With so much other news swirling in 2020, one item may have gone unnoticed: the plaintiffs bar in Philadelphia, which has not seen much dramatic leadership change over the past few years, experienced quite a shakeup.
According to many in the field, this could be largely due to the nature of the business—part of the lifecycle of the bar, which typically sees most of its growth not through mergers and lateral moves, but by high-profile partners spinning off and venturing out on their own. But new factors, including nuclear verdicts and a slowdown in trial work because of the pandemic, may be playing into that dynamic as well.
Over the past year, two well-known partners at top-tier plaintiffs firms split off to hang out their own shingle.
In February 2020, Michael Barrett left Saltz Mongeluzzi & Bendesky after 22 years at the firm to start Barrett DeAngelo. In the month before the move, Steven Wigrizer, one of the founding partners at the competing personal injury firm Wapner Newman Wigrizer Brecher & Miller, joined to chair Saltz Mongeluzzi’s medical malpractice department.
And, more recently, in late January Andrew Stern left Kline & Specter after 16 years there to launch a new firm with fellow Kline & Specter partner Elizabeth Crawford.
Over the past few years, a handful of plaintiffs firm partners have spun off here and there, but according to some observers, the pace is increasing now. That could be simply due to individual circumstances and the cyclical nature of the business. But, according to at least one attorney, the increase in mass torts work and large verdicts in Philadelphia could be exacerbating these trends.
“It may be anecdotal, but it could be a byproduct of a lot more money going through plaintiffs firms—mass tort money, bigger and bigger verdicts,” Ostroff Injury Law attorney Jon Ostroff said. “When the pie gets bigger, so do the problems.”
Ostroff said he has learned from experience that firmwide profit-sharing compensation models, where attorneys are paid based in part on a formula and in part by the firm heads divvying up the profits, can lead to tensions among firm leaders.
“Profit sharing fosters infighting, paranoia and looking over shoulders. I don’t think it’s a sustainable way to keep great lawyers happy,” Ostroff said.
John Smock of Smock Law Firm Consultants based in South Carolina agreed that a lot of money coming into a firm can accelerate existing tension.
“No question,” he said. “As the numbers go up, the tensions get higher and higher.”
However, Smock and others said that ultimately change and the splintering of law firms is a constant in plaintiffs bars across the country.
“It’s the nature of the beast,” Smock said, comparing top plaintiffs attorneys to top-tier, highly competitive athletes. “I don’t think it’s new. It’s part of who does this, and what motivates them to do it.”
That clearly holds true in Philadelphia, where most of the top plaintiffs firms can be traced back to one or two partners splitting off from another firm and striking out on their own.
The Beasley Firm’s Jim Beasley Jr. likened the situation to a scene from ”The Godfather Part II” where the character Hyman Roth explains to protagonist Michael Corleone why he did not retaliate for a mob-related murder, saying, “This is the business we’ve chosen.”
“ This firm was started because my dad left [B. Nathaniel] Richter‘s firm because he wanted to have his own shingle, and we’ve probably seen a dozen firms [spin off us too],” he said. “It’s because it’s the business we’ve chosen. … The nature of the trial lawyer is they want to control their own destiny.”
Beasley noted that there’s a trend toward efficiency these days, so that could also be part of the reason some attorneys may seek to form smaller offshoots.
According to James Cotterman, a consultant with Altman Weil, two types of cultural dynamics predominate in the plaintiffs bar; one that is highly individualistic, where practices are very independent and individual performance is prized above all else; and the other where partners share a commitment to their mutual success and often use a shared profit compensation agreement.
“Trouble starts when partners are not contributing a fair share or when a lateral joins the firm who is more independently minded,” Cotterman said of the shared compensation-style dynamic. “No firm can escape discord if partners take out disproportionally to what they contribute.”
Michael van der Veen, of van der Veen, O’Neill, Hartshorn and Levin, said these moves can also be spurred on by law firms changing or refocusing their practices. But, he said the fact that cases have largely crawled to a stop in the face of the COVID-19 pandemic—and the fact that the lengthy lockdowns have meant fewer injuries occurring, and therefore fewer lawsuits getting filed—means revenues have been contracting across the board.
“When there’s a contraction of business in the structure of a partnership law firm setting, less profits go around,” van der Veen said, adding that the trend stretches beyond plaintiffs firms and could be part of the uptick in movement elsewhere in the legal community. “That’s another reason why I firmly believe in diversity of practice areas.”
Ostroff said he’s found that lawyers need three things to feel fulfilled and stay at a firm: they need to feel valued, in control and secure. Profit-sharing models, even if decisions are based on merit, can sometimes feel arbitrary or create resentment. Making it so all the earnings for each lawyer at the firm, including the name partners, are tied directly to what each lawyer brings in is one way to help alleviate the stressors that can arise, Ostroff said.
“If there’s one partner not carrying the load, that can lead to a breakdown, or one outperforming, that can lead to a breakdown,” he said.
By making it so almost all the lawyers’ earnings are tied directly to the work they bring in, Ostroff said, the attorneys can feel like they’re more in control.
“If you underperform or overperform, what the other lawyers are doing has nothing to do with what they make,” he said.
But, most agree that, given the competitive nature of the work, firm splintering is not a new thing and it will continue for the foreseeable future.
“The good news is there’s plenty of work for everybody,” Beasley said.