85-Year-Old “Am Law 200” Law Firm Sedgwick LLP Closing in January
Sedgwick LLP, a San Francisco-based law firm, announced that it will be closing its doors after nearly 85 years in business. The firm confirmed that it will permanently close its offices across the U.S. in early January 2018, although some sources have said that some Sedgwick employees will be out of work by as early as December 1.
Sedgwick, which is part of the “Am Law 200” list of law firms, is known for its litigation and insurance practice. Like many law firms, it is facing increased competition in the legal market. The firm has been plagued in recent years with a raft of defections and failed merger talks. The exodus of lawyers already led to the closure of the firm’s locations in Washington, D.C. and Austin, Texas earlier this year.
In a statement, the company said, “We have concluded that the best way to allow our lawyers to continue providing great service to our clients is by ceasing operations and moving to other excellent law firms. We are pleased that most of our lawyers and staff have opportunities with very fine firms.”
Over the last number of months, the company has been besieged with defections and failed merger talks. At one time, Sedgwick was home to approximately 375 lawyers, but it is now down to fewer than 160. In 2017, Sedgwick has seen nearly 35% of its lawyers leave for greener pastures. Since October, nearly 10 partners have left.
It is believed that many of the lawyers currently employed by Sedgwick will find work with U.K.-based law firm Clyde & Co. The two firms had allegedly been discussing a merger before talks broke down in October.
Not surprisingly, a huge reduction in the firm’s workforce has cut into Sedgwick’s earnings. In 2016, Sedgwick reported gross revenue of $170.5 million. As of June 2017, the firm had lost more than 20% of its annual gross revenue, and it laid off a number of staff in response to growing partner defections.
The company has been facing falling revenue for a number of years now. After rising three percent in 2012, net income slipped 4.2% in 2013 to $208.5 million.
Sedgwick’s Previous 2017 Closures and Departures
Aside from having to announce its plans to shutter all of its operations, 2017 has been a dismal year for Sedgwick. In January, Michael A. Tanenbaum, the company’s former chairman, and 16 other lawyers (along with 18 staff members) left Sedgwick to form an independent law firm on the East Coast. The new team was spearheaded by Tanenbaum, James Keale, and Thomas Robertson; the three had worked together at Sedgwick for 25 years.
Also in January, nine partners, 12 associates, and two counsel from Sedgwick in Dallas, Texas left to open a new office for Drinker, Biddle & Reath LLP.
In response to the mass exoduses, Sedgwick simply called the partner departures “efficiency adjustments,” and there were more efficiency adjustments to follow. In July, Sedgwick quietly closed its office in Austin, Texas. In August, Sedgwick’s office in Washington, D.C. closed after its last two remaining partners moved to Troutman Sanders LLP.
Fast forward three months, and the departures and falling revenue have finally caught up with Sedgwick.
“As More Partners Depart, Sedgwick Confirms Plans to Close,” The American Lawyer, November 21, 2017.
“Law Firm Sedgwick to Close in January,” The Wall Street Journal, November 21, 2017.
“As Litigators Depart, Sedgwick Sheds Staffers,” The American Lawyer, June 20, 2017.
“At Sedgwick, Revenue and Profits Tick Down,” The Recorder, January 30, 2014.
“35 Lawyers and Staff Spin Off to Launch Litigation Boutique Tanenbaum Keale LLP,” Business Wire, January 25, 2017.
“Drinker Biddle Expands into Texas with Arrival of 23 Lawyers in Dallas,” Drinker, Biddle & Reath LLP, January 26, 2017.
“Sedgwick to Close DC Office as Partners Join Troutman Sanders,” The National Law Journal, August 15, 2017.