← Autodidact Archive · Original Dissent · Walter Yannis
Thread ID: 19887 | Posts: 7 | Started: 2005-08-30
2005-08-30 12:14 | User Profile
This is probably of interest only to my fellow lawyers out there.
I can't believe Coudert Brothers is closing up shop. My, how the mighty can fall.
The only analog that comes to mind is the destruction of Andersen in the wake of the Enron scandal. The amounts involved with the closing of Coudert are no doubt smaller than the gargantuan amounts transferred in one way or another when Andersen imploded, but in terms of just the permanent change wrought on the international business landscape the passing of Coudert really takes the cake.
[URL=http://www.nytimes.com/2005/08/30/business/30law.html?pagewanted=3&th&emc=th]New York Times[/URL] August 30, 2005 Law Firm That Opened Borders Is Closing Up Shop By JONATHAN D. GLATER
When more than 100 partners of Coudert Brothers, one of the oldest law firms in New York, gathered for their annual meeting in a ballroom at the Hotel Pierre in December 1987, they had reason to celebrate: the firm was about to open an office in Moscow, putting the first foreign lawyers in the Soviet Union, then in the early days of glasnost.
"They were all screaming and cheering," recalled Tom Brislin, a partner at Coudert at the time.
Coudert, the first truly international law firm in the United States, had done it again. Within days of the opening of the Moscow office, a senior associate was quoted in newspapers discussing the investment opportunities that existed in the Soviet Union. "That's a classic Coudert story," Mr. Brislin said.
This past May, the same Moscow office, once a symbol of the firm's global reach and ambition, became another sign of Coudert's weakness. The three partners running the office jumped to a rival firm, one of a number of such moves in recent years. Faced with a wave of such losses, and after failing to find a merger partner, the firm announced this month that after more than 150 years, it intended to break itself apart.
What went wrong? Insiders describe a firm whose overseas growth, much of it undertaken based on what former partners called opportunity and impulse rather than thorough analyses of business potential and profitability, ultimately brought it down.
"We were really great pioneers, and really not good settlers," said one partner, who, like several others, insisted on anonymity because he was concerned that his colleagues would think he was harming their prospects by publicizing the firm's troubles.
Over the last decade or so, dozens of big, highly profitable law firms that had deeper relationships with lucrative clients overtook Coudert. Firms like Clifford Chance, White & Case and Baker & McKenzie opened offices in choice overseas markets that Coudert's lawyers in some cases had opened first but that the firm did not defend effectively.
While some Coudert offices were very successful - the lawyers in the Russia and Central Asia practice group are now much sought - others were costly and unproductive, dragging down the firm's business over all and holding down pay.
The breakup will probably mean the end of a firm that has advised major companies like Carrefour, L'Oréal and Occidental Petroleum. Its renown led to its selection as the investigator of accounting problems at Global Crossing after the company filed for bankruptcy in 2002.
Coudert has counted among its partners prominent lawyers like Sol M. Linowitz, a former diplomat and presidential envoy, who died in March. Gary Hart, the former senator from Colorado and unsuccessful Democratic presidential contender, has served as counsel at the firm since the early 1990's.
The decline of Coudert shows how much the business of law has changed, as large law firms have increasingly come to resemble the companies they often represent - focused on marketing, on profits, on plans.
"In the major international firms, what's different today is you have more of a corporate-type organizational structure," said Ward Bower, a principal at Altman Weil who has advised law firms on strategy. "You have a C.E.O.," he said, "and that C.E.O. really has authority."
Lawyers who have worked at Coudert said they prided themselves on being different: as practicing, in a sense, above such concerns.
"It was young, idealistic and wonderful," said Frederic R. Coudert, who spent nearly 40 years practicing at Coudert before he left in 1997 and is the great-grandson of one of the firm's founding brothers. "But idealists have a hard time in this world."
Difficult financial facts were the immediate basis for the decision to begin winding down operations. At meetings of the executive committee in July and early August, financial projections made clear that the only way to survive would be to force partners to accept pay cuts that would leave their salaries below those of some associates, one partner said. That stark reality was shared with partners, who voted this month to permit the firm to disband.
The firm disclosed its plans in a most lawyerly way on Aug. 18, in a statement: "The partners of Coudert have authorized the firm to enter into combinations of offices and practice groups with other firms. Such combinations will be done in an orderly process and announced over the next several weeks." Since then, a spokesman for the firm has declined to comment.
Coudert Brothers was founded in 1854 by Frederic René Coudert; he was later joined by two brothers. The three were the sons of a French immigrant who, having escaped a prison sentence related to his involvement in a conspiracy, came to the United States in 1824.
New York owes him a lot. Frederic René Coudert, according to a history of the firm, "Coudert Brothers: A Legacy in Law," by Virginia Kays Veenswijk, issued a deliberately misleading but very effective warning that Philadelphia might obtain the Statue of Liberty, helping to bring it to New York and raising money for the installation in the harbor.
The firm's international focus was its claim to fame. Coudert opened an office in Paris in 1879. It was the first American law firm to open offices in London, Singapore and Moscow.
"The firm pioneered international law," Mr. Brislin said. "It was always sort of done as a romantic thing."
Richard Dean, a partner at Coudert who was a senior associate in the newly opened Moscow office, described the thinking inside the firm: "To be first in a place had always been important to us."
2005-08-30 12:45 | User Profile
There are no more law firms. There are just groups of lawyers who share overhead and administration.
2005-08-30 13:35 | User Profile
[QUOTE=SteamshipTime]There are no more law firms. There are just groups of lawyers who share overhead and administration.[/QUOTE]
There's something to that.
IT really changed the legal profession. You really don't need to have a group of lawyers sitting next to each other all day for effective client information sharing. And really that's the big draw of a big firm: if one lawyer suddenly croaks then the firm has the resources to take the client matter forward without missing a beat because there's more than one guy involved.
But IT changed a lot of that. I can keep up on client matters sitting at home reading my email.
You know, the really huge economic loss with closing Coudert really is the IP value of the name. Coudert closed many, many of the great deals of the past century, and their name was a very powerful brand that meant to quality. The Coudert name was like the Coca Cola of legal services. Amazing that they'd just let all that goodwill go to waste. How is it that some larger firm didn't simply take them over.
Actually, I know the answer to that. A California firm called Orrick, Herrington & Sutcliffe was in merger talks with Coudert for a long time, and when those talks apparently fell through, Orrick just took over Coudert's whole London and Moscow practice in one fell swoop. Really astonishing how fast all that happened. While litigation seems likely, it looks to me like Coudert partners overplayed their hand. They probably should have taken the deal. OTOH, Orrick didn't get the goodwill value of the Coudert name, so they're out of pocket as well.
I think that the future belongs to small organizations that form effective networks short of a full blown partnership. A number of such networks are appearing now, facilitated by the internet and the cheap email and teleconferencing it affords.
2005-08-30 13:54 | User Profile
Back when the ABA's Law Practice Management Section was about more than promoting diver-sitah, an Atlanta lawyer wrote an astounding article predicting the death of the law firm. I think he may have been wrong on one count: instead of breaking up, the large full-service firms have gotten bigger and wealthier than ever. I have heard some gossip about a few of these firms though: they are merging just to beef up their bottom line and are bleeding cash right on to their marble floors and custom-made carpets. Associate salaries have been stagnant since 1999.
2005-08-30 14:00 | User Profile
[QUOTE=SteamshipTime]Back when the ABA's Law Practice Management Section was about more than promoting diver-sitah, an Atlanta lawyer wrote an astounding article predicting the death of the law firm. I think he may have been wrong on one count: instead of breaking up, the large full-service firms have gotten bigger and wealthier than ever. I have heard some gossip about a few of these firms though: they are merging just to beef up their bottom line and are bleeding cash right on to their marble floors and custom-made carpets. Associate salaries have been stagnant since 1999.[/QUOTE]
Yeah, that's for sure.
Big firms are as obsolete at skyscapers. The economic need for them is rapidly eroding. And that due mostly to the improvement of IT.
Plus, a huge firm like Coudert could never know when a malpractice suit was going to blindside them. I know that the Andersen debacle scared the shite out of the remaining Big Four accounting firms. And look at the crapola KPMG is wading through now. They just settled with the feds for - what? $400 million? That was a really frightening case, too, because you had a few partners selling tax shelters that obviously couldn't pass muster. It's really Tax Law 101 stuff that tripped them up. And the entire worldwide parntership got creamed.
Those folks are all pretty nervous about this. It makes more sense just from a liaiblity persepective to enter into non-partnership arrangmenets, such as Meritas.org.
2005-08-30 14:06 | User Profile
These alliances are popping up everywhere--we're in one as well. The next step, as the lawyer I'm referrign to predicted, will be when the individual partnerships just merge into Meritas. "Partnerships" will then be informal space-sharing arrangements of various legal specialists. The Meritas company will be responsible for all administration, marketing, and putting together lawyer-client teams.
2005-08-30 22:46 | User Profile
This is fascinating! I had no idea, and I had worked in law schools for the past 10 years. We really do live in ivory towers, LOL. :)