Hang the RecessionA Case Update

Sharvon BenjaminLuciano FurutiRose PompeyAnthony PuenteMari SaucedoKelly Schoenherr

Agenda Introduction/Case Overview Struggles of Thacher Proffitt & Wood Employee Update Sonnenschein Nath & Rosenthal today Current unemployment political debate Job creation Conclusion Questions

Thacher Proffitt & Wood’s growth was mainly due to mortgage-backed securities.

Thacher Proffitt & Wood loses 100 attorneys to a competitor.

Thacher Proffitt & Wood pursues a merger with another firm to keep its doors open.

Thacher Proffitt & Wood law firm goes out of business.

During the collapse of the housing market Sonnenchein Nath & Rosenthal implemented a growth plan.

Sonnenchein Nath & Rosenthal hired attorneys from a failed rival.

Introduction

The Struggle Sub-prime crisis strikes

More than half of Thacher Proffitt & Wood’s attorneys join a competitor’s firm

Plans for a merger fall through

Thacher Proffitt & Wood closes it doors

Thacher Proffitt & Wood Dissolves: Sonnenschein Rescues

Thacher Proffitt & Wood’s Decisions

9/11 – TPW employees survived the attack on World Trade Center

Invested almost all their work in mortgage-backed securities

No diversity in investments Market crashed, causing TW&W’s clients to go

bankrupt Refused to merge until it was too late After the decision of a merger the candidate pulled

out Spent millions on renovations and leasing Acquired debt of $30 million

Sonnenschein, Nath, and Rosenthal saw an increase in

demand for people with the skills of former Thatcher Proffitt and

Wood attorneys

What action would Sonnenschein Take?

Sonnenschein Nath & Rosenthal saw the downturn as a chance to gain market share.

Hired 100 of rival Thacher’s top attorneys as Thacher dissolved due to the economy

Thacher’s financial-services lawyers would pair with Sonnenschein’s regulatory and lobbying practices in WashingtonSonnenschein would hire the Thatcher attorneys at lower salaries than what the market had typically been offering before the economic crunch.

How does this create a competitive advantage for firms?

While most firms are downsizing due to the economic slowdown, Sonnenschein Nath and Rosenthal, committed to hire in order to be ready for the upturn in demand for services.

Countercyclical Strategy

What is Countercyclical Strategy?

BIGGEST BAIL OUT IN HISTORY OF BANKS AND WALL STREET FIRMS

Strategy was to be ready for increased demand for talented litigators.

Why did Sonnenschein see a need for financial services specialty lawyers?

What is Sonnenschein’s position in the world of law today?

According to AM Law

Salary Reductions & Lay-offs

Sonnenschein Nath & Rosenthal plans to cut associate salaries, beginning June 1st.

Sonnenschein Nath & Rosenthal recently laid off an undisclosed amount of associates.

Sonnenschein Nath & Rosenthal reduces the salaries of their associates.

Current Unemployment Unemployment rate is

9.7%

Payroll employment rose 431,000 in May

Obama Administration strongly encourages job creation in the private sector

Job Creation Senate passed a $15

million job-creation bill

Policy makers predict unemployment rate below 9% by the end of 2011.

Banks are stabilizing but not improving rapidly.

Conclusion

Questions

Agency Group. (n.d.). The Employment Situation in May. Retrieved June 07, 2010, from FDCH Regulatory Intelligence Database: Business Source Premier database

American City Business Journal. (2009, September 2). Sonnenschein lays off lawyers. Retrieved June 07, 2010, from Business Journals: http://www.bizjournals.com/sanjose/stories/2009/08/31/daily54.html

Bario, D., & Staff. (2009). Proffitt and Loss. Legal Week .

Fortado, L. (2008, December 23). Thacher Proffitt, 160-Year-Old Law Firm, to close. Retrieved June 09, 2010, from Bloomberg.com: http://www.bloomberg.com/apps/news?pid=email_en&sid=a9Oe4mPmsSkg

Matthews, S. (2010, June 04). Lockhart Says Job Creation Too Weak for Big Cut in Unemployment. Retrieved June 07, 2010, from Bloomberg.com: http://www.bloomberg.com/apps/news?pid=email_en&sid=ap9vBhX95PvA

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2010). Human Resource Management: Gaining A Competitive Advantage. New York: McGraw-Hill/Irwin.

Sonnenschein Nath & Rosenthal Profits Drop 3%. (2010). JD Journal .

Weiss, D. C. (2008). Thacher Proffitt Announces Expected Dissolution. ABA Journal .

References