Anyone who wonders why law school applications are plunging and there's widespread malaise in many big law firms might consider the case of Gregory M. Owens.
The silver-haired, distinguished-looking Mr. Owens would seem the embodiment of a successful Wall Street lawyer. A graduate of Denison University and Vanderbilt Law School, Mr. Owens moved to New York City and was named a partner at the then old-line firm of Dewey, Ballantine, Bushby, Palmer and Wood, and after a merger, at Dewey and LeBoeuf….
But on New Year's Eve [1913], Mr. Owens filed for personal bankruptcy….
The bulk of his potential liabilities stem from claims related to the collapse of Dewey and LeBoeuf, which filed for bankruptcy protection in 2012….Mr. Owen's situation is all too emblematic of pressures facing many partners at big law firms. After Dewey and LeBoeuf collapsed, Mr. Owens seemingly landed on his feet as a partner at White and Case. But he was a full equity partner at Dewey, Ballantine and Dewey and LeBoeuf. At White and Case, he was demoted to nonequity or "service" partner--a practice now so widespread it has a name, "de-equitization."
Nonequity partners like Mr. Owens are not really partners, but employees, since they do not share the risks and rewards of the firm's practice. Service partners typically have no clients they can claim as their own and depend on rainmakers to feed them….
"It's sad to hear about this fellow, but he's not alone in being in jeopardy," said Thomas S. Clay, an expert on law firm management…."For the past 40 years, you could just be a partner in a firm, do good work, coast, keep your nose clean, and you'd have a nice career. That's gone."
James B. Stewart, "A Lawyer and Partner, and Also Bankrupt," The New York Times, January 24, 2014
The silver-haired, distinguished-looking Mr. Owens would seem the embodiment of a successful Wall Street lawyer. A graduate of Denison University and Vanderbilt Law School, Mr. Owens moved to New York City and was named a partner at the then old-line firm of Dewey, Ballantine, Bushby, Palmer and Wood, and after a merger, at Dewey and LeBoeuf….
But on New Year's Eve [1913], Mr. Owens filed for personal bankruptcy….
The bulk of his potential liabilities stem from claims related to the collapse of Dewey and LeBoeuf, which filed for bankruptcy protection in 2012….Mr. Owen's situation is all too emblematic of pressures facing many partners at big law firms. After Dewey and LeBoeuf collapsed, Mr. Owens seemingly landed on his feet as a partner at White and Case. But he was a full equity partner at Dewey, Ballantine and Dewey and LeBoeuf. At White and Case, he was demoted to nonequity or "service" partner--a practice now so widespread it has a name, "de-equitization."
Nonequity partners like Mr. Owens are not really partners, but employees, since they do not share the risks and rewards of the firm's practice. Service partners typically have no clients they can claim as their own and depend on rainmakers to feed them….
"It's sad to hear about this fellow, but he's not alone in being in jeopardy," said Thomas S. Clay, an expert on law firm management…."For the past 40 years, you could just be a partner in a firm, do good work, coast, keep your nose clean, and you'd have a nice career. That's gone."
James B. Stewart, "A Lawyer and Partner, and Also Bankrupt," The New York Times, January 24, 2014
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