soldier named Washington assembled troops in Cumberland before marching west during the French and Indian War. In 1865, a band of Confederate cavalrymen rode straight into downtown, entered two hotels on Baltimore Street, and dragged Union Generals Benjamin Kelley and George Crook from their beds. The audacious operation, known as McNeill’s Raid, became one of the most extraordinary cavalry exploits of the Civil War, all without firing a shot.
The birthright of being from that part of Appalachia is a distinct chip on your shoulder. The kind that leads men to soup up Ford Coupes to run moonshine and tell a cop he needs to buy better cologne. Or calling opposing counsel a petulant child and telling him to google “petulant.”
Charlotte might remember the trip, but Pat certainly won't. I will. And there's a picture of my parents sitting on that front porch with my children that will outlast the house.
Court is in recess- see you next Friday.
