Before Dewey & LeBoeuf entered its death spiral last fall, one of its partners met with the head of an Am Law 20 firm to talk about a lateral move. These talks had been going on for a while, but all of a sudden the Dewey fellow had turned ardent. The chairman, as he recounts the story, asked what had changed. The partner was uncomfortable and a little embarrassed. He mumbled some answers about how the firm owed him money and, with one thing or another, he was beginning to lose faith in his firm’s leadership.
After a little polite clucking, the chairman asked whether the partner had sought a look at Dewey’s books.
Had he retained counsel, the chairman asked, just to make a polite inquiry or two, or put a shot across their bow?
Why not? Wouldn’t you do that for a client?
Well, it would get messy, and he’d known these guys for a while, and they were asking for a little more time, and, really, it was like a bad family situation. Now he thought that maybe he should just pack up and go.
Recounting this conversation later, the chairman said he had two immediate thoughts. With an envious smile, he said he’d like to run a firm where he could miss payouts, and no one would come after him with a pitchfork. And two, forget my other questions, pal, just answer this one: Why don’t you grow a spine?
Indeed. While my blunt companion appeared to ask a manhood question, what he really was driving at was an issue broadly applicable to partners, namely: If you’re not going to do it, who is looking out for your interests?
If you sift through the rubble left behind by the failures at Brobeck, Heller, Howrey, and now the Dewey lava flow, you will find two common denominators: really poor leadership, full of misplaced strategies and misleading statements; and partnerships filled with lawyers who refused or failed to act as owners. Having a spine might help, but short of that, having a structure in place to protect their interests may be the better option.
What I have in mind is a cross between an outside director and an ombudsman, someone appointed and paid by the partners who has access to the executive and comp committees and only one job: keeping track of the firm leaders and calling fouls as necessary.
•For another take on why outside directors make sense for law firms, see “Call it Heresy, But Law Firms Require an Outside Perspective.”
This didn’t used to be necessary. Back in the day of the one-office, no-name-tag partnerships, there was always an opportunity for mischief, but the stakes were lower and the governance and personal bonds far tighter. Now much of the big-firm world more closely resembles corporations, only the shareholders don’t have much protection beyond the good faith engendered by their firm’s executive committee.
At many firms that will be enough. Long and deep cultural ties, transparent business records, a palpable tolerance for probing questions: These are hallmarks of partnerships worthy of the name. But some firms have been and will be found wanting. Do partners want to risk their capital and reputations, and, if the worst happens, get caught in years of clawback gamesmanship? A governance fix seems wiser.
In the real world, of course, good luck raising this with your managing partner. But ask yourself: If you can’t get close enough to him to ask, or if he keeps around a sidekick, a brass-knuckled munchkin to deal with the likes of you, why do you want to keep your capital and your future in his pocket?
This idea will make some firms nervous or furious. It could feel like a vote of no confidence. Really, it’s not personal, it’s just business. I can hear it now: “Are you talking to me? If you don’t like it here, maybe you should just leave.” That’s why we need one of the best firms, a place where leadership above reproach is the promise and reality, to embrace this idea. If a firm leader with this stature—and we all have generally agreed-upon lists—suggested appointing such a person to his or her partners, it would be a gesture of confidence and a gift to colleagues spread across the anxious big law firm world. It would empower partners elsewhere to ask why their institutions aren’t following this model. And it would give meaning to the best political slogan of the 1980s, one that resonates with the lawyer disposition: Trust, but verify.