For Whom the Sun Still Shines (Thacher Partners Joined Sonnenschein for Seven-Figure Paydays)
On December 21, we reported on the rescue of some Thacher Proffitt lawyers by Sonnenschein. One hundred TPW attorneys were able to move over to Sonnenschein, while their colleagues went down with the ship, when Thacher dissolved the next day.
We obtained a version of the Memorandum of Understanding between Sonnenschein and the TPW partners it picked up, dated December 19, 2008. The memo provides interesting insights into aspects of law firm business that associates rarely see — and also lists the compensation of all Thacher Proffitt lawyers who were picked up by Sonnenschein.
Not surprisingly, the need to ante up comes first. The memo begins with the buy-in, explaining how much cold hard cash the TPW partners had to cough up to Sonnenschein. Sonnenschein asked TPW partners to put up 45% of their total budgeted compensation by February 28, 2009. For partners at the top end, the amount could be as high as $630K.
Maybe that’s why the firm needed to go to Vegas so badly. Now is the time to double down.
When we got a hold of the offer letters Locke Lord sent a couple of rainmakers at Morgan & Finnegan, we saw that the “budgeted compensation” for M&F’s John Sweeney was $1.6 million. For TPW partners joining Sonnenschein, the top nine equity partners are budgeted at $1.4 million each. The next seven come in at $1.275 million. Two are slotted for $1 million, and two more for $750,000. Total compensation for the 20 Thacher Proffitt partners who joined Sonnenschein as equity partners: $24.85 million.
After the jump, we take a look at the highlights, and provide a link to the full memo.
After Sonnenschein establishes how much money it will be paid by TPW partners, the memo states clearly Sonnenschein’s obligations (or lack thereof):
The parties agree that Sonnenschein is not, and will not be held out as, a successor to TPW.
For those playing along at home, that means “Your debts are your own, enjoy!” It is an important point in any agreement like this, one that Morgan & Finnegan employees will learn about as soon as they try to get their payroll checks cashed by Locke Lord.
The memo then goes on to state which partners and which associates will be saved by Sonnenschein, and how much they will be getting paid.
We’ve redacted individual names, but we’ve left in the practice groups, class years, and salary information in the PDF below.
Enjoy Sonnenschein’s List.
Memorandum of Understanding [PDF]
Earlier: Sonnenschein partners are going to Vegas, baby! Vegas!
Breaking: Sonnenschein Saves 100 Thacher Proffitt Lawyers
(67) Comments
Comments
What does this have to do with Davis Polk's 17% drop in PPP and rumors of layoffs at STB?
Anything yet on SkaddenLA?
That is a VERY interesting memo. Thanks for posting.
I don't kow much about partnerships, or non-compete clauses, but why is a partners' book of business his/her own?
IE, why can't a firm say that the clients belong to the firm and stop a partner from taking the cilent? Is it because law is exempted from such covenants? I wouldn't be surprised...
who here is smart?
I always wondered what people with titles like "Counsel" earned. Memo was informative.
Don't keep your word.
Don't be transparent.
Lie.
Do the opposite of what you said you will do.
...these things will get you the most powerful position in the world.
Good work - Obama. We salute you.
Wow. Very interesting.
Anyone notice that in the first group of associates, one class of 2007 associate is only getting 100,000 while all the others are getting 160,000?
Wow. Very interesting.
4, because a client can generally hire whatever lawyer he wants to.
Most Counsel seem to make $300K or above. But one Counsel makes $200K, and one makes only $50K.
What's that about? Maybe some part-time arrangement?
8 - its possible that associate is part-time.
associate class 1983? whats up with that? a 26 year associate? can someone explain?
4:
Because the client is entitled to retain (or not retain) any attorney they choose.
That's why people talk about how much "portable" book a partner has. The partner might have a lot of business that (s)he is responsible for generating, but if the client maintains a short list of "approved" firms, then that business might not follow the lawyer, but stay put at the original firm.
I think firms routinely overestimate how much business is "portable."
The assistants make more than a lot of young attorneys
Potent potables.
8/12 - Part time arrangement as a 2nd year? Moreover, getting brought over in a cherry pick? Something is suspect here...
Wow, wonder who leaked this? Nothing too earthshattering there though. But, this site needs more stories like this. It's why a lot of us started coming here in the first place.
Kind of surprising that equity guys at a firm that was pretty much known as a structured finance shop are getting offers like that. I mean, securitization work is pretty much at a standstill ,and there is a real possiblitiy that the whole industry permanent shrinks down considerably over the next few years.
The legal assistants DO make a lot of money. Can a laid-off lawyer just try and become a legal assistant?
20 I have! With the OT you can make abou 60% of an associate with less stress and certainly better than shitlaw! The problem is them letting you go that route!
Check out the numbers for the Income Partners - $500K, $600K, $650K.
Sounds like a nice gig - great income, and probably less stress than being an Equity Partner.
So, one lucky 2008 graduate got saved. Quite a few of my law school classmates who went to TPW weren't so lucky.
Baker Botts PPP increased around 5%
23 - you must go to an absolute dump of a law school if quite a few of your classmates went to TPW
24- Good news, Botts Boy. How about those other BigTex firms?
25- wachoo talkin' 'bout, Willis? TPW was a fine firm, very old and respected on Wall Street.
So, basically, these associates come over with a frozen salary? (viz. 2007 and 2008 both at 160k, 2006 at 170k, etc.) Is everyone else at the firm frozen, or just the refugees?
Elie, pulling an honest-to-god scoop! Good job! Keep up THIS kind of work! SNR management is calling together a raise hell meeting right about now.
"So, basically, these associates come over with a frozen salary?"
They should be grateful to have jobs. Other TPW lawyers were not so lucky.
24, no idea I just read the report yesterday on Texas Lawyer, (or something similar). I would assume V&E would at least be the same if not more. Don't pay much attention to any of the other BigTex firms.
25,
I went to Georgetown. It wasn't unusual to have multiple Georgetown students in TPW summer class.
Must be all Sonnenschein and lollipops for the new partners.
31-
Actually, V&E is what I was curious about - will keep an eye out on Texas Lawyer
@13 -- The name you're looking for is "Michael Clayton".
Apparently, Sonnenschein needed a "fixer".
13, according to the memo, class of 1983 is not an associate, its a "counsel".
Make sure to send this memo (unredacted) to the Internal Revenue Service; they'll want it for their next audit.
24 fails to mention that Baker Botts is also one of the few Bigtex firms that has been laying off associates.
You know what is scary? That there isn't a class in law school about how the business of law practice works, and that this is the first time the great majority of big firm associates have seen this kind of document.
Thanks, Ellie, I learned a lot from this memo.
20- I've worked with legal assistants who had JD's a couple times before. You'd need to convince prospective employers that you wouldn't quit as in a couple months if he market turns around. In other words, have a convincing story that you'll be happy indexing documents, cite checking other people's briefs, and being at the bottom of the pecking order for at least couple years. If that's done well, I think the JD would be a plus, not a minus.
29, that's because Kash wrote this article and then added him to the byline to make him feel better and to salvage his reputation. How do I know this? There are no obvious typos in the post (see, e.g., Elie's "casualty"/"causality" snafu in the next post).
39 - actually, there's a class at Michigan called Law Firms and Legal Careers that's pretty awesome in that respect.
39, 42 - called Large Law Firms at Northwestern.
anyone know what happened to the tpw summers?
anyone know what happened to the tpw summers?
Nice article and very interesting that you got access to this document. An ATL triumph.
4:
"Model Rules of Professional Conduct
Law Firms And Associations
Rule 5.6 Restrictions On Right To Practice
A lawyer shall not participate in offering or making:
(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or
(b) an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy."
44, the tpw summers are rescinded and scrambling.
1. An impressive scoop. Nicely done. (And a very interesting and informative read.)
2. Northwestern and Michigan have classes on BigLaw? Really? What do they cover?
3. Was Sonnenschein the only firm to pick up boatloads of TPW refugees?
49 - here's the course description for Michigan's class:
The goal of this course is to expose and sensitize students to the myriad of real-world considerations that will affect their legal careers, and to assist students in making informed career choices (including selection of law firm). This course is designed primarily for the first semester, second year student who is interviewing law firms for the first time, but is recommended to all students who may consider working in private practice at some point in their legal careers. Topics covered include associate recruitment, training and retention (from the perspective of the firm and the young lawyer, including interviewing tips and strategies), law firm culture, profitability and professionalism issues, law firm strategy, compensation, marketing, billing, clients, firm governance, diversity, partnership considerations, alternatives to firm practice, and financial and lifestyle issues. Approximately one-third of the course will focus on professional responsibility issues, particularly those issues that a young lawyer may expect to encounter in medium or large-sized law firm practice. The final exam consists of a short paper on overall course themes, and an open-book, short answer exam on readings, lectures and professional responsibility issues. The longer paper previously required for this class has been replaced by an in-class discussion.
It's taught by Karl Lutz, a former K&E partner.
Interesting. I'm not sure how I feel about a class like that factoring into one's law school GPA (interviewing tips and strategies is really the province of the career services office, isn't it?) but seems like it would be a useful brown bag lunch series for most law students.... Especially like the idea of covering professional responsibility issues young lawyers are likely to face and the marketing, billing, firm governance, and financial/lifestyle issues.
Come to think of it: ATL, these would be good informative "serious" topics to have guest columns on. Pretty please?
i don't agree with Large Law Firms factoring into GPA either, here's Northwestern's description:
The goal of this course is to expose and sensitize students to the myriad of real-world considertions that will affect their legal careeers, and to assist students in making informed career choices (including selection of law firm). This course is designed primarlily for the student who is interviewing law firms for the first time, but is recommended to all students who may consider working in private practice at some point in their careers. Topics covered include associate recruitment, training and retention (from the perspective of the firm and the new lawyer, including interviewing tips and strategies), law firm culture, profitability and professionalism issues, law firm strategy, compensation, marking, billing, clients, firm governance, diversity, partnership considerations, alternatives to firm practice, and financial and lifestyle issues. The final exam consists of a short paper on overall course themes, and an open-book, short answer exam on readings, lectures and professional reponsibility issues.
Taught by Lutz here as well.
This MOU should not be redacted.
22-the prevailing feeling is these partners basically will be axed at the end of the year. SNR talks real pretty about a family atmosphere but treats everyone like a shift worker. Part-timers don't even get paid for holidays on their scheduled day. Staff works 7 hour "days" not a 35 hour week. Next up: office relocation power play - who's your daddy now?.
22-the prevailing feeling is these partners basically will be axed at the end of the year. SNR talks real pretty about a family atmosphere but treats everyone like a shift worker. Part-timers don't even get paid for holidays on their scheduled day. Staff works 7 hour "days" not a 35 hour week. Next up: office relocation power plays - who's your daddy now?.
Good grab Mystttal. seriously well done.
SNR dreams of becoming a nascent CWT, with a highly leveraged core of rainmakers eating what they kill surrounded by a myriad of salaried assoc and of counsels whom they will suck dry and then kick to the curb
I wonder if the "60-Day Attorneys" were told that they were being brought over as part of "Schedule F-2" and not "Schedule F-1." How many other firms are using such arrangement, and are they telling the associates? Recent Cooley layoff of Heller associates comes to mind.
55 - couldn't happen to a nicer bunch of douchebags.
55 - couldn't happen to a nicer bunch of douchebags.
I agree with 53, there is no reason at all for redacting this document.
Word on the street is that the SNR/TPW "marriage" was really a "shot gun wedding" forced on both firms by their mutual banker. The bank would have lost a lot of money if TPW went under, and SNR was so dependent on the bank's line of credit that it had to say "I do." So TPW got "parked" at SNR. But before the TPW equity partners get a paycheck they each have to borrow 45 percent of their full year salary and turn it over to SNR for 12 months of working capital. So that is a $12 million total entrance fee for the TPW guys to play in the SNR casino. And which set of books did SNR show the TPW partners? The one Portnoy gives to the American Lawyer, or the one he gives his partners? In 2007, Portnoy gave the American Lawyer a PPP number for 2006 of $825,000. In June 2007, the American Lawyer confronted Portnoy with the"real" number, which was $713,000. Portnoy clammed up, mumbled something about, "changed our accountant." For 2007 PPP, Portnoy handed the American Lawyer a PPP number of $900,000+. The "real" number was $785,000. For 2008, nobody knows yet what number Portnoy will pull out of a hat to hand the American Lawyer. But the "real" number is somewhere in the range of $600,000-$650,000. So back to the poor souls from TPW, what 2008 PPP number do you think Portnoy gave them? And who do you think leaked the MOU to the world? Don't rule out Portnoy. He may have wanted to snow people that he was paying more than $1 million each to 16 TPW partners. Problem is the fine print about who is really paying who.
I hope all the Thacher Proffitt partners who went to Sonnenschein get kicked out on their asses by the end of the year. I used to work with them and they're a motley group. With very few exceptions, none of them are very good attorneys. Paul Tvetenstrand ran TPW like a fraternity house and was more interested in his bar in Chelsea Piers than the law firm. Erik Klingenberg is a sexual harassment lawsuit waiting to happen. John Kim has the intelligence of a clam. Bob McCarthy pretends he's a holy roller and then does in an entire law firm so he can keep making a fat paycheck. The whole lot of them make me sick.
KUDOS to 62; the true TPW mess identified; plus they did a lousy job managing; their subprime securitization group led by Tvetesntrand and Kudenholdt constantly resisted efforts to have the firm grow larger and truly diversify in a meaningful way, always resisting bringing in name partners or groups with large books of business; they liked being in charge while the firm made money and steamrolled anyone who stood in their way. They reap what they sow. Wait until SNR finds out they don't really have any big or meaningful clients.
KUDOS to 62; the true TPW mess identified; plus they did a lousy job managing; their subprime securitization group led by Tvetesntrand and Kudenholdt constantly resisted efforts to have the firm grow larger and truly diversify in a meaningful way, always resisting bringing in name partners or groups with large books of business; they liked being in charge while the firm made money and steamrolled anyone who stood in their way. They reap what they sow. Wait until SNR finds out they don't really have any big or meaningful clients.
KUDOS to 62; the true TPW mess identified; plus they did a lousy job managing; their subprime securitization group led by Tvetesntrand and Kudenholdt constantly resisted efforts to have the firm grow larger and truly diversify in a meaningful way, always resisting bringing in name partners or groups with large books of business; they liked being in charge while the firm made money and steamrolled anyone who stood in their way. They reap what they sow. Wait until SNR finds out they don't really have any big or meaningful clients.
62 and 63 hit it right on the money. The whole lot are a dim bunch of scalawags. In strong enough winds, even turkeys can fly. But when the tide goes out, you can see who's swimming naked. May they get what's coming to them.
I will eat their souls.
-Beelzebub