Monday, July 28, 2008

Was Clementi the First?

The Clementi proposals in the Legal Services Act 2007 are radical. Alternative business structures will usher in "Tesco Law" and "Goldman Sachs Skadden". I've been doing some archival research lately and found that these ideas were first proposed 23 years ago in 1985 by Steven Brill in The American Lawyer.

In one of the most prescient articles ever written, Brill wrote:

Wall Street's Sullivan & Cromwell and Shearson Lehman/American Express have begun secret negotiations aimed at a deal in which S&C would become the first law firm to be acquired by a financial services conglomerate....Under terms of the proposed S&C buyout--which would be dependent on S&C successfully moving to overturn...Code of Professional Responsibility rules prohibiting nonlawyers from sharing in lawyers' fees--S&C would, as one source close to the deal puts it, "become an integrated part of the package of services Shearson Lehman/American Express can offer major corporations....when the deal is done, we're going to restructure S&C's fees so that in mergers and acquisitions they'll charge a percentage of the deal, the way investment bankers do."


It was fiction, as Brill said, but I wonder if he realized it could become true? He does say in the article, "Sure, the idea in its totality is off the wall for many reasons..." Not any more.
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1 comment:

Peter Lederer said...

Well -- perhaps even earlier! Remember Bernie Cornfeld and Investors Overseas Services? In the late 1960's one of his senior executives approached one of my London partners to inquire whether Baker & McKenzie might be interested in being acquired by IOS. (He was told that there might well be interest, but that, sadly, there were some -- probably insurmountable -- difficulties!)