THIRTEEN HOURS LATER, the firm’s partnership voted to “unwind” Wolf Block within 60 days, as an orderly alternative to a formal bankruptcy. There were junior partners who walked into that meeting on “Black Monday” not knowing what the hell was going on. There were secretaries who found out by picking up the paper on their way to work.
In the following days and weeks, as it became clear that Philadelphians were experiencing the death of Wolf Block as a broad blow to their civic pride, and as legal observers nationwide wondered if the firm’s implosion was a portent of others to come, Wolf Block’s leadership tried to explain the decision. They described a “perfect storm” of factors, in the words of Wolf Block chairman Mark Alderman, who had been a leader of the firm since 1995. There was obviously the economy: the credit crunch and the collapse of the housing bubble, which decimated Wolf Block’s core business in real estate and convinced the firm’s bank, Wachovia, to ratchet up the terms of its loan (“An atomic bomb lobbed into our plan,” Alderman told me). There was the firm’s own tumultuous history, particularly a 10-year period from 1985 to 1995 when a “Troika” of three arrogant men took it over and then ran it into the ground, sparking a mass defection of the firm’s best partners. And there were more intangible factors as well, such as “the nature of the modern law firm, where roots are not as deep as they once were,” as Alderman told the Inquirer. The overall impression was one of bittersweet inevitability, a great law firm martyred by cruel circumstance.
But this narrative ignored some inconvenient facts. Granted, Wolf Block was a casualty of the economy; Philadelphia is a city saturated with law firms, and now that the economy had shrunk the market, it was a good bet that some firm would die. But why Wolf Block? Why not Pepper Hamilton, or Schnader Harrison? Wolf Block wasn’t the only firm that had lost real estate business to the recession, wasn’t the only firm to have survived an era of disastrous leadership. In fact, in sheer revenue terms, Wolf Block’s best years came after the Troika stepped down from power. As recently as March 2008, the firm posted a 10 percent jump in revenue from the previous year, from $157 million to $173 million, and a 3.5 percent jump in profits per equity partner, a common measure of a firm’s fiscal health.
The truth is that there was nothing inevitable about Wolf Block’s demise. It had been wounded by the recession, but not fatally. It didn’t have to die. At least, that’s what the firm’s 15 most powerful lawyers believed — the ones who had been meeting on weekends, pouring their hearts into a detailed turnaround plan. These people were Wolf Block’s soul, the very core of the firm. Many had worked there for 20 or 30 years — their entire professional lives. And they believed that the firm, despite all of its baggage and missed opportunities, its bad decisions and unlucky breaks, could still be saved. They believed it 96 hours before the dissolution vote. And they were right. That’s the amazing thing: They were right.