Since the Great Recession, many of the Am Law 100 have altered the potentially burdensome pension plans that have spelled trouble for firms in the past. But in the midst of a stock market rollercoaster, that might be a problem for partners thinking of making an exit.
Credit: Kevin Fales

No law firm collapse has left a more indelible mark on the legal profession than the spectacular failure of Dewey & LeBoeuf. While many remember the outsize guarantees and the drawing down of credit lines that helped bring about its demise, the firm was also pinned with another immense financial burden: a generous, underfunded pension plan.

For some firms in the Great Recession, reduced revenues combined with the overwhelming pressure from multimillion-dollar pension liabilities—a holdover from the days when pensions were simply a promise firms made to retiring partners—were too much to bear.

But with the Great Recession now a decade in the past and another recession brewing, has the industry learned from its mistakes?

Dewey’s pension hearkened to the old days at law firms. Instead of a traditional 401(k), a government-backed fund to which a firm and its employees contribute annually, many Dewey attorneys were rewarded with a lavish pension that was paid out of a firm’s yearly revenues.