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The End of an Era: Stroock & Stroock & Lavan's 150-Year Legacy

published November 02, 2023

By Author - LawCrossing
Published By
( 14 votes, average: 5 out of 5)
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Stroock & Stroock & Lavan

In a stunning turn of events, the iconic law firm Stroock & Stroock & Lavan is poised to cease operations, ending its illustrious 150-year history. This venerable institution, renowned for its profitability, is on the verge of closure as its executive committee announces a winding down of operations following a partner vote to dissolve the firm.

Pioneering the Legal Slowdown
Stroock & Stroock & Lavan's dissolution marks the initial major casualty in a recent legal industry slowdown, which has caught many leading law firms off guard, resulting in widespread layoffs. The firm's descent into this predicament can be traced back to the aftermath of the 2008 recession and the failure of key clients.
The tipping point arrived last year when the departure of numerous legal professionals severely impacted Stroock's bankruptcy division, one of its core pillars. This left the firm without a foundation for restructuring work, just as the global economic downturn affected its commercial real estate focus. Legal experts have marveled at the firm's resilience in such adversity.
Merger Prospects and Pension Predicaments
Despite persistent efforts to explore merger opportunities, Stroock needed help to secure a buyer, even after addressing a burdensome $6 million annual pension obligation. A group of over 30 partners, primarily from the real estate practice, has joined Hogan Lovells.
The Unraveling of a Legacy
The final verdict to dissolve Stroock & Stroock & Lavan was cast on October 24, 2023, when partners granted the executive committee the authority to move forward with the firm's dissolution. Co-managing partners Jeff Keitelman and Alan Klinger have chosen to remain silent.
Jeff Keitelman, a prominent real estate attorney, is among the Stroock partners who will transition to Hogan Lovells. This decision was instigated by the firm's CEO, Miguel Zaldivar, who aimed to fortify the firm's real estate investment trust capabilities and establish a presence in New York.
Stroock also entertained merger talks with various other firms, including Pillsbury, Nixon Peabody, Steptoe & Johnson, Squire Patton Boggs, and McGuireWoods. However, the firm's pension obligations remained a formidable obstacle, as it needed to have more adequately funded pensions for retired partners over the years.
A Storied Legacy
Stroock & Stroock & Lavan's origins trace back to 1876 when M. Warley Platzek founded the firm in Manhattan. Later joined by the Stroock brothers and Peter Lavan, the firm's name evolved to its current form. The firm was renowned for its deep political ties within New York City and its extensive work with influential public sector unions.
In the late 1980s, The American Lawyer consistently ranked the firm among the top 50 largest law firms by revenue. Nevertheless, the firm faced substantial setbacks during the 2008 recession when it lost major clients, such as The Bear Stearns Companies Inc. and Lehman Brothers Inc., significantly impacting its capital markets practice. Subsequently, layoffs ensued in 2009, and a decade-long decline in gross revenue followed.
Practice Strengths and Recent Unraveling
Historically, Stroock & Stroock & Lavan relied on two cornerstone practice areas: bankruptcy and real estate. These areas typically weathered economic downturns well, often leading companies into restructuring when broader economic forces impacted the commercial real estate market. In 2021, the firm experienced a surge in revenue and profits per equity partner, driven by a pandemic-era spike in corporate transactions.
However, in 2022, the firm's bankruptcy team was severely depleted, with dozens of lawyers, including nearly 20 partners, departing for Paul Hastings. This exodus included Kris Hansen, the head of the restructuring practice group, and other prominent attorneys. Furthermore, in July 2023, the firm lost numerous lawyers to Steptoe, further eroding its capabilities.
The Domino Effect of Partner Departures
Law firms are intricate structures, and the departure of partners can set off a chain reaction. This phenomenon is often likened to a bank run, where leaving partners results in lost profits, motivating others to seek higher compensation elsewhere. This risk is particularly pronounced for smaller firms with fewer partners, making it challenging to retain and attract top talent.
Navigating the End
Stroock & Stroock & Lavan's executive committee strives to avoid bankruptcy, which can lead to disputes over remaining assets and liabilities. Presently, the winding down of the firm is perceived as the optimal solution for most stakeholders. Notably, Jeff Keitelman and approximately 30 partners moving to Hogan Lovells will bring associates and staff, while other partners, including Alan Klinger, have kept their plans private.
The dissolution of Stroock & Stroock & Lavan signifies the conclusion of a legal legacy that has spanned over a century, shedding light on the challenges law firms face in an ever-evolving legal landscape.
The disbanding of Stroock & Stroock & Lavan underscores the evolving nature of the legal industry. The firm's rich history and ultimate closure reflect the profound influence of economic shifts, partner departures, and the intricacies of managing pension obligations. The legal community will continue to monitor the industry's adaptation to these challenges and opportunities in the future.

published November 02, 2023

By Author - LawCrossing
( 14 votes, average: 5 out of 5)
What do you think about this article? Rate it using the stars above and let us know what you think in the comments below.