THE NOT-SO-SAD STORY OF SAN FRANCISCO'S BROBECK, PHLEGER, AND HARRISON, AND WHAT IT MAY MEAN FOR THE FUTURE OF THE PRACTICE OF LAW

By EDWARD LAZARUS

Thursday, Jun. 13, 2002

In corporate America, morality tales are everywhere. A company that was once touted as the nation's most innovative is now bust. Its accounting firm is on trial. Investment houses scramble to explain the perfidy of their most highly touted analysts. The stock market tanks amid fears of widespread corporate fraud.

The dramas of the legal world are minor by comparison. But a story has been unfolding over the last few months suggesting that the time is right to reflect briefly on the current state of the legal profession and the damage done it by the now shattered bubble of the 90s.

The once high-flying law firm of Brobeck, Phleger, and Harrison is coming apart at the seams. Some months ago, the firm - which became famous for riding the tech boom to enormous growth and supercharged profits - announced that it was laying off substantial numbers of associates in response to the economic slowdown.

More recently, more than 20 partners in the firm, including those who controlled a big chunk of Brobeck's securities practice and the immediate past chairman of the entire firm, announced their defection to Clifford, Chance, a large British-based firm. Reportedly, these partners are taking the stunning sum of $75 million in business with them - and the stench of a potentially nasty future lawsuit already hangs in the air.

The Trends That Marked Law Firms' Evolution in the 90s

It is too soon to say whether Brobeck's woes mark a turning point in the business of law. But it is certainly true that Brobeck embodied and symbolized many of its worst trends. Perhaps Brobeck's fall from grace will inspire private practitioners - from first year associates to the senior partners of premier law firms - to reconsider the structures and goals and law firm life.

The Problems of Overwork: From Burnout to Bill Padding

Generally speaking, this has been a bad deal for lawyers and clients alike. Although starting associates make $125,000 or more a year, they have to work incredibly long days and frequent weekends just to meet the minimum hourly requirements, much less achieve distinction.

The enormous press of work has any number of doleful effects. First, it deadens associates to the craft of lawyering. People living on the edge of burnout rarely do their best work - both because they lack the reflective time necessary to learn and grow as a lawyer, and because it's so difficult to take pleasure in work when there is so darn much of it to do.

Even more pernicious, an annual hours requirement in the 2200 billable hour range encourages anyone without the strongest moral fiber to start padding bills. To work 2200 billable hours means really working at least 2600 hours - which amounts to 50 hours or more per week every week of the year. When the choice is between having some small semblance of a non-work life versus buffing the daily time sheet, lots of associates make a very human but wrong choice.

All of these effects cheat the client, either because the firms provide work that is not as good as it should be, or because they charge too much for the product that is delivered.

Why Even Partners Suffer When a Firm is Overworked

Partners don't do so well under the system either. In many firms, they work just as hard, sometimes even harder than the associates - which means that, just like the associates, they probably aren't doing their best work or obtaining real satisfaction from that work. Fewer and fewer lawyers take on pro bono clients or pursue other forms of community service. How can they? Many partners don't even have adequate time for their families.

Despite the sacrifice, it's still impossible for these partners to achieve what all too often seems to be the goal - namely, to get rich. With a few minor exceptions, lawyers are hourly wage earners. It doesn't take a math genius to figure out that this compensation structure, even when pushed to limit, will never make lawyers rich - at least as that term has come to be defined in the last decade.

Lawyers don't get stock options or other forms of meaningful equity. And, accordingly, their compensation (except for that of a handful of rainmakers), tops out at perhaps a million dollars a year even at the very most successful firms. That's a princely sum; some might say a disgustingly large sum. But it isn't real money in the view of lawyers watching their clients take early retirement. In other words, it doesn't solve the envy problem.

An Upside to the Economic Downturn?

It is far too much to hope, of course, that the decline of Brobeck will usher in a new era of contentment in the legal profession - one based on a saner, less money-driven, more achievable set of hopes and expectations. But I know a lot of lawyers, both associates and partners, who would trade fewer (more productive) hours for less money and a richer life.

Although no one cherishes an economic slowdown, the economic conditions that caused Brobeck to nosedive do present an opportunity. With the bursting of the tech bubble, law firms no longer have to compete for talent with Internet start-ups. For the most part, the easy money stock option days are gone as well. In short, lawyers have less to fear and less to envy - and perhaps that will give them the freedom to remember again those satisfactions of the profession that have nothing to do with money.


Edward Lazarus writes about, practices, and teaches law in Los Angeles. A former federal prosecutor, he is the author of two books - most recently, Closed Chambers: The Rise, Fall, and Future of the Modern Supreme Court.

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