– Reuters (paywall) reported that, according to the Thomson Reuters Institute, US law firms reigned in first-year associate hiring this fall in an attempt to increase profits and hold down direct expense increases. It is uncertain whether this will be enough to make 2023 a profitable year.
The 100 most profitable firms in the country are on track to end the year with profit growth, the report concludes. Mid-size law firms are likely to end 2023 with profits akin to 2022, while others are in danger of slipping below last year’s profits. The average number of new first-year associates at the 100 most profitable firms was down nearly 17 percent this September, compared with the average from the previous two years, according to the institute.
‘For the market as a whole, I think 2023 will turn out to be a decent year – it’s not going to be an outstanding year,’ said William Josten, manager for enterprise legal content at the Thomson Reuters Institute. ‘There’s going to be a wide range in that average. Some firms are doing very well and some are struggling.’
– The Wall Street Journal (paywall) reported that WeWork filed for Chapter 11 protection in the US Bankruptcy Court in New Jersey. WeWork CEO David Tolley said roughly 90 percent of the company’s lenders have agreed to convert their debt into equity, wiping out about $3 bn in debt.
WeWork was once valued at $47 bn. Its business crumbled when demand for its desks fell and vacancies rose during the pandemic, while WeWork still owed billions of dollars in rent payments to landlords. The company’s locations outside of the US and Canada won’t be impacted by its bankruptcy, the company said in a press release.
– Reuters reported that according to two people familiar with the matter, activist shareholder Elliott Investment Management has built a stake in BioMarin Pharmaceutical and has been in discussions with the biotechnology company for months about its future. The nature of the conversations between San Rafael, California-based BioMarin and Elliott, which is headquartered in West Palm Beach, Florida, and any demands the hedge fund may have made could not be learned. Elliott declined to comment, while a representative for BioMarin did not immediately respond to a request for comment.
– BlackRock announced that lead independent director Murry Gerber has informed the firm’s board that he will not stand for re-election at the end of his term in May 2024. Gerber has sat on BlackRock’s board since 2000 and as lead independent director since 2017. The board has begun a process to identify the next lead independent director, who will assume the role following the 2024 AGM.
‘For more than two decades, Murry has been an independent voice and instrumental leader on BlackRock’s board of directors. He has been central to the firm’s success and the enormous value created for BlackRock shareholders,’ said BlackRock chair and CEO Laurence Fink in a statement. ‘He has been a trusted adviser and exceptional partner to me and the entire senior management team through important moments in BlackRock’s history, and I sincerely thank him for his contributions on behalf of our shareholders, clients and employees.’
– According to the WSJ, a senior US Department of the Treasury (DoJ) official said the Biden administration wants new powers from Congress to help in a crackdown on the illicit use of cryptocurrencies, citing digital asset flows allegedly connected to Palestinian militant group Hamas. The DoJ has been in communication with Democrats and Republicans about actions they could take, said deputy secretary Wally Adeyemo. He cited Hamas’ October 7 attack on Israel, which he said has brought an ‘increased focus on the illicit financial use of digital assets.’
– According to Reuters, several business groups, led by the US Chamber of Commerce, sued the National Labor Relations Board (NLRB) in an effort to strike down a rule treating many companies as employers of contract and franchise workers and requiring them to bargain with their unions. The groups said the rule will cost companies billions of dollars and cause disruptions in industries such as retail, construction, hospitality and healthcare.
The NLRB rule will treat companies as ‘joint employers’ of contract and franchise workers when they have control over working conditions such as pay, scheduling, discipline and supervision, even if it is indirect or not exercised. Joint employers can also be held liable for violating workers’ rights to organize and can be made to bargain with unions representing contract or franchise employees. ‘The new rule imposes joint-and-several liability on virtually every entity that hires contractors subject to routine parameters,’ the groups said in the complaint.
An NLRB spokesperson declined to comment.
– EY is proposing to step up its US governance overhaul initiatives in an effort to give partners there a greater voice in company strategy, following the failed separation of its audit and advisory businesses earlier this year, according to the WSJ.
The firm has outlined a proposal to set up a US independent committee of five elected partners that would nominate a slate of candidates for a future governing board, which would be tasked with oversight of US company strategy, risk management and other areas, according to materials from a webcast. All US partners would vote to choose the members of the nominating committee. The committee would identify three candidates for every open vacancy, on which all US partners would then vote.
The proposed governance framework was presented to US partners as an opportunity to give them more of a say in the firm. ‘Our focus on modernizing the governance of the EY US firm was started more than two years ago, and is part of the firm’s practice of regularly reviewing current best practices of governance in professional services firms,’ a spokesperson said.
– Reuters reported that, according to a new study, law students who used artificial intelligence (AI) on legal writing tasks were able to complete their assignments faster, but their work product wasn’t consistently better than that of classmates who did not use the technology. Students with lower grades on average saw bigger improvements in their legal writing tasks when using GPT-4 than did their higher-performing classmates. ‘These results suggest that generative AI will almost certainly become a vital tool for many lawyers in the near future, comparable to more familiar legal-tech tools like Westlaw, Lexis and e-discovery software,’ notes the study.