The Rise and Ruin of Finley, Kumble

By Steven J. Kumble and Kevin J. Lahart

Reviewed by Jean M. H. Fergus
New York Law Journal, Wednesday, September 19, 1990
The Lawyer's Book Shelf

The Germans have a word for it. Schadenfreude. The delight one takes in another's ruin. When news spread that the Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey firm was falling in 1987, there were few in the legal profession who did not experience Schadenfreude. Here was a firm that broke all the rules, aggressively recruiting other law firms' partners in an effort to broaden their own client base, offering compensation few lawyers ever imagined, and, on top of it all, getting good press! For a time, Finley, Kumble was touted as the law firm of the future: a future other firms sometimes feared and had little taste for. By 1988, the big bad firm was no more.

The story of the firm's climb and eventual crash is told in vivid detail by one of its founders in the new book, Conduct Unbecoming: The Rise and Ruin of Finley, Kumble, by Steven J. Kumble and Kevin J. Lahart. All in all, the book edges as close as an outsider can get to the inside story of a firm that, in its heyday, was at the vanguard of contemporary law firm practice. And what’s more, the book is a flat-out good read. Opening to almost any page is an invitation to become quickly engrossed in the story. Conduct Unbecoming is also very funny. The humor may not always be intentional but who can resist a chuckle over the irreverent comments of some of the key players in the drama: Harvey Myerson, whom Kumble calls the Agent Orange of the legal profession" and "a legend in his own mind", Andrew Heine, his 'thoroughly arrogant and stunningly impolitic" partner and co-founder; Marshall Manley, who reminded him of the old joke "How can you tell when a lawyer is lying?"; and Robert Washington, "smooth as silk" and "tough and clever and thick skinned as any politician must be."

Nor, to give Kumble credit, does he spare himself. For example, he details his betrayal of a loyal friend. Kumble negotiates with Harvey Myerson despite the objections of his litigation partners and then current head of the department. Kumble explains his philosophy: business decisions require that friendship and loyalty come second and third. Kumble comes close to apologizing for this defect and even claims a conversion. Now he says, "Loyalty is what is important, even in a business environment, because when you can't do anything about the economy or about the way things work, the only thing that binds you together are loyalty and friendship "

The most absorbing parts of the story probe the firm's management. What did make Finley run? Money was a prime ingredient and billings and collections were essential to ensure the cash flow necessary to fund the firm's growth. "The biggest business problem for law firms is the willingness or ability to turn time into money,'' writes Kumble and he became the firm’s enforcer, a job for which he had both the ability and taste. If time sheets were late, partners were in danger of not receiving their draw. If bills were not paid, clients' work ceased and, in some cases, were sued.

Kumble effectiveness created a political problem for him in the firm. "I was very rough on him [Bob Washington, who liked to represent the government of a popular Caribbean resort nation even though they did not pay their bills] and on everyone else. It did not make me popular, but at the end of the year, I put a lot of money in these people’s pockets, and they understood the connection." Or so he thought, until his toppling from power.

Money flowed from the banks. Bank loans fell into four categories: working capital loans in the form of revolving credit lines; long-term loans for capital improvements; partnership contribution loans for partner capital; and loans collateralized by select accounts receivables. The last device was structured by Kumble and Peat Marwick to take advantage of income for distribution purposes, a controversial plan that some partners contend was not disclosed to them. Yet the ever expanding ranks of rapacious partners had to be fed. Kumble was reluctant to distribute less than had been projected and these borrowings helped to accomplish that goal.

The dollars also stacked up via a program of lateral recruitment of partners who arrived with major clients and significant portfolios of business. Big names like Wagner, Carey, Tydings and Laxalt brought additional cachet to a firm whose hunger for business and billings was voracious. Unlike the large old-line Wall Street firms, Finley Kumble had no loyal institutional base of clients. Clients had to be found. At first this was accomplished by establishing an expertise in areas of law shunned by the large firms, for example, bankruptcy and labor. Lateral recruitment of partners was the follow-up tactic.

Publicity was key in continuing to attract these legal experts and Kumble took over this task himself. "I had them to my home for dinner. I’d invite them to my parties–anyone who wrote about law. And it paid off" he writes. Finley, Kumble managed to get beyond the trade press and reach the general press with well-placed stories about the firm and its partners.

Ultimately, Kumble is a victim of his "over mighty subjects." Heine was actively and openly conspiring against him and forming alliances, both financial and political, with partners who would eventually remove Kumble from firm management — Myerson, Manley and Washington. This gang of four was "the catalyst of the firm's eventual destruction," he writes.

Occasionally admired, sometimes reviled, Finley Kumble is laid out for all to see. This is not a book one would want one's clients to read. However, Lord Blake suggests that history is enjoyable because it is "Gossip, pure gossip" and those interested in the business side of legal practice will find the history behind Finley Kumble to be downright riveting.

Fergus Review | full list

© 2003 Fergus Partnership Consulting Inc.
New York office: 212-767-1775 | London office: 44 207 247 9660