More trouble in the Big Law community

Those of you who drank yourselves insensate over the holiday weekend, or who ate so much hot dogs, hamburgers and potato salad that you found yourself unable to partake of any news, may not have known that Dewey & LaBoe was in trouble. Well, Reuters (among others) reports that Dewey filed for Chapter 11 bankruptcy Monday night. This means no reorganization, they're just going bye-bye.

The implications for Temp Town should be obvious and boil down to: we got trouble, yes trouble, right here in River City. Those troubles take several forms. First, there obviously will be one less firm to work for, and Dewey was a big one. According to Reuters:

The result of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae, Dewey & LeBoeuf had about 1,450 attorneys at its peak, according to The National Law Journal.

I don't care how you count it, 1,450 lawyers is big. That made them one of the largest in the world. If those guys can fail, we need to start wondering, who can't? Why'd they go away? Again, from Reuters:

But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession.

Oh, killed by the recession, just a one-off, no real long-term problems for Temp Town here, right? Dream on, Aerosmith. If one of the largest and most successful firms in the world has "excessive compensation and governance problems," do you think these kinds of issues might be more widespread than many realize? Most lawyers are not business gurus, and law firms are run by lawyers. Besides, it's not like Dewey is the first -- in the last year or so,
Coudert Brothers, Heller Ehrman and our beloved Howrey all went down, and those are just the big ones.

In addition to a potential source of work for temps disappearing, the demise of Dewey will inevitably dump at least a few associates into Temp Town, even if only temporarily. Big Law firms are not hiring associates the way they used to -- they cost too damn much.

Face it, Big Law's business model is changing, and Temp Town inevitably will be affected. We're already seeing a lot more use of predictive coding, ediscovery firms that use their own staff or a minimum of temps, and don't forget the growing popularity of direct hiring. Sure, it pays more, but it is a lot more work for temps to keep up with dozens of law firms than to maintain ties to a half-dozen or so agencies. (Yeah, yeah, most temps are registered with more than that, but they can't keep them all straight and they generally only actually do work for a few. That is changing, too, of course.)

What does all this mean? Hell if I know, but I suspect it resembles Woody Hayes' misgivings about the forward pass: only three things can happen, and two of them are bad.