This article re-published on the Paralegals blog is well worth a quick read..
As not only does it suggest the reasons for the failure of both firms but also suggests that what has happened on the west coast is bound to happen to some extent on the east coast.
The Chronicle writer Tom Abate writes:
Now the same forces that humbled Heller Ehrman and Thelen – competitive pressures, defections of partners and tightening credit – are buffeting law offices elsewhere and are likely to cause failures in other cities.
"I would anticipate that we would see more dissolutions, and I think they will be East Coast firms," said Ward Bower with Altman Weil, a Pennsylvania consultancy that advises law firms on a range of topics from mergers to management.
The demise of Heller and Thelen leaves Morrison & Foerster and Orrick, Herrington & Sutcliffe, among others, as remaining pillars of the San Francisco legal community.
Bower said it was an unfortunate fluke that Heller Ehrman and Thelen were internally weak when the revenue slump caught the industry by surprise last year.
"You had a unique situation in San Francisco because firms there were hit with a double whammy," Bower said, starting with the bursting of the dot-com bubble of several years ago and followed by the housing-led financial crisis.
…../…..
S.F. just the first hit
In essence, legal experts say, San Francisco’s legal industry took the first hit in what is looming as a nationwide shakeup.
"Since 1991, the practice of law has been seeing dramatic increases in revenues," said Gary Klein, a legal industry recruiter in Washington, D.C.
Preston McKenzie, a business of law expert with Thomson Reuters in Minnesota, said this long surge in billable hours and revenues had been driven by the increasing complexity of global business in fields as disparate as mergers and intellectual property.
"There are equity partners at large law firms who have never seen anything during their careers other than increasing demand and higher rates," said McKenzie, whose industry surveys began to detect a slackening of demand for legal services in mid-2007.
"It was almost like a switch being flipped, and demand moved backward," he said.
The full article is available at
http://paralegalslo.blogspot.com/2008/11/woes-that-felled-s.html
