R.I.P. Law Firms as Distinct from Other American Businesses

The business of law has never been as cut-throat and dollar-driven as it is today.

Take Exhibit A: DeWitt LLP v. Anderson.

Apparently, in late 2015, the DeWitt law firm, with offices in Minneapolis, Madison, Wisconsin, and Brookfield, Wisconsin hired a recruiting firm and poached attorney Susan L. Anderson from the Minneapolis law firm of “Messerli & Kremer” [sic (see here at Para. 7)] (Messerli Kramer). Ms. Anderson appears to have had a trusts and estates litigation practice that presumably fit well into DeWitt’s business model, or so DeWitt had to have once thought.

What stands out from DeWitt’s complaint in its lawsuit against Ms. Anderson, however, is that it seems DeWitt did not exactly propose paying Ms. Anderson, so much as it proposed charging Ms. Anderson. That is, it appears that, under the DeWitt agreement, Ms. Anderson would receive a “monthly draw” of $6,666.67 ($80,000/year) which she would have to repay out of revenue that she generated for the DeWitt firm. That would be Ms. Anderson’s overhead, after which, it seems, she stood to make money for herself.

Somehow, though, over her fourteen months at DeWitt, according to DeWitt, Ms. Anderson’s “account deficit” owed to DeWitt ballooned to $169,469 (see here at Para. 13) (subsequently reduced to $157,773 from post-departure revenue).

It is hard to understand how Ms. Anderson’s debt to DeWitt exceeded the amount of her draws, which it seems to have done. (We speculate there were other benefits, like insurance, a marketing budget, etc., tacked on.)

In any event, in our view, what is worth your attention is how this lawsuit reflects the dark underbelly of 21st century law firm business.

Historically, law firms and lawyers were perceived of as above the fray, somehow outside or beyond the bottom-line, sharp-elbowed brawl of the free market. Of course, this special exemption befits the selling of a product (legal services) premised on (or at least steeped in) integrity, honesty, discretion, and fiduciary duties. And, along the same lines, we have a hazy (maybe distorted) impression of by-gone days where law firms and lawyers stood together and stuck together through thick and thin and so on. Those days are clearly gone and there is no reason to believe they are ever coming back.

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