The nation's fourth largest law firm, Finley, Kumble, Wagner, Underberg, Manley, Myerson & Casey, is breaking up, the victim of clashing egos and mounting debts, and its Washington office is expected to announce this week the formation of a new firm employing about 100 lawyers.
Rumors of Finley, Kumble's dismantling have been surfacing in legal publications since June, and were hotly denied by the law firm's key partners as recently as last month. But after nearly a year of management turmoil, most of these partners have jumped ship, and the firm's New York headquarters is on the sublet market.
"The problem was too many different types of people in too many different places," said one lawyer, discussing the firm's demise.
Another lawyer, also speaking on the condition that his name not be used, offered a blunter assessment: too many of Finley, Kumble's people, particularly its partners, "were after only one thing, the almighty buck. They could care less about institutional loyalty."
At its Park Avenue offices Friday, the firm's elegant reception area with its dark green rugs, cranberry-red leather chairs and $500,000 collection of 19th century sporting art, belied the disintegration of recent weeks. Still, with debts reportedly topping $80 million, the atmosphere at the firm is decidedly unsportsmanlike.
The Florida branch of Finley, Kumble has confirmed plans to go it alone, a goal it has had in mind since June. About 200 partners in New York, Washington and Los Angeles have either left or are regrouping into new firms or joining existing ones. As for associates and support staff, the firm's dismantling is expected to result in unemployment for at least 1,000 people nationwide by New Year's.
Finley, Kumble began with eight New York-based lawyers in 1968, expanding over the last decade into a far-flung operation with nearly 700 lawyers in 14 cities. With Pac-man-like fervor, according to some critics, the firm acquired smaller firms, took on or "raided" additional high-profile and high-priced partners, including former senators Paul Laxalt (R-Nev.) and Russell Long (D-La.), and developed four legal power centers in New York, Washington, Los Angeles and Miami.
There were some lawyers, usually at small or mid-sized firms, who said Finley, Kumble grew too rapidly and that the process of going national virtually guaranteed a list of problems longer than the firm's ever-lengthening name.
Robert B. Washington Jr., one of Finley, Kumble's three co-managing partners and the director of its Washington office, disagrees, ascribing the firm's troubles to management difficulties, not bigness per se.
"I believe in a national law firm, and I believe a national law firm works," said Washington, a former head of the D.C. Democratic State Committee who has strong ties to the city's top business and political leaders, including Mayor Marion Barry.
"I really think the issue is of governance and how we managed such a large firm," he said. "We had a management committee of 29 people that met monthly. Try to get 29 people together and what often happens is that you can't manage . . . and improper governance ultimately creates problems of incompatibility, problems of culture and problems of ego."
The firm's well-publicized internal power struggles didn't help foster congeniality, according to Washington.
For all its infighting, legal observers say Finley, Kumble has had a tremendous impact on the profession.
"It has reshaped the way law is practiced in the country," according to T. Sumner Robinson, editor-in-chief of the National Law Journal. Where most law firms used to refer their clients to other firms for out-of-town legal work, "now, it's a perfectly common practice for firms to have different offices around the country," he said.
Finley, Kumble might have worked, "but for the clashes," Robinson said. "It was a management collapse, not a concept collapse."
The clashes that ultimately led to the firm's dissolution were those that occurred between Kumble, who first envisioned a national law firm, and Manley, who joined the firm in 1978 and built its California practice from nothing to 150 lawyers.
In a September cover story that some at the law firm say spelled the end of the partnership, The American Lawyer printed an exhaustive tell-all article about the firm's troubles. Its title: "Bye, Bye, Finley, Kumble -- The Firm Everyone Loves to Hate Is Falling Apart."
"What happened for the last half-decade was the fastest growing, most lavishly paying, most reviled (especially by those at firms whose partners or clients had been raided), most talked-about law firm ever," the article reported. "What's happening now is $76 million of debt that's growing, name partners not talking to each other, at least one key client afraid to send new business, and partner and associate resumes flooding the mails from Beverly Hills to Park Avenue."
For a time, the partners, especially former New York governor Hugh Carey, talked bravely of reorganizing the firm, not folding it. Then, this month, Kumble resigned and Carey announced plans to jump to W.R. Grace & Co. Myerson began seeking recruits to join him in starting up a new firm. And Washington began meeting with D.C.'s 50-plus partners, many of whom, including himself, had come to the firm via Finley, Kumble's 1980 merger with the prominent local firm of Danzansky, Dickey, Tydings, Quint & Gordon.
According to a report last week in the National Law Journal, the bulk of Finley, Kumble's $84 million debt was not incurred to purchase hard assets but is money borrowed to pay partners or to cover the capital contributions of partners joining the firm.
Legally, lawyers who were partners at the time Finley, Kumble assumed a particular debt are considered personally liable for it. The firm reportedly expects a net income this year of nearly $60 million, and the push is on for partners to collect their "receivables" by Jan. 31, the end of the firm's budget year.
Lawyers in and out of the firm say receivership, which would help Finley, Kumble wind down and stave off litigation among various partners, seems inevitable.
"I'm not surprised that they are busting up, but I think the problem is one of personalities, not finances," said a lawyer from a competing Washington law firm. Staff writer Kathleen Day contributed to this report.