Stroock is in a ‘precarious position’ after the loss of the bankrupt group; is a merger necessary?

Law firms

Stroock is in a ‘precarious position’ after the loss of the bankrupt group; is a merger necessary?

Stroock & Stroock & Lavan is in a ‘precarious position’ following the loss of one of its two crown jewels – its bankruptcy and restructuring group – to Paul Hastings this spring, according to an analysis by Law.com.

Three sources put the revenue loss at more than $60 million, which is almost a quarter of Stroock’s earnings. Now recruiters are likely to “come out of the woods” to sue the real estate group, the law firm’s second crown jewel, a source told Law.com. The group has 18 partners out of a total of 52 lawyers.

The firm’s co-managing partners, Alan Klinger and Jeff Keitelman, said Stroock is in a good position, with more than $18 million in bankruptcy group earnings remaining with the firm.

“In a weird way, for 2022, the firm is financially advantaged,” Klinger told Law.com.

A merger is an option, even if past merger talks have been unsuccessful. Klinger and Keitelman told Law.com that there was no particular issue that was a sticking point. And the law firm’s unfunded pension wasn’t a problem, they said.

“It’s part of our budget, and there’s nothing scary there,” Keitelman told Law.com. “A lot of old New York companies have unfunded pensions. They are paid out of the company’s income.

Some unnamed sources who spoke with Law.com weren’t optimistic about a future merger. But another unnamed source, an industry consultant, said issues that have doomed other law firms, such as high debt loads or mass departures, are not yet an issue at Stroock.

“Stroock is a small business, and losing revenue is not the same as losing profitability,” the industry consultant said. “If they are able to stay profitable and attract talent, they can be OK even without a merger.”

Comments are closed.