Alderman’s friends say he struggled against an old and fusty idea of what the firm should be. And the lawyers who left, “because they left in bitterness, really did a good job of tarnishing the image of Wolf Block in the community,” says one former partner. “They had a lot of contacts, a lot of gossip. … Every time something happened, or somebody didn’t get the compensation they wanted, the rumor mill started feeding.”
It wasn’t that Wolf Block lawyers didn’t like Alderman, personally; it was that they found him confusing, elliptical. They could never tell what he was planning to do. If the Troika’s downfall was its trigger-happiness, Alderman’s was his indecisiveness. This became a problem in Wolf Block’s merger discussions in 2007 and 2008, first with Cozen O’Connor, then with Akerman Senterfitt, a large Florida firm. Alderman believed that Wolf Block had to merge or it would die; “There may be no place in the future for a 300-lawyer, regional firm,” he told the Legal Intelligencer in 2008. But he was unable to make either merger happen. The Cozen talks fell apart early on, and the Akerman deal dragged on for nearly 10 agonizing months before cratering in September 2008, even as the stock market did its swan dive.
The Akerman merger talks had been expensive, both in terms of the hard costs — plane flights to Florida — and lost lawyer time. While other firms had spent the summer of 2008 tightening their belts, Wolf Block’s costs spiraled. Now that the merger was dead — and with it, any chance to cut costs via “redundancies” — the firm had to scramble to bring its costs in line with its revenues. Beginning in September, a team led by David Gitlin, a fastidious securities lawyer, came up with $15 million to $20 million in cuts. Wolf Block laid off 15 people. It planned to eliminate the 26th floor of its lease, and to reduce associate salaries by 10 percent. But it was too late. The firm’s fiscal year ended on January 31, 2009. Wolf Block’s revenues were only down eight percent, but profits were down closer to 30 percent. The disastrous profits were a red flag to Wachovia/Wells Fargo, which refused to lend Wolf Block money for the duration of 2009 unless the partners guaranteed the loan personally. Which the partners weren’t willing to do. And with no loan, Wolf Block couldn’t pay its operating costs. (Law firms tend to borrow at the beginning of the year, collect fees at the end of the year, and then pay the bank back.) The firm would cease to exist.