As Big Law Profits Plunge, Financial Uncertainty Looms: The Morning Minute
The news and analysis you need to start your day.
August 19, 2022 at 06:00 AM
6 minute read
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WHAT WE'RE WATCHING
WHO YA GONNA CALL? - Some clients have reportedly taken to "ghosting" their outside counsel—meaning they simply stop sending them work without formally ending the relationship. No bad review. No opportunity to make things right. Not even a goodbye. While this phenomenon itself does not appear to be widespread, it does highlight a widely-held misconception among law firm partners: that if one of their clients is dissatisfied, they'll hear about it before it's too late. The fact that in-house departments are culling their vendor lists is not surprising. But to end a business relationship without so much as an "I'm Sorry. I Can't. Don't Hate Me" Post-It note speaks volumes about the client's view of that relationship: that it's so damaged it's not even worth officially ending. Like it or not, that's on outside counsel as the service provider. As we explore in the latest Law.com Trendspotter column, clients are more willing than ever to leave a firm behind. Assuming you'll get a warning or a shot at redemption before that happens would be a mistake. If you're not regularly reaching out to your clients for feedback, now is the time to do it—while they're still answering your calls. I'm interested to hear from you: What should law firms be doing to strengthen their relationships with clients? Let me know at [email protected].
POST-PROFIT-PLUNGE PROPHECY - Well, that de-escalated quickly. After a few years of sky-high profits, PEP dropped by double digits through the first half of the year, and most firm leaders, in a recent survey, are now uncertain whether revenue can increase for the rest of the year, Law.com's Andrew Maloney reports. That represents a significant shift in sentiment, as more than half of survey respondents said they expected increases after the first quarter. More than halfway through 2022, law firms have seen profits per partner sink nearly 11%, the Wells Fargo Legal Specialty Group wrote in an analysis this week. Meanwhile, analysts from Citi Private Bank's Law Firm Group wrote that the high-water mark for financial gains in 2021 along with the uncertainty created by inflation, the war in Ukraine, and the ongoing COVID-19 pandemic, among other things, means it is "likely" many firms will see profitability decline overall this year. The cautious optimism about the legal market displayed by many firms earlier in the year has shifted, according to a recent survey of the 500 largest U.S. law firms by ALM Intelligence and LawVision. And it may color what law firms do in lateral hiring and in managing associate classes.
WHO GOT THE WORK?℠ - Adam Gray, Mike Stenglein, and Mark A. McLennan from King & Spalding have stepped in as defense counsel to Plymouth Rock Energy LLC and Engie Power & Gas LLC in a pending breach-of-contract class action. The suit, which accuses the defendants of failing to disclose the variable charge pricing in consumer contracts, which have caused thousands of customers to pay more for their energy services than originally contracted, was filed June 21 in New York Eastern District Court by Milberg Coleman Bryson Phillips Grossman and Steifman LLP. The case, assigned to U.S. District Judge Lashann Dearcy Hall, is 2:22-cv-03664, 300 West End Ave. Associates Corp. et al. v. Plymouth Rock Energy LLC. >> Read the filing on Law.com Radar and check out the most recent edition of Law.com's Who Got the Work?℠ column to find out which law firms and lawyers are being brought in to handle key cases and close major deals for their clients.
ON THE RADAR - Thompson Hine filed a breach-of-contract lawsuit Thursday in Ohio Southern District Court on behalf of Automobile Consumer Services and its CEO Tarry E. Shebesta. The suit brings claims against PureCars Technologies, which acquired in 2021 third party TruPayments, a company based on Shebesta's patent-pending fintech. PureCars is accused of reneging on conditions of equity purchase and employment agreements, then terminating Shebesta in order to deny him access to his technology and related financial rewards. Counsel have not yet appeared for the defendant. The case is 1:22-cv-00476, Automobile Consumer Service Inc. et al v. PureCars Technologies LLC. Stay up on the latest deals and litigation with the new Law.com Radar.
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EDITOR'S PICKS
State Ethics Board Allows Lawyers to Hold Cryptocurrency in Escrow, But Not for Legal Fees By Colleen Murphy |
'Respondent's Case Is Severe:' State High Court Rejects Attorney's Exceptions, Maintains Disbarment Sanction By Allison Dunn |
Inside Track: Will Your Company Be Activists' Next Target? By Greg Andrews |
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Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
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