Archive for December 2008

Non-Equity Partners, Trying to Hang On

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partnership announcements.JPGIn today’s National Law Journal, Leigh Jones reports that non-equity partners at major law firms are also worried about the future. With all of the frightening career news floating around, it seems reasonable that either you are bringing in business, or you are terrified.

The upshot is that some law firms — especially those that have maintained armies of nonequity lawyers primarily to service accounts — are rethinking their business model, and some nonequity partners likely are reassessing their careers.

“Some firms are going to have to take a hard look,” said Brad Hildebrandt, chairman of Hildebrandt International, a law firm consultancy.

In good times, non-equity partners are a nice luxury for firms looking to use experienced people who generate great fees:

K&L Gates Chairman Peter Kalis said he is “very” comfortable with the equity-to-nonequity ratio at his law firm. He said the business model at K&L Gates is akin to a diamond, with the widest portion of the structure representing a group of nonequity partners who have created a more attractive service model for clients.

“Clients have little or no interest in paying for credit card-waving first- and second-year associates to fly around the country and run up bills,” he said. “What clients are interested in is paying for appropriately priced people who have both skills and substantive knowledge and who add value.”

The nonequity tier at K&L Gates, said Kalis, comprises attorneys with a wide variety of career goals — some with definite plans for full partnership and others who have less desire to develop business.

But these are not good times.

The bloated “inner tube” of non-equity partners, after the jump.

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Non-Sequiturs: 12.15.08

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random task small.jpg* The Austin Powers “Random Task” joke is too easy here. Instead, I’ll assume that this case will only provide further evidence for TSA officials demanding that we walk through nasty airports barefoot and broken. [What About Clients?]

* If you are going to comment on commenters, then ATL’s commentariat has to be part of that discussion. [Volokh Conspiracy]

* Black-on-black criticism is a sign of progress. It’s good to remember that “the black community” is not a monolithic group. [On Being a Black Lawyer]

* Is Pass/Fail like an undercover police officer for prestige whores? [Legal Blog Watch]

* Blawg Review celebrates Bill of Rights Day. But do they celebrate all rights? I offer a cheers to the rights-happy Ninth Amendment … there are so many more rights just waiting to be discovered! [The Legal Satyricon via Blawg Review]

Nationwide Dissolution Watch: Is TPW Finally Done?
(Stay tuned. We’ll know more tomorrow.)

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Thacher.jpgLast Thursday, we reported that King & Spalding might represent the last best hope for Thacher Proffitt & Wood. The Legal Times puts TPW’s situation into the clearest possible terms:

[Thacher's] overall headcount is down more than 100 lawyers compared to last year — and so are its profits. Profits per partner fell more than 22 percent in 2007 to $1.02 million, according to the Am Law 200.

The firm has had a constant stream of high-profile departures, including its vice chairman Thomas Leslie, who decamped for Greenberg Traurig in October, and Washington managing partner Richard Schaberg, who left for Hogan & Hartson’s D.C. office last month. The New York consultant and another individual familiar with the discussions say that if the deal falls through, Thacher Proffitt will likely go under.

We don’t have much more information about the K&S/TPW talks, but based on sources at Thacher, something significant is about to go down at the firm — and dissolution is one possibility.

According to our tipsters, whether or not there is a rescue by King & Spalding, Thacher’s litigation department won’t be a part of it. Word on the street is that the head of litigation is leaving TPW tomorrow.

More after the jump.

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(Stay tuned. We’ll know more tomorrow.)”

Nationwide Layoff Watch: Drinker Biddle Could Be Letting People Go

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drinker biddle logo.jpgWe received multiple reports this morning that Drinker Biddle & Reath let go of approximately 20 people, all on Friday. Tipsters reported the information this morning, but a morning commenter had the best line:

Yes it’s true about DBR – on Friday afternoon. No stealth – they came around to every office – told everyone it was economy based.

Other tipsters confirmed that the dismissals were based on the economy and not associate performance. The firm would not confirm or deny the reports, as a matter of policy.

If true, axing people 13 days before Christmas is a sad sign of the times. Let’s hope that firms finish all of their 2008 associate cuts by the end of this week. Surely feelings and families should take precedence over burying layoff news in the holiday news cycle.

And, as always, good luck to all the former Drinker Biddle employees.

Earlier: Prior ATL coverage of law firm layoffs

Further Thoughts: The Time for Giving (to your Secretary/Administrative Staff)

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Secretary.jpgLast week, we posted an open thread to discuss end-of-the-year gift giving to your secretary and/or paralegal. We’ve waded through the many comments to fish out some points of consensus.

  • A few secretaries appeared on the thread to urge associates to give cash or an AmEx/Visa gift card equivalent, and not a gift card to a specific restaurant, bookstore or department store. As one secretary says, “if you decide on giving gift certificates/store cards – I sincerely hope your next bonus will be paid in the same currency.”
  • New York appears to have its own scale. Even with the bonus slash, many associates are still giving their secretaries $100 per each year the associate has worked at the firm.
  • For those outside of New York, your little gift bundle of holiday joy can stay in the $100-250 range, with junior associates giving about $100, mid-levels giving about $150, and senior associates giving $200+.

    • In case comments are not indicative of general trends, here are some polls to see what your peers are doing. New York is its own world, and gets its own poll:

    And what about the trend across the rest of the country?

    One commenter says that even if you have a bad secretary, “one of those ‘can’t make a copy’ people,” associates should still give a small gift, but should not feel obligated to give a hefty cash bonus.

    More polls — about who you are giving to, and how to handle gift-giving if you’ve changed secretaries — after the jump.

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    Watch Out, Ari Emanuel: Cravath Branches Into Celebrity Representation

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    David Gregory Meet the Press Cravath Swaine Moore.jpgBased on the anemic associate bonuses recently announced by Cravath, one might think that the firm is hurting. We hear that work at CSM is a little slow — and that there may be some anxiety over the staggering cost of the firm’s $900 million lease at Worldwide Plaza.

    But don’t shed tears for Cravath just yet. The firm is still getting some high-profile engagements. From the New York Observer:

    When agent Richard Leibner’s phone was ringing off the hook one night last week, everyone was asking him the same thing: Was his longtime client David Gregory the next host of Meet the Press, or wasn’t he? He called back, telling reporters he could neither confirm nor deny the report that first appeared on the Huffington Post.

    Perhaps this was because his agency, N. S. Bienstock, wasn’t representing Mr. Gregory on the deal. So who exactly was aiding the ambitions of NBC’s robo-newsman? ….

    On Monday morning, with the deal finally made public, white-shoe New York law firm Cravath, Swaine, & Moore posted a brief item on its Web site, crediting two of its partners — Eric Hilfers and Robert Joffe — for handling the negotiations.

    This engagement probably didn’t generate the seven- or eight-figure fees that billion-dollar M&A deals generate. But it’s still a cool and interesting gig, the kind that stands out to 2Ls going through fall recruiting.

    More after the jump.

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    Associate Bonus Watch: Ropes & Gray Goes for a Half-Skadden, With a Twist

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    law firm associate bonus watch 2008 biglaw bonuses.jpgRopes & Gray has announced the bonus structure they will be paying to junior associates across all of their offices. While the structure is nominally a Half-Skadden payout (which might work just fine for Boston based attorneys), there are a bunch of interesting caveats.

    The basic structure is as follows:

    Class: Base Salary: Bonus: Total Compensation

    2008: $160,000: $17,500 (prorated): $177,500

    2007: $160,000: $17,500: $177,500

    2006: $170,000: $20,000: $190,000

    But there are some opportunities for top Ropes associates to make a lot more, while associates who are low on hours get nothing:

    As you know, we have an activity target of at least 1,900 billable and pro bono hours to be eligible for a bonus. This year, we have increased bonuses from the above scale for associates who worked substantially more than the targeted amount, and decreased rather than eliminated bonuses for many associates who worked substantially less. We did not apply the hours target to associates in the class of 2008 because their integration into client matters is still in progress. We have also adjusted bonuses in unusual circumstances where an associate’s performance review is substantially below our expectations.

    More after the jump, including the full Ropes & Gray bonus memo.

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    Nationwide Layoff Watch: Wolf Block Fires Mo Cheeks 15 Associates and Staff

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    WolfBlock Wolf Block Schorr Solis Cohen.jpgIf you watched any ESPN this weekend, you might have caught SportsCenter’s ridiculous coverage of Philadelphia 76ers coach Maurice Cheeks getting fired. Cheeks is the fifth NBA coach to get fired before Christmas (which is a record, apparently) and somebody at ESPN decided that it was appropriate to merge the “bloodbath” of NBA coaches into the larger story about nationwide unemployment numbers.

    Therefore, I’ve decided to hand over the rest of this post to Stephen A. Smith so everybody can learn the latest about another Philly institution (Wolf Block) with the appropriate level of histrionics.

    Holla! I got this from a SOURCE last week that Wolf Block was layin’ down the smack on 15 cats right before your Christmas or your holidays or WHATEVER YOU WANT TO CALL IT. They got the straight heave-ho yo!

    My source tells me that the REDUCTIONS were based on the economics of America, not the performance of their ballers.

    After the break, management talks straight.

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    The Asia Chronicles: Fish-Head Soup

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    fish head soup.jpgAsia Chronicles logo.jpg[Ed. note: This post is authored by Evan Jowers and Robert Kinney of Kinney Recruiting--sponsor of the Asia Chronicles, and an ATL advertiser. Kinney has made more placements of U.S. associates and partners in Asia than any other firm in the past two years. You can reach them by email: asia at kinneyrecruiting dot com.]

    This is Robert, writing from back in the USA after another interesting week in Hong Kong. I took the photo above in a market in Hong Kong last week because it reminded me of some lawyers I know. These are tough times for many, no doubt. Many of the readers of this column have probably seen the recent New York Times article, which quoted and even pictured Evan Jowers as he was running around from meeting to meeting in Hong Kong. That article was so well known that one of our competitors who claim to specialize “exclusively” in recruitment for Asia chose to highlight the article in an advertisement, despite the fact that only we were quoted in it. While in Hong Kong, I learned from clients and contacts that dozens of new recruiters, unfamiliar with the market (some even from my home state of Texas), have been passing around resumes and cold-calling people in Hong Kong (even law firm partners) as if they knew Queen’s Road Central from Tsim Tsa Shui. They are bored in the USA and are reaching out, which is to be commended but won’t help your job search.

    In light of the title of the article in the New York Times (which indicated the market for attorneys is comparatively great abroad) and the influx of resumes we have seen from potential candidates for Asia with no nexus to the region and/or relatively weak academic and work experience, I thought it might be useful to set the record straight on exactly how “hot” the market is in Asia. “Hot” is the wrong word. Perhaps things have changed just in four weeks but, in fact, there are layoffs happening in Hong Kong, Tokyo, Singapore and mainland China as we speak. To our disappointment, we have found recently that one candidate we placed a year or two ago and others with whom we were working have been told that they will no longer have a position following a few months. The firms are cutting muscle in these cases, letting go very strong people with no severance other than a couple of months of notice and costs to return to the USA. Many people hope for a quick turnaround and say that they think the “second half of 2009″ will look better, but in reality no one has a clue about the timing other than that everyone knows will come eventually and the first half of 2009 is as far in the future as they can see and up until then, it looks a lot like fish-head soup.

    More after the jump.

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    Associate Life Survey: Chop! Chop! The Economy’s Slow.

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    funny-pictures-your-cat-asks-why-you-are-throwing-him-away.jpgWe received 1,037 responses to last week’s ATL / Lateral Link survey on layoffs, which is up a bit from 800 this summer.

    As we feared, the number of reported layoffs is also up a bit from this summer:

      * Roughly 11% of associates reported public layoffs at their firms, up from about 4% this summer.

      * 21% accused their firm of “stealth layoffs,” up from 18%.

      * 7.5% said that their firm was firing support staff, but not associates, up from 4.5%. (22% of these respondents said that staff attorneys were affected, 45% said paralegals were being cut, and 85% said that other support staff were getting the axe.)

      * In contrast to this summer, when over half of associates felt like things were “just fine”, that number has fallen to only 35%.

      * 16% of respondents say that even though layoffs haven’t yet hit their firms, they fear that they are on the way.

    Survey Responses: Is your firm conducting layoffs?

    Yes, and they’re being public about it. 10.61%
    Yes, but they’re “stealth layoffs”. 21.02%
    People have been asked to leave, but it’s performance-related. 1.42%
    The firm is laying off support staff, paralegals or staff attorneys, but not associates.   7.52%
    No, but the firm has frozen salaries. 1.74%
    No, but I’m afraid they’re coming. 15.91%
    No, everything’s fine. 34.81%
    I don’t know. 6.08%

    See who’s getting hit where, after the jump.

    double red triangle arrows Continue reading “Associate Life Survey: Chop! Chop! The Economy’s Slow.”

    S&C Bonus Watch: What Does an Associate Bonus Look Like?

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    S&C logo.jpgI think I speak for many ATL readers and Biglaw followers when I ask: when the heck is S&C going to announce its 2008 associate bonuses?

    Because the delay is getting ridiculous. It’s December 15th. All of S&C’s peer New York firms have announced already, except for Weil — and historically speaking we can’t expect Weil to move before S&C. S&C has always been a market leader on this matter. What gives?

    One tipster puts the extent of S&C’s delay in stark relief:

    S&C normally pays our bonus along with our December paycheck. Today, however, my December paycheck posted to my account, but no bonus along with it. Still no announcement from them regarding the change, so this is rather surprising.

    It now seems likely that S&C won’t pay a dime of the 2008 associate bonus in 2008. That’s annoying. Essentially, the conversation over at S&C seems to be going like this:

    S&C: I got a threshold. I got a threshold for the abuse that I will take. Now, right now, I’m a f**** race car, right, and you got me the red. I’m just saying that it’s f*#^@! dangerous to have a race car in the red. That’s all. I could blow.

    ATL COMMUNITY: Oh! You ready to blow?

    S&C: Yeah, I’m ready to blow.

    ATL COMMUNITY: Well, I’m a mushroom cloud laying mother$^&er, mother@%^&er. Every time [I open my inbox and don't see a fair compensation message], I’m Superfly T.N.T., I’m the Guns of the Navarone!

    Get with the program S&C.

    Happy Monday.

    Earlier: Prior ATL coverage of associate bonuses.

    Morning Docket 12.15.08

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    plane.jpg

    * Investigators looking in to Bernard Madoff’s ponzi scheme “found evidence he ran an unregistered money-management business alongside his firm’s brokerage and investment-advisory subsidiaries.” [Bloomberg]

    * A little insight into how Marc Dreier cheated even the best businessmen. [New York Times]

    * Regardless of whether Gov. Rod Blagojevich resigns today, Democrats will have to decide whether to appoint or elect Barack Obama’s replacement. [Washington Post]

    * … Meanwhile Illinois lawmakers try to pick up the pieces. [Chicago Tribune]

    * Another merger fell apart this weekend. Apollo Inc. will not be acquiring Huntsman corp. Litigators will still be kept busy because Huntsman plans to continue its law suit against Credit Suisse. [Reuters]

    * New Zealand’s anti-trust regulator says airlines are acting like a cartel. [The Financial Times]