Stroock: a law firm that lost control of the narrative

Merger talk leaks and predatory rivals were a symptom, not the cause of New York firm’s malaise, reports John Malpas
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In recent weeks Stroock & Stroock & Lavan’s website has made sad viewing as the directory of lawyers at the once successful New York firm dwindled to just a handful.

By the time Seyfarth Shaw unveiled the hire of a quartet of senior white collar lawyers last week, just 19 people were listed on the site, which has subsequently gone off-line with the dissolving firm’s offices due to be vacated by the end of the month.

The Seyfarth team, led by Washington DC-based Richard Morvillo, had only joined Stroock a little over two years ago from Orrick.

At that point the firm was on a bit of a roll, buoyed by booming deal markets that would lead it to record its second-highest turnover on record as it neared its 150th anniversary. And yet there were warning signs, stretching back many years.

“Stroock had a century-long reputation as a politically savvy, well-connected New York law firm, close to city agencies, public unions and kingmakers in the Democratic party,” observes Robert Bata, principle of consulting firm WarwickPlace Legal.

“It also had an enviable real estate and litigation practice, balanced out by a highly respected bankruptcy practice. But the firm missed out on growth opportunities during a succession of domestic merger waves, with its firm leaders unwilling to contemplate what they saw as a loss of independence and perhaps a loss of their positions.”

ALM Intelligence’s research shows headcount peaking in 2002 at 374 and revenue reaching its highest point in 2007 when it fell just short of the $300m mark at $297m.

The financial crisis saw two of the firm’s key capital markets clients, Bear Stearns and Lehman Brothers, fail, and in 2017, Stuart Coleman, Stroock’s former co-managing partner and chair of its highly rated investment management practice, took six partners to Proskauer Rose.

Then, in March 2022, the firm experienced what proved to be a fatal blow when Paul Hastings secured virtually its entire restructuring team, including 19 partners. 

Stroock’s response, at least publicly, was to restate its faith in its market position as a quality mid-sized firm. Acknowledging that the bankruptcy group wanted a “larger firm environment”, co-chair Jeff Keitelman said: “We’re committed to our mid-sized firm approach and building in the areas where we excel.” 

He pointed to the hiring of 20-plus partners in the previous 18 months – in corporate, IP, white collar/corporate investigations, tax and real estate. But the market was turning, and in the second half of 2022, the deal markets ground to a halt.

It soon emerged that the firm was pursuing merger talks. Over the ensuing months, it was linked with Steptoe & Johnson, McGuireWoods, Squire Patton Boggs and Nixon Peabody amid reports that an unfunded pensions obligation was proving to be a stumbling block to any deal.

At the same time, it was experiencing a steady flow of partner losses, including that of a 35-lawyer reinsurance and consumer litigation team to Steptoe in July 2023. 

And while the firm appears to have resolved its pensions headache by this summer, securing the votes it needed from retired partners to buy out its pension, it was evidently too little, too late.

In late October, its latest set of talks with Pillsbury Winthrop Shaw Pittman came to nothing and a few days later Stroock’s partners decided to call it day, voting to dissolve the firm just as a 28-partner team of real estate lawyers, including Keitelman, were inking a deal to join Hogan Lovells.

Since then, focus has rapidly shifted from saving the firm through a merger to securing an orderly dissolution. A highly rated team of advisers has been hired and the goal of avoiding messy bankruptcy proceedings looks likely to be achieved.

Meanwhile, the demise of a firm as prestigious as Stroock will have spooked law firm leaders at firms with a similar profile. 

In an exchange of LinkedIn posts, a group of recruiters debated the extent to which predatory law firms working with recruiters and loose talk around Stroock’s merger negotiations were to blame for its collapse.

Kimberly Stockinger, CEO of the Sweetbridge Group, noted “disquiet” among her managing partner clients about the impact of the leaks on the firm’s prospects for survival.

“I’ve talked to several firm managing partners who are quite displeased with this activity and people want answers as far as the media leaks on the merger discussions that add to the hurt internally,” she wrote. “It’s been happening far too often as of late.”

For Ross Weil, a partner at New York search firm Walker Associates, “Stroock has been struggling to find a fresh and sustainable identity since at least 2017” when Coleman and his team moved across to Proskauer.

“The legal recruiting community as well as other law firms saw this move as a strong indicator to pursue picking off top-talent due to instability reasons,” he observed.

“During the past seven years since this move, Stroock has shown plenty of signs that the firm was stable and on the right track, however, they could not get ahead after the Paul Hastings raid.”

As Bata notes, recent departures “were motivated not just by Stroock’s imminent demise but by the fact that the leavers were looking to be part of a larger domestic and international platform, something Stroock had refused to consider while the going was good”. 

He concludes: “The Stroock story is a potent warning that the time for implementing a growth strategy is when things are going well, not when it’s too late to control the narrative.”

Firms that have recruited from Stroock in past year*

Adler & Stachenfeld
Boies Schiller Flexner
Carter Ledyard & Milburn
Clyde & Co
Crowell & Moring
Day Pitney
DLA Piper
Jones Day
Kilpatrick Townsend
McDermott Will & Emery
Morgan Lewis & Bockius
Pillsbury Winthrop Shaw Pittman
Ropes & Gray
Seyfarth Shaw
Sidley Austin
Troutman Pepper

*Incorporates research posted on LinkedIn by Chris Griffiths, head of sales, Pirical Legal Professionals. Click here for a more detailed analysis by Pirical —  Stroock from all sides: which rival firms have benefited from the demise of the 150-year old firm.


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