Thursday, May 10, 2012
A story in the Am Law Daily has a chilling quote from a soon-to-be ex-Dewey & LeBoeuf employee. "I've been here 14 years," she said. "They never apologized. They never explained what was going on to us. It's very disrespectful to the staff. It's always about the lawyers. It's never about the staff."
What do Dewey & LeBoeuf partners (and recent ex-partners) owe their staff? I’m not talking about technical calculations based on the federal WARN law. I am talking basic principles of human decency that have to be followed in order to look one's self in the mirror each morning—what our non-professional parents or grandparents would tell us to do.
I suspect that 95% of people (and lawyers, who are people too) would sign on to this list:
- Guarantee the timely distribution of all paychecks and corresponding 401K contributions
- Guarantee the eventual payment of unused vacation and personal time
- Explain the status of health insurance and prevent any interruption in coverage
- Say “I am sorry this is happening to you. We wish we could rewind the clock and do things differently so we could have avoided these problems for you and your families."
The reality, however, is near the opposite. No apology. No explanations. And an eventual bankruptcy filing that will convert hundreds of longtime Dewey & LeBoeuf staffers into unsecured bankruptcy creditors who will likely have to hire a lawyer to get a percentage of what they are actually owed.
If (rich) Dewey & LeBoeuf partners seem to be falling short, it is all-too-easy to chock up this behavior to greed and moral failure--and I am sure this behavior will be amply recounted in the final Dewey & LeBoeuf post-mortem. Yet, moral fortitude is no match the sheer size and geographic dispersion of the Dewey & LeBoeuf partnership. As a simple matter of logistics, it is near impossible for the firm's most well-meaning partners to coordinate an effective plan for treating all the staff fairly.
A story in the New York Times (here) reports on an ex-partner who is starting a fund to assist staffers, apparently seeding it with $10,000. His moral impulse is spot on. But the task of fully delivering on the impulse is pretty staggering. Some questions:
- Are all the partners kicking in, or some? Many Dewey & LeBoeuf partners have probably never met each other—what a task!
- If I am a partner, how much is this going to cost me? Well, it depends upon who steps up and on what terms.
- Are the partner contributions pro rata or proportional to income and status in the firm? Apparently, the true incomes of Dewey & LeBoeuf partners was a deep mystery, though the differential reportedly approached 20 to 1. What is fair is at odds with what is workable.
- Every Dewey & LeBoeuf staffer, not just the ones who worked with me? Dewey & LeBoeuf had 1,000 non-lawyer employees. The needs, obligations and liabilities could run into the tens of millions.
- Who has all the information on employee benefits, and who is going to pay that person to calculate all the payouts and communicate with staffers?
Somewhere between question 1 and question 4, most of us would conclude that were embarking on a fool’s errand—we, and our families, would drown in the task of helping others. So we would put our heads down and focus our own situation. And despite a pounding conscience, the less advantaged are left holding the bag on a mess that, objectively, the lawyers created.
Ironically, this disgraceful state is a byproduct of several decades of prosperity and growth. And its unraveling perfectly parallels the voice, exit and loyalty framework articulated by the famed economist Albert O. Hirschman in his 1970 book, Voice, Exit and Loyalty. The framework runs roughly as follows.
In relatively small organizations or communities, problems and disagreements can be resolved through voicing one’s concerns to fellow stakeholders. Further, if exit is expensive or impracticable, voice is the only option. Ideally, dialogue and cooperation ensue, thus benefiting all parties and producing a reservoir of loyalty.
In larger organizations, however, a governance structure based on voice can be too messy and time consuming, so decisions are delegated to smaller group. Unwise or imprudent decisions are curtailed by the exit or the threat of exit by key stakeholders. So exit can produce quite stable and healthy organizations. Yet, when leadership fails to take corrective action in response to exit, the organization can slowly, or quickly, self-destruct.
Today, virtually every firm in the Am Law 200 operates on exit principles as expressed in the market for lateral partners. In the case of Dewey & LeBoeuf, the most significant shock to the system was the realization within the partnership that the firm’s leadership had failed to level with them regarding the financial health of the organization. The firm was long past the point where an out-of-use voice could serve as a corrective (26 offices, 10 countries!). Further, the reservoir of loyalty had run dry. So the partners rushed for the exits.
Ironically, many Dewey & LeBoeuf staffers probably took solace in working for an old-line prestigious law firm with international offices; they inferred they were safe. Now they are collateral damage, treated with less respect than the staff of Big Box store closing in an aging suburb.
What happened at Dewey & LeBoeuf could happen at any Am Law 200 law firm, albeit some have deeper reservoirs of loyalty than others. I worry that the so-called “elite bar” has given up on voice, or is woefully out-of-practice in speaking openly and frankly to those with power. Further, I worry that too many Am Law managers only listen to the views of rainmakers. That is especially pernicious if the rainmakers are overpaid, as they appeared to be at Dewey & LeBoeuf, because the exit of the rank-and-file lawyers can also destroy a firm.
Regardless, all of us lawyers need to take note of the deplorable treatment of the nonlawyers in the building--hundreds of people who kept the enterprise running and contributed to the professional treatment of clients. The treatment of the Dewey & LeBoeuf staff (or Howrey a year earlier, or Brobeck or Heller) is utterly incompatible with self-image of an elite, prestigious law firm. Increasingly, we are confusing profitability with estimable conduct. The evidence is indisputable that this error in judgment destroys firms and destroys lives.
[posted by Bill Henderson]