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Law Firms
Stroock is in a ‘precarious position’ after loss of bankruptcy group; is a merger needed?
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 estimated the revenue loss at more than $60 million, which amounts to almost a quarter of Stroock’s revenue. Now, recruiters are likely “coming out of the woodwork” to pursue the real estate group, the law firm’s second crown jewel, one source told Law.com. The group has 18 partners among 52 total 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 revenue that stays with the firm.
“In a weird way, for 2022 the firm is financially advantaged,” Klinger told Law.com.
A merger is an option, even though past merger discussions didn’t work out. Klinger and Keitelman told Law.com that there wasn’t a particular issue that was a sticking point. And the law firm’s unfunded pension hasn’t been an issue, they said.
“It’s been part of our budget, and there is nothing there that is scary,” Keitelman told Law.com. “Many of the old New York firms have unfunded pensions. They get paid from firm revenue.”
Some anonymous sources who spoke with Law.com weren’t optimistic about a future merger. But another anonymous source, an industry consultant, said issues that doomed other law firms—such as a lot of debt or people leaving in droves—aren’t yet a problem at Stroock.
“Stroock is a smaller firm, and losing revenue isn’t 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.”
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