Big firms do the collapse

In law, as in life, death and taxes are a pretty sure bet. Pity that a handful of once-major, now-defunct law firms didn’t heed that lesson last year. Instead of putting effort in bankruptcy or tax law, their efforts to maintain trendy 1990s hotspots such as tech and M&A drove them out of existence, leaving acrimony in their respective wakes.

Of the Once-Big Three, the evaporation of Brobeck, Phleger & Harrison garnered the boldest headlines. But another of 2003’s other lost firms, Chicago’s Altheimer & Gray, proved that firms didn’t need to go tech to go bust.

The tale of Brobeck stood as the final note in the 1990s legal spending spree that sent students west to Silicon Valley in search of ever-increasing salaries, casual work environments and sexy subject matter. At the peak of the 1990s gold rush, Brobeck was named one of Fortune‘s “100 Best Companies to Work For.” But in 2002, with tech-law revenues lagging, the firm’s fortunes took a definite turn for the worse. Nonetheless, according to The New York Times, partners continued to draw tens of thousands of dollars each month. When the firm’s dire circumstances grew undeniable, partners pledged $26 million in expected profits to pay some of its outstanding debt.

Such tactics only prolonged the death throes of the firm; in January 2003, the firm abruptly announced that it was closing its doors. Associates not only lost their jobs, but they also saw their outstanding reimbursement claims left unpaid.

Much of Brobeck’s workforce was absorbed by other firms; Morgan, Lewis & Bockius, a rumored white night in the firm’s final days, hired many of the firm’s lawyers. But the troublesome wake of the Brobeck collapse continued through the summer.

Most notably, much of the firm’s large support staff was suddenly left without access to 401(k) accounts, as well as without health insurance and other employee benefits. The firm continues to work on distributing 401(k) assets to account holders; the remaining functionality of the law firm is largely devoted to that process.

But the wind-down has been complicated by Morgan, Lewis’ absorption of a portion of the Brobeck book of business. In one lawsuit against the firm, plaintiffs (organized under the name “Broke Beck”) have charged that the distribution of client files to Morgan, Lewis and other firms has posed a threat to client confidentiality and raises possible conflicts of interest.

As detailed in The Record last spring, Brobeck recruited heavily at HLS despite the onset of problems at the firm throughout 2002. (Jonas Blank, “Brobeck meltdown leaves HLS students unscathed (mostly)”, Mar. 6, 2003.) Over 100 students signed up for interviews; students accepting summer offers from the firm were suddenly jobless only months before the close of the school year. Fortunately, given what OCS Director Mark Weber referred to as the “inelastic” demand for HLS-minted lawyers, students were able to find alternative employment in other firms.

But while many students fled to what were seen to be “safer” job markets such as the Midwest, Chicago fixture Altheimer & Gray proved that the Midwest was no assured field of dreams.

Altheimer announced on June 26 that it was ending its 88-year run as a reliable Chicago stalwart. The firm, which had developed an international presence and had investigated further expansion as recently as Fall 2002, was unable to overcome what The Economist reported to be a $30 million debt load. But Altheimer’s failure was not attributable to Brobeck-style reliance on the ill-fated tech bubble. Rather, its fortunes fell despite its reliance on M&A work for 75 percent of its practice. As reported in the National Law Journal, internal memoranda faulted the slowdown in M&A for “cut[ting] deeply into Altheimer’s core transaction business.”

Like Brobeck, Altheimer & Gray interviewed students last Fall despite its falling fortunes. Unlike Brobeck, however, Altheimer is still listed in the law-firm directory provided to HLS students via the OCS recruiting web site. According to the site, “Altheimer & Gray is actively recruiting Harvard Law School students and graduates, but has not provided information for our directory.” Fortunately, the site notes that “[t]his employer therefore cannot be added to your Briefcase, or included in comparisons, downloads or prints.”

Where will the legal community find its next big-firm meltdown? Unfortunately for students, there are no sure answers. But given the ongoing work of the Office of Career Service, combined with the seemingly limitless sources of information in, among other places,, the National Law Journal and other legal publications reinvigorated with heightened scrutiny of firms’ health in the aftermath of the public collapses of Brobeck and Altheimer, students can begin to inform themselves as to the career-defining decisions that await them in the fall interviewing season.

Shrug off the “right man’s burden”

On the same day that lawyers debated “diversity” and affirmative action before the high court, writers argued “ideological diversity” in the court of public opinion. But for those who trumpet the latter as evidence of unfair treatment, it is their argument — not their class — that is suspect.

On April 1, the Wall Street Journal opinion pages featured an essay by Northwestern Law’s John McGinnis (HLS ’83) and Columbia law student Matthew Schwartz, describing their empirical research indicating that the legal academy is staggeringly liberal. The essay, highlighted by the national Federalist Society as well as David Horowitz’s right-wing, didn’t go so far as to decry faculty partisanship as harmful to conservative students. But to many, the study is evidence that the legal academy’s “ideological unilateralism” threatens harm to the education of conservative law students.

Speaking as a conservative law student, I vigorously disagree: To be a discrete and insular law school minority is an enviable position.

“Minority” status has long served as a beacon for reactionary protection in American culture, and not always for inappropriate reasons. Indeed, our nation has witnessed deplorable acts of oppression of minority groups. In response, our Constitution offers protections, and the courts and Congress offer still more. But minority status per se is not a position of weakness — certainly not at HLS.

The first obvious advantage of the conservative law student minority is absence of the “collective action problem.” When conservatives can’t rely on a systematic tendency toward the promotion of their views, they are spurred into action — inviting speakers, writing and the like. The core perpetrators of law school conservatism can rely on no one but themselves, and their reliance has been fruitful.

Just as important, the ideological minority is forced into a beneficial position in the classroom: that of near-constant dissent and skepticism. No conservative enters law school blind to the reality of the current left-center establishment. While students of all political persuasions accept their introductory lessons with varying degrees of skepticism, conservatives have reason to be particularly cautious: Long before any of us learn any law, we are introduced to “public policy justification” as a legitimate cause for divergence from strict adherence to the written laws. We are handed casebooks whose materials are edited to varying degrees and for various purposes. We learn the law from faces we recognize from liberal political causes and public advocacy. For students whose initial impression of the role of law collides violently with the last fifty years’ doctrinal ebb and flow, we are forced to look all the more closely at the underlying forces and interests of the lawmakers — either to justify our initial impulses, or to discover where we erred. To conservatives willing to forge ahead, the classroom provides not a threat of silence or hours of attempted Brennanization so much as it does the opportunity to test one’s own theories and, essentially, “read from the other team’s playbook.”

The majority — left-center law students — reap far fewer of these benefits. Instead of consistently confronting a large body of opposition to their view of the nature and role of law, they can elect to reside in an echo chamber of liberal conventional wisdom.

Of course, minority status in the legal academy has its major drawbacks, first among them the dearth of conservative legal mentors. But the largest threat to the conservative law student seems to be internal, not external: the appeal of resorting to the politics of “victimhood” so often utilized by political interest groups.

These political tactics were highlighted by the recent RECORD editorial criticizing conservative students who claim to be “silenced” in the classroom (“Conservatives should shut up about silencing,” 3/13/2003). I still agree with the core of the editorial’s argument: conservative students, particularly in the Federalist Society, are one of the best-organized, most intellectually eager and persistent student populations, and this is the outgrowth of their minority status. In a short time the Federalist Society and its peers have launched such effective attacks on liberal institutions — both political and judicial — that they have spurred the growth of an urgent countermovement. Heralded by such prominent professors as HLS’ Tribe and Chicago’s Sunstein, the left’s urgency is prima facie evidence of the power of its nemeses. Any Federalist Society member who claims classroom vulnerability is levying a suspicious accusation in light of the last twenty years.

Claims of victimhood may play in some realms of political debate, but they offer minimal benefit to the legal academy’s conservative minority. Instead, by drawing attention to classroom politicking, they decrease the amount of classroom time and focus dedicated to legal debate. The legal debate is one that legal conservatives could very well win, as the ongoing experience of the national Federalist Society attests. The political debate — the victim contest — is a much less promising endeavor, indeed.

Adam White is the editorial page editor of The Record.

Selling out: In defense of corporate law

By Adam White

For law students eager to enter the world of big firm law, autumn of 2L year brings a refreshing change: For a few weeks, the most oft-uttered phrase on campus ceases to be, “Isn’t there a public policy justification?” Unfortunately, it is replaced by an only slightly less disconcerting phrase: “I’m selling out.”

This too-common description of students’ foray into firm life reflects the Law School’s disappointing failure to instill in students a powerful truth: that the contributions of “Big Firm” lawyers and of corporate legal education at institutions such as Harvard Law are invaluable to the effective leadership of tomorrow’s legal community.

The Law School has never hesitated to cast its mission in lofty terms. According to the 2002-03 Catalog, “[HLS’s] goal is to provide comprehensive training…. The School … seeks to make substantial contributions toward solving society’s complex problems.” But leadership is needed in a variety of arenas, and if the lessons of the past year have taught anything, it is that corporate regulation and deregulation merit a more searching, intellectually honest inquiry than they have received in the recent past. While many have called for more ethical leadership on corporate boards, fewer have publicly demanded knowledgeable leadership on the part of those anointed to govern and regulate these corporations.

Congress demonstrated the ramifications of financial illiteracy in the legal community at its WorldCom hearings last summer. In a moment indicative of an alarming trend, Rep. Carolyn Maloney (D-NY) asked a former Andersen partner, “How did you not see some red flags when the taxes [of WorldCom]… were so different from what they reported as their earnings?… Would that have helped you possibly uncover the fraud?” [Rep. Maloney, guardian of the Republic, should know that tax accounting and financial accounting are different by law — it’s like the difference between asking how many dependents you have and how many kids you have.]

The questions of Maloney and her peers (GOP and Democrat alike) would be funny were they not depressingly absurd. While such a leadership vacuum has many causes, the search for such causes cannot ignore altogether the derision of corporate law and the big firms that practice it as being qualitatively inferior to the “nobler” academic pursuits of our “future leaders.” Such an atmosphere can inappropriately dissuade America’s bright legal minds from pursuing careers in corporate legal America — perpetuating a leadership vacuum in a field that needs competency now more than ever.

HLS does take steps to promote corporate law — including the recommendation of the “bundled” courses. But for every promotion of corporate law, the Law School provides as many disparaging characterizations of life in corporate law, either explicitly or by implication.

Nowhere is this more obvious than at OPIA, whose mission to open the door to public law often piggybacks upon derision of law firm life. In an excerpt from a book sold and quoted triumphantly on the OPIA website, one author boasts, “I became convinced that neutrality was for the Swiss and determined that, when I grew up, I would not follow the sheep to a big law firm but would instead work to advance truth and justice….” The implication is clear — law firm life is qualitatively inferior to “service” life, and only lemmings pursue private law.

Similarly, the qualitative delineation between “firm work” and “pro bono” is equally harmful and inaccurate. To anoint the ACLU et al. as those working for the “public good,” to the exclusion of corporate law firms is to ignore the incomprehensible importance of the American economy and those who motor it. Lawyers who advocate on behalf of corporate America may be accused of “selling out,” but their contributions to the economic infrastructure have grown the economy, and their legal services protect American entrepreneurs from legislators whose forays into economic regulation would otherwise go unchecked. That’s a whole lot of bono, OPIA’s pronouncements notwithstanding.

Where students are not actively reminded of the importance of corporate legal expertise, extracurricular avenues for their study fail to materialize. Thus, HLS lacks student-edited journals or clinical programs devoted to technical corporate law. In a feedback loop, this is both a symptom and a source of the problem: Students cannot engage corporate law in a practical academic environment, which lends to the impression that corporate law is intellectually inferior to legal historicism, politicking and “legal aid” endeavors, which further dissuades students from pursuing the corporate environment.

HLS has produced leaders who take on corporate malfeasance, such as New York Attorney General Eliot Spitzer, HLS ’84 (who honed his skills in private practice). Just as importantly, the school has produced lawyers who defend America’s productive companies from the creeping tendencies of an increasingly burdensome regulatory Leviathan. But one must hope that the brilliant corporate minds of tomorrow will be produced by HLS, not in spite of it.