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Summary: Boston Law firm Bingham McCutchen, once on top, now is struggling to survive.
Boston-based Law firm Bingham McCutchen LLP has made an impressive run of it, since their inception back in 1891. They’ve grown consistently and considerably, and banked in on the 2008 recession rather than starve through it. Now, however, the firm is coming to a crisis: morale is low, debts are due, 225 lawyers have been cut since 2012, and 50 partners have left this last year. They are at the tipping point. Managing partner Steven Browne will have to either regain morale to keep his team of lawyers together, or he must consider more drastic options.
One of the attractive drastic options is to merge with Morgan Lewis, the nation’s 12th largest firm. This would amount to more of an acquisition on Morgan’s part. It would, nevertheless, give the scaffolding necessary for Bingham’s team to reach a state of homeostasis.
Browne began his leadership last year, and has worked to face the burgeoning problems of a 12.6 percent revenue decline in 2013. With only 750 lawyers remaining, they’ve lost 18 percent of their work team.
What went wrong? Some think Bingham grew too fast. With 10 mergers in 15 years, former chairman Jay Zimmerman bolstered their 200 lawyer team to over 1,000. However, such growth must balance against finding an established and consistent role in the market, which itself is unpredictable, and as of late shaky.
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Their strategy of offering flashy contracts to “rainmakers,” or partners who net high-profile clients, has left other clients alienated. Bingham offered such perks as expensive apartments for their best partners in attempts at securing the best talent. Such preferences can alienate “lesser” partners, who, lacking any contract assuring similar job security, tend to listen when recruiter call.
This culture of paranoia seems a justified response, considering Browne’s words that “we are talking to a number of people about fit.” Leadership is scrutinizing performance in hopes of maximizing the efficacy of their team. Though this makes for a leaner work force and greater efficiency, those partners under the interrogating eyes will no longer feel the firm is their “home,” and will hope for a place their talent is appreciated.
Many of the expensive contracts and apartment perks have expired, and Bingham isn’t renewing them, freeing up revenue and diminishing partner disparity. Though Bingham has finished up some of its high-profile cases, such as the 2010 Deepwater Horizon oil spill case representing Anadarko Petroleum Corp., it still represents Oculus VR, a virtual reality firm that has recently sold itself for $2 billion to Facebook.
A merger with Morgan would stabilize things, and partners are going to vote on the prospect over the next few weeks. Browne has admitted that bankruptcy isn’t totally off the table. “Financially we would have no reason to even think about it,” but he adds, “I am not going to leave any potential outcome off the table, no matter how remote.”
