Julie Kay does a virtual commemorative edition look back at the rise and falling fortunes of Ruden McClosky.
There’s so much good stuff in there you really ought to just break down and get a DBR subscription (not you guys still at Ruden — you need to save some money).
Here’s what a former insider said was the problem:
“They need to reach down in the ranks and get some young people,” said a former Ruden lawyer who did not want to be identified. “I think the problem is they refuse to change. Hildebrandt [the international law firm consultants] should be in there, cleaning the place out. The most critical thing a firm has to do is transition its leadership. That’s a critical failure.”
Hmm, wonder who he means — firm leader Carl Schuster ran the ship for 23 years.Could it be that all you guys did was real estate?No way, according to partner Michael Krul, who’s been there 35 years:
“I would say we did not make any mistake by not diversifying outside of real estate, period, end of story. If you’re going to be a major law firm in Florida, you better have a significant real estate practice. We have never failed to pursue other opportunities in other practice areas. We have hired intellectual property lawyers for 15 years. We have a very vibrant health care practice. The most available and strongest part of the economy has been real estate.”
So what was the problem, smart guys?Of course:
The real problem, according to firm leaders, was the firm culture — essentially, Ruden was focused on being “nice guys.”
Isn’t that always the problem?Well, no more Mr. Nice Guy:
Some of the lawyers might have left after being asked to sign personal guarantees, Krul and Schuster said.
“I think if you were already on the fence, you might not want to make the commitment,” Krimsky said.
Krul said Ruden was asked for the personal guarantees after the firm needed to draw on its line of credit more heavily in the first two months of 2009 than in prior years. The assumption was the economy would turn around by early this year and they’d be able to pay the money back. That didn’t happen. When the line of credit came due in January, the firm wasn’t able to pay it off.
So the bank — now under new ownership and unfamiliar with Ruden — requested the personal guarantees, Krul said. Ruden approached other banks for a line of credit, but they all wanted the guarantees, he said. Eighty to 85 percent of the lawyers who were asked to sign did, but no pressure was put on them to do so, firm leaders said.
Schuster won’t say how much is owed except to say it’s “paltry compared to the size of the firm.”
A law firm consultant who did not want to be identified said it is highly unusual for a bank to require personal guarantees of lawyers, and the odds are against a firm surviving after such a “critical juncture.”
“I think that both people inside and outside the firm know that and sense that,” the consultant said. “Having partners sign guarantees is not in the mainstream at all. They need to look at what can be done to salvage the firm.”
Notwithstanding all this, Ruden — believe it or not — is in acquisition mode:
“Ruden is looking to acquire, not be acquired, if the right opportunity presented itself,” he said.
Right, like acquiring a firm with paying clients, a big line of credit, streamlined and well-run operations, this is just off the top of my head…….
(I’m getting verklempt)