Trouble in paradise for law firms, Senate confirms Roopali Desai on 9th Circuit, Pomerantz set to forgo fees after judge threatens sanction
Reuters Legal
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Falling demand and rising costs threaten to derail law firms, says an industry report. Firms are also looking to relocate offices rather than renew existing leases, according to a commercial real estate brokerage. The Senate, in a bipartisan 67-29 vote, confirmed the first South Asian American judge on the 9th Circuit. Law firm Pomerantz said it will not seek payment for its work on a shareholder settlement with biotech company executives.
The combination of falling demand for legal services and rising pay and overhead costs has created financial headwinds for law firms in 2022, according to a second quarter analysis of industry data released Monday.
The Thomson Reuters Law Firm Financial Index, a quarterly composite score of demand, expenses, rates, productivity and other economic indicators at large and midsize law firms, fell to its lowest point this past quarter since its 2006 founding.
That marks a dramatic shift from a year ago, when the index hit an all-time high due to soaring demand in corporate practices. The index has fallen in each of the past four quarters.
William Josten, manager for enterprise legal content at the Thomson Reuters Institute, which is part of the same parent company as Reuters, said:
“At the moment, most firms are doing just fine ... The concern is that there are factors lining up that — if left unattended — could have very negative consequences for firms going forward.”
Law firms leasing office space chose relocations rather than renewals in the first half of the year at a level not seen since before the COVID-19 pandemic, according to commercial real estate brokerage Savills.
Relocations have made up 63% of law firm lease transactions by square footage through the end of the second quarter, compared to 51% in 2021 and 30% in 2020, a newly released Savills survey of firm leasing activity said. Savills tracks law firm leases over 20,000 square feet across major U.S. markets.
The shift comes as some law firm leaders are reconsidering their office spaces, after lawyers and staff have worked remotely for much of the COVID pandemic.
Tom Fulcher, chair of Savills' legal tenant practice group, said firms now feel "more of a sense of confidence" about how to accommodate a new balance of in-office versus remote work than they have in the previous two years. He added that they at least know enough to "start being able to make long-term commitments" to new office spaces.
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The U.S. Senate has confirmed Arizona lawyer Roopali Desai to become the first South Asian American judge on the 9th U.S. Circuit Court of Appeals, as the Biden administration continues its drive to add diversity to the federal judiciary.
The Senate's bipartisan 67-29 vote on Thursday approving Desai, a Phoenix-based civil litigation partner at Coppersmith Brockelman since 2013, marked the 18th overall U.S. appeals court confirmation since the start of Biden's presidency.
Desai was the fifth confirmed Biden appointee to the 9th Circuit, which handles appeals from much of the western U.S., including California. Sixteen other Biden circuit court nominees are awaiting further action before the Senate Judiciary Committee or full Senate.
The committee approved her nomination on a voice vote, and not a formal roll call of members, marking only the second time the panel has used that process during the Biden administration. Four Republicans — Senators Mike Lee of Utah, Ted Cruz of Texas, Marsha Blackburn of Tennessee and Josh Hawley of Missouri — were still recorded as opposing Desai's confirmation.
Pomerantz has said that it will not seek payment for its work on a shareholder settlement with biotech company executives after a San Francisco federal judge threatened to sanction the plaintiffs' law firm for letting the case languish for nearly a year and a half.
Pomerantz had proposed to take $625,000 in attorneys fees from the $2.5 million deal but said in court filings Thursday that it would recoup only expenses.
The firm represents investors who sued TerraVia Holdings and three of its executives for allegedly failing to disclose that its algae-based protein had prompted a product recall.
Last month, U.S. District Judge James Donato ordered Pomerantz to explain why it had not better supported the lead attorney on the case, who said at a hearing that family issues had caused the delays.
"The Pomerantz firm should have functioned as a team to carry out its fiduciary duties as class counsel."
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