Jenner & Block: Problems Per Partner?
So far, law firm partnerships have put on a unified front about the cost cutting measures that need to be taken during this economic crisis. When it comes time to layoff associates or cut salaries, partners look like a monolithic group.
But law firm partners do not all think with one mind. And the cracks are beginning to show.
Back in October, Jenner & Block asked 10 partners to leave. But the latest reports out of Jenner suggest that the firm is not only asking some partners to leave, management is outright de-equitizing partners as well. A tipster reports:
Management just voted themselves massive raises while cutting the points of partners who are not politically connected. More significantly, over the last few days, management is going office to office de-equitizing and partially de-equitizing tons of partners in an effort to raise the profits per partner number. Those partners who are being de-equitized are no different than those who are permitted to keep their equity except those whose status remained intact have friends on management.
Above the Law asked Jenner spokespeople about these specific allegations. We received this response:
The quote … is inaccurate. However, as a matter of policy, we do not publicly comment on individual personnel matters.
But additional sources corroborate the reports that Jenner partners are being de-equitized.
More details after the jump.
One tipster quips:
At this pace Jenner and Block will soon be populated by top level experienced partners (billing clients hundreds of dollars per hour) and nobody else. Service partners are gone.
Yet another tipster describes the situation as a “partner blood bath.”
Our sources explain that high-end rainmakers are demanding a larger share of the profits, at the direct expense of junior partners who do not bring in business. Morale, we are told, is very low among the partners. High earning partners are annoyed that junior people aren’t pulling their weight, while new partners do not appreciate being essentially “demoted” to senior associate status. One of our sources reports:
Those who have dared speak against management have been publicly punished and made an example of. The firm no doubt will “spin” this latest move by claiming that only a few partners were affected (not true) and by making it sound like those partners were not performing up to standards - also not true.
Is this really an issue that is localized to Jenner & Block? Fundamentally, there is only so much money you can save by laying off associates and cutting salaries (just like there is only so much money you can save by firing staff). Some firms will undoubtedly start taking a hard look at the people who are supposed to be generating business.
But, it seems particularly unfair to de-equitize partners for not generating business during the worst economic crisis since the Great Depression.
Will rainmakers be willing to take less pay to help their firms weather these tough times? Or will they take their book and jump to whichever firm allows them to keep what they kill?
Either way, this is a story we will continue to follow. If you have other stories about rifts between senior and junior partners, send them into tips.
Earlier: Nationwide Layoff Watch: Jenner & Block Cuts … Partners
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first?
I'd rather work at Jenner than at McDermott Will & Emery.
"At this pace Jenner and Block will soon be populated by top level experienced partners (billing clients hundreds of dollars per hour) and nobody else."
Former Thelen and current Orrick partner the Glass Cock here, pointing out that it is outrageous for an attorney to bill a client hundreds of dollars per hour.
The beatings will continue until morale improves.
Their firm logo looks like it belongs on a pair of stone-washed tapered jeans.
A poem I wrote for laid off Lathamites. Don't get down. The world is your oyster and you'll come out of this for the better.
-------------------------------
Standing Tall
By LL
Sometimes the world looks perfect: Nothing to rearrange.
Sometimes you just, get a feeling like you need some kind of change.
No matter what the odds are this time, nothing’s going to stand in my way.
This flame in my heart, and a long lost friend.
Gives every dark street a light at the end.
Standing tall, on the wings of my dream.
Rise and fall, on the wings of my dream.
The rain and thunder. The wind and haze.
I’m bound for better days. It’s my life and my dream,
Nothing’s going to stop me now.
#2 - Why do you say that about McDermott?
Wow...5 really nailed it...that's all I see...
Elie, when will you cover stealth layoffs at Debevoise? Are you afraid to rat-out your former firm?
"If you have other stories about rifts between senior and junior partners, send them into tips."
Really? I can tell you now that there are no such issues at any firm. (it is at this point where I wish I had a cool ATL nickname/icon).
6 - you really want to open yourself up like this to ATL commenters?
Wow...5 really nailed it...that's all I see...
Murray, get on this! And turn off some of those lights.
5 - before I read your comment I actually thought the logo looked pretty cool. But I think you are right, making me glad I don't try to make my living in marketing.
First to say - I'm still Jenner from the Block, used to have a little now I have a lot...
11 - I don't care about the commenters. I just want to get my poetry out there and to inspire Lathamites.
#2, I would rather you worked at Jenner, too.
MW&E Chicago
How about a post about NY bar exam results.
Good. Worthless partners should be kicked to the street before first years. It's not associates' fault that work is slow. I know the economy sucks and that it's not the partners' fault either. But it's sure as hell more their fucking fault than associates'.
good...dequitizing one partner is like firing 5 associates...they want to reap the benefits of skyrocketing ppp, but not share in the wealth by increasing associate salaries
Why is there a scruffy looking dude feeding an enormous tadpole grapes on my screen?
Why indeed?
No sympathy from me.
MWE Chicago = no work whatsoever.
20, if that's true, what is the purpose of a non-equity partner?
elie, you truly suck
An a$$Lobster says What?
When the hell did ATL start covering accounting firms?
This kind of thing can really start to tear a firm apart. No one wants to keep lower quality, purely service partners around - they are essentially senior associates and they can easily be replaced. Lots of firms made lots of partners like this over the last decade or so, and for a long time it was the normal practice. A few people matured into major rainmakers, but everyone stayed at their firms their entire careers, so there was no pressure to compensate them a ton. Firms that give run of the mill services partners are too much security are making a mistake.
However, many firms are trying to go too far and knocking down or out everyone but the most powerful and the most connected. That is a major mistake as well. We're not producing widgets here, and many service partners are relatively irreplaceable, and the quality of the work will absolutely suffer if you show a bunch of people the door. At my firms, many of the younger "service" partners are doing a ton of work, and don't have a ton of clients because it is not the culture to try to wrestle away clients from the corner office partner, even though the younger partner is the one doing all the work and making the major clients happy. The 60 year old guy controlling major business often overestimates his own importance in the process - they're not always the ones doing the major work on their cases or deals, and in many cases have forgotten how hard it is in the trenches, haven't really kept up with developments in the last decade, and would be hopelessly lost if they actually had to be the point man on anything.
From what I know about Jenner, there is some of both going on. I think that doing too much of the latter will come back and bite them on the ass - quality of lawyering is pretty variable at Jenner, and it's just going to get even more so if they knock out a bunch of good partners just to slave to the almighty dollar.
ttt
Vince Woodjablomie! How are ya?
Wow, Jenner Block must be following Latham example of getting rid of people not based on merit, but based on connections. This is usually the best strategy to deequitize Latham and Watkins.
Yikes. Jenner is a lit shop. Did not expect them to be hurting this bad.
What's with the MWE troll these days? Surely you have something better to do....
*picks up law review competition packet, runs off to library with a case of red bull. *
-nervous T-10 1L
soon to be nervous 1L sa
Didn't these guys just open a Los Angeles office?
So one day at Jenner & Block,
The mighty rainmakers took stock:
"Our nonshares are slacking,
Let's send them all packing,
And then our PPP will rock!"
Latham Truth # 8:
So many secretaries have been fired at Latham that they can no longer pick up phones for associates. Only partners get that privilege.
Share truths about your firm.
"But, it seems particularly unfair to de-equitize partners for not generating business during the worst economic crisis since the Great Depression. "
Is it any more unfair than laying off associates for not making their billable minimum? It's about time deadwood partners were cleared.
Check into the situation at White & Case New York. Salaries for contract partners significantly reduced and lots of senior equity partners being whacked!
Junior (non equity) partner here. Equity battles are not new and are not a product of the economy. Many, many firms have de-equitized partners in recent years as a method of pumping up PPEP (profits per equity partner). Even so, not all equity partners are created equal (at most firms).
But it all depends on how non-equity partners are compensated. It has less to do with the economy than the firm's budget. You miss some of the upside if the firm overshoots budget, but you are insulated from the downside if the firm misses. It provides some certainty and a more regular paycheck. And if you don't get to vote, so what? In most big firms your vote won't count for much anyway.
Check into the situation at White & Case New York. Salaries for contract partners significantly reduced and lots of senior equity partners being whacked!
Check into the situation at White & Case New York. Salaries for contract partners significantly reduced and lots of senior equity partners being whacked!
Check into the situation at White & Case New York. Salaries for contract partners significantly reduced and lots of senior equity partners being whacked!
Check into the situation at White & Case New York. Salaries for contract partners significantly reduced and lots of senior equity partners being whacked!
De-equitizing partners is a serious matter and should only be exercised in the most compelling circumstances. The fact that it is happening on a larger scale at this non-peer firm marks its death knell.
Was the tipster a partner? Coolio.
Elie -
Sometimes reporting or commenting on the inner workings of a major law firm requires more just contacting the firm for a comment, or relying upon tips. The answer to the question of what is happening at Jenner is right in front of you. You have previously "reported" on some of the pieces. With a little enterprise on your part, you could enlighten your readers as follows:
1. Jenner will soon be moving into new offices in a build-to-suit. The lease was negotiated, and construction was started before the economy crashed. In a world where timing is everything, the building and the lease are expensive, and Jenner and the developer are already arguing over such petty things as to whether the floors slope too much from the center of the building to the window wall;
2. Jenner just announced that despite the recession, it is opening an office in LA, resulting in more pressure on the firm's finances, and grumbling from some partners;
3. Half a dozen partners from the DC office, including the managing partner, have joined the Obama administration. These guys had major points, and when they surrendered them, it set off a feeding frenzy among some of the remaining partners, who saw this as an opportunity to get a bigger piece of the pie. Management has reallocated those points, resulting in major boosts to some partners, especially those doing the reallocation; and
4. Jenner periodically sweeps out "service partners," and reallocates the surrendered points to placate those with bigger books of business.
Does anyone know if it might be useful to check into the situation at White & Case New York regarding salaries for contract partners significantly reduced and lots of senior equity partners being whacked?
The Big Law model is headed into the toilet. All that's left is salesman. May as well work at Circuit City....too bad they aren't still around.
47 - hit all but two of the driving issues. stay tuned for the back story which will explain even more
is something happening at White & Case in New York?
The ship be sinking...
Jenner should focus on doing what it does and not on being on the A-List or sponsoring every conference they hear about or putting out ungodly amounts of newsletters that cover the same attorneys issue after issue.
Jenner is good lawyers that should be left alone to practice their craft. It's a nice place.
47--
What exactly did you enlighten us to? It seems as though you just paraphrased previous posts.
LOL @ 15
Jenner & Block: Putting the DOUCHE back in FIDUCIARY.
The problem that you have is simple. Most rainmakers would not know what a contract was if it was sitting on their desk. They are essentially legal salesmen. You still need people with the "brains" to do the work. Once the rainmakers are faced with actually doing real work, then you will have a big problem.
PE -- Good post. By any chance do you live on Mission Canyon road in Santa Barbara? Hope you duck both conflagrations
Law firms have too many lawyers. From top to bottom. I think all firms (other than the strict lockstep firms that regularly cull the deadwood) are sorting through the partner ranks as well as the associate ranks.
Non-story. Jenner, and a lot of other firms in Chicago, restructure the partner ranks on a regular basis, even in good times. I suspect its the same in other markets as well. The days of making "partner" and being safe for the rest of your career have been over for a long time.
At my most recent firm, equity reviews were done yearly. I think they looked at 3 years trailing and then try to predicted a year or two ahead in making allocation decisions. Admittedly, that's not a great standard right now, but it was something that was done every year. Dead weight junior partners were cleaned out regularly as well, unless they were the point on a very key client relationship and/or had some specialized knowledge that a big client needed.
Hey 39, 41, 42, 43 & 44, how about checking into the fact that you only need to hit the "Post Comment" button once.
Latham Truth:
It sucks.
People are finally catching on to the fact that the only people that "are profitable" for a law firm are the lawyers who bring in business. Just because a client gets billed by the amount of time a lawyer spends on the matter does not mean that the billing lawyer (whether a service partner, counsel, or associate) is generating profit for the firm. Everyone else at the firm other than the lawyer who brings in the business is just a labor expense. These service partners are like the guy flipping burgers at McDonalds. They don't generate profit for McDonalds regardless of whether McDonalds charges a fixed price for the burger or a varying price based on the amount of time it took the cook to make the burger. Yes, they are necessary, but only to the extent that someone else has convinced a customer to come in and buy the burger.
To #36
I'm a Jenner partner and I am gay
Sleep all night and I work all day
They cut my balls off which is fine
Cause the lady mangers say it's time
PE/58 -
Stop trying to prop yourself up by posting anonymously. You're not fooling anyone. You're done here. Go away.
Jenner: realizing that human rights pro bono work doesn't put food on the table since 2009.
47 to EIC!
47 = racist asslobster
Jenner & Block
It's a matter of impotence
Have any firms closed (satellite) offices? Isn't that the next likely step when firing associates and support staff, de-equitizing partners, deferring 3Ls and lowering pay still won't stop the bleeding?
I didn't know J&R Block was a law firm...I thought they did tax returns.
PE, go back to your room. You are a douchebag and no one ever wants to see you again.
My balls are a matter of importance.
65,
I agree entirely about the PE post the other day. Along with many others it was horrifying. But 1L's have neither discretion nor sense during finals. This one is dead on and wonderfully short.
58
They did a lot of GM corporate work. Now that GM is toast - not much work there.
Latham fired a number of of counsel in Chicago.
Greed is what it's all about. The rainmakers demand more money in exchange for not taking their book of business elsewhere. Happens all the time. The problem with many rainmakers is that they usually are nothing more than a product of the firm's PR department. They were created out of thin air, so to speak, to be the face of the firm to clients. In short, the rainmakers really didn't generate the work. Another area of greed comes from the soon-to-retire senior partners, who threaten to leave now and take their book of business to the firm willing to pay them the most. Greed, plain and simply, but that's the way it is.
Hmmm-
Let me see if I understand this correctly?
McDonald flipper gets paid $5 per hour and makes 10 burgers. Netted out at $50. Minus overhead etc
Firm lawyer A bills 100 hours. Client pays @$400. Receivable - $40000 minus lease, administrative overhead etc
Firm lawyer B bills 100 hours Client pays @$500 hour. Receivable- $50000 minus fixed lease, administrative overhead etc
Billable/accounts receivable minus expenses = ???profits Or is this just plain ole hamburgers?
p x q - expenses = profits [ Idea = charge a high p; sell a lot of q; and reduce labor costs]
Service sector
p( fee per hour) x q (hours billed) - expenses = ????
Therefore fim lawyers are labor expenses and not profit makers???
Where did you go to school #63? Tijuana Flats?
77- You sound like an idiot. Are you drunk?
63 -
The only people who are profitable to a law firm are people who do both the following:
1. Create the opportunity to profit (generate business)
2. Utilize the opportunity to profit (satisfy client needs--bill hours)
Anyone who is doing only one of those functions cannot themselves be said to be "profitable" for the firm. They are merely a part of a greater whole which accomplishes profit. Both activities are necessary, and neither are individually sufficient for one specific person to be fairly called profitable.
Any Jenner people, or people who know... fill us in. How are things at Jenner? Is work really slow? Are people worried? Or is this just overblown and Elie making something out of nothing to try and keep his job?
#5 - Their new marketing slogan: "Jenner & Block, covering your ass"
all of these firms are now inverted pyramids or hour-glass shaped. too many partners, few senior associates, and dwindling jr associate ranks due to layoffs.
partners don't want to face that this has all been, literally, a pyriamid scheme. coming to jesus involves kicking out non-rainmaking partners.
look at the firms where the partner / associate ratio is ~50% / 50%. that's the recipe for dissolution. maybe not imminently, but that writing is on the wall.
all of these firms are now inverted pyramids or hour-glass shaped. too many partners, few senior associates, and dwindling jr associate ranks due to layoffs.
partners don't want to face that this has all been, literally, a pyramid scheme. coming to jesus involves kicking out non-rainmaking partners.
look at the firms where the partner / associate ratio is ~50% / 50%. that's the recipe for dissolution. maybe not imminently, but that writing is on the wall.
all of these firms are now inverted pyramids or hour-glass shaped. too many partners, few senior associates, and dwindling jr associate ranks due to layoffs.
partners don't want to face that this has all been, literally, a pyramid scheme. coming to jesus involves kicking out non-rainmaking partners.
look at the firms where the partner / associate ratio is ~50% / 50%. that's the recipe for dissolution. maybe not imminently, but that writing is on the wall.
are all these firms inverted pyramids?
85 What firms are at risk of dissolution?
The argument between who is the source of law firm profits, the salesman (partners) or the production force (associates) is pointless. For most of the last twenty years, as client demand exceed the supply of law firm labor, both sides could increase their returns -- associates saw bigger paychecks and the salesmen (partners) saw bigger draws because they were able to pass alone the increased costs to the customer in the form of higher rates.
Now, there is net decrease in demand for legal services, associates are seeing smaller paychecks (or no paychecks), and partners are seeing smaller draws (or no draws). The one odd thing about law firms is that associates are fired before the sales force is trimmed. In most businesses, management will cut non-producing sales staff first before cutting production capacity. Because a law firms are run by salesmen (partners), it is backwards, and the production capacity is cut first. But in the end, the same thing happens in a law firm as in any other business -- the salesmen are fired for failing to bring in sales.
A smart law firm model would provide no base pay to the sales force (partners), only pay them commissions (or "origination," as the legal industry likes to refer to its sales commission payments). Associates would be paid only by the billable hour, with no base pay. This structure would reward productivity, and prevent law firms from getting into a cash crunch, as the moment demand for legal services slipped, expenses would drop in equal proportion.
81 -- zero billable hours to be had in corporate. litigation isn't doing much better, though there are some hours to be had if you work with the right partners. IP is probably the only group with consistent work to do. probably the same trend in any other firm in the chicago area.
47 -- don't forget the fact that they didn't play nicely with their summers (cold offers and delayed start dates). again, prob the same as other firms in the city.
Give me that filet o fish,
Give me that fish
Nobody's a winner at Nixon Peabody!
HAHAHAHAHA
Oh wait, I'm sorry, I didn't realize ATL was posting about anyone else this week.
Anyone have any info as to how this reshuffling impacted the DC Office? Were the younger DC partners disproportionately cut?
Is there work in the DC Office?
Their Chicago offices always smelled like mildew and old cheese. That couldn't have been good for morale, either.
89 -- 81 here, thanks for the info. Aren't 2009 graduates starting Jenner in November? Not idea by any means, but vastly preferable to many firms 2010 dates.... or is the November start date incorrect? Any shop specific tips for incoming SA's?
94 - a classmate going to Jenner said that 2009 grads are starting right after the move to the new building, which is scheduled for late Oct or early Nov at this time.
88: that's the smartest post I've seen on here in quite some time. Kudos to you.
Management and labor are two sides of the same coin. Management is responsible for bringing in work/clients, and labor is responsible for doing the actual work in a satisfactory manner, and keeping the clients happy. One cannot survive without the other.
Only 2 summers were not offered jobs and '09 is starting in November, which is pretty good in this market.
I heard that Jenner is so broke that they are going to comply with Trump's request that they turn off their lights at night. Not to be nice, but because they can't pay their bills.
Everyone knows MWE sucks eggs. I'm not naming names, but ever since a certain italian pony (with initials PC) joined up, the place has gone to shit. Great recession or no, that guy sucks! It's dewey decimal system this and soggy that. And so, as a result, MWE sucks.
Everyone knows MWE sucks eggs. I'm not naming names, but ever since a certain italian pony (with initials PC) joined up, the place has gone to shit. Great recession or no, that guy sucks! It's dewey decimal system this and soggy that. And so, as a result, MWE sucks.
Everyone knows MWE sucks eggs. I'm not naming names, but ever since a certain italian pony (with initials PC) joined up, the place has gone to shit. Great recession or no, that guy sucks! It's dewey decimal system this and soggy that. And so, as a result, MWE sucks.
98
Trump should force Jenner into bankruptcy. That would be a nice present to the partners.
Hey, wanna hear a joke?
Q: Why are Biglaw attorneys so miserable?
A: Because they deserve to be.
McDermott Will & Emery must really suck. Why do people hate it so much?
Jenner is doing really well, all things considered. at least in the departments I'm familiar with.
there is a new policy - partners know that they have to bring in a certain amount of business within 2 years or they will be given a year to find another opportunity.
This has been coming for a while and doesn't have all that much to do with the recession. Though that doesn't help, of course.
they're opening a new office in a new city. don't think they'd do that if they were broke.
I believe Jenner's policy is non-equity partner after 8 years, then review for promotion to equity after 10. But what we seem to be dealing with here is bumping people back down to non-equity.
As far as I'm concerned, as long as they're not taking it out on associates, that's a good thing, and as far as anyone knows, Jenner's strategy has been pretty exclusively to leave the associates alone, do modest staff layoffs, and do the most damage to partners. It's true that these partners can't really be blamed for failing to bring in business during this economy, but hey, it IS their fault that there's slow business (if business is slow at Jenner). If somebody has to get axed, the partners who aren't bringing in business make the most sense. This tells me that, while Jenner is relatively very insecure for a partner, they seem to treat their associates fairly. What's wrong with that?
I would rather work anywhere than MWE!
MWE is hell on earth.
Don't kid yourself 106 -- Jenner has been doing stealth layoff associates for some time now. In addition, they've made some junior associates so miserable that they've left on their own -- in this market -- which speaks volumes.
109: You'd know more about this than I would. I don't claim insider knowledge of Jenner.
--106
109 -- What you say could very well be true. I don't know. I am just having a hard time imaging how that is possible. I can't seem to come up with plausible things which could be done to an associate to make them give up their position without other prospects. Daily beatings? Systemic shunning?
Latham fact of the Day:
Latham gave me a full bonus few weeks before I was laid off with 6 more months of pay. That is how mismanaged Latham is.
Latham is loosing their Paris office already.
http://www.legalweek.com/Articles/1197991/Winston+taps+Latham+for+Paris+litigation+team.html
104--because it sucks.
Laughing my Black ass off.
The Sheriff
P.S. The ship be sunk
isn't jenner de-equitizing partners old news?
The Pittsburgh office.
94 -- yeah, '09 is supposed to be starting "right after we move into the new building" in november. and yet, at the same time, management is desperately fighting to delay getting into that new office space as long as possible.
not sure what to tell incoming SAs, except save your money, and keep an eye out for other positions until you actually get an offer. dragging yourself into work everyday only to sit around with no hours to bill, and worrying all the while about losing your job because you haven't billed any hours, isn't the best way to live. one of my alums got so sick of it that she just walked; she figured it was better to spend her day at home job hunting than waiting around for some sort of stealth firing. it's starting to look tempting
Hi there - a couple disconnected thoughts in response to some of the themes in this thread:
1. Is Jenner going under? Probably not, if they are de-equitizing capital partners. If a firm de-equitizes, it need to return the partner's capital contribution. Most firms are close to their cash low-point right now (even if the business is not seasonal, cash collections are highly seasonal). So a firm that is really desperate does not de-equitize in the spring.
2. Another thing: Remember that PPEP is reported on a year-end basis, so if all you are looking to do is pump up your numbers you de-equitize near year-end, when the firm is in a better cash position. It's easier to return capital and you still get the reporting benefit.
3. And another: Most law firms have a covenant in their revolving credit agreements tied to equity partner departures. Usually you can't have 15% (by capital) leave in any six-month period. So if you are really running scared, again, the last thing you do is push equity partners out the door.
Upshot of 1-3: I have no doubt Jenner is hurting - we all are. But these are not the signs of a firm in serious danger. And no, I do not work there...
4. Different topic that came up in the thread: Why do law firms treat business-generators better as compared to worker-bees, when both are (admittedly) essential to profits? Simple. There are many, many more lawyers who are good worker-bees than good business generators. Service attorneys, while crucial, are largely a fungible resource. In good years there are not enough of them to go around, and the law of supply and demand does its thing. The flipside occurs in a bad year. Consistent business generators, on the other hand, are extremely difficult to find, and there's not really a "market" in which you can obtain them systematically. Law firms are simply too primitive to reliably identify, recruit and retain business generators - so they go with the most basic trick in the book (throw as much money at them as you can and pray they stay).
Let the games begin. This policy committee better enjoy their new money and power, because if the firm is around next year, they will be voted out of office. In fact, the campaigning already has commenced.
Let the games begin. This policy committee better enjoy their new money and power, because if the firm is around next year, they will be voted out of office. In fact, the campaigning already has commenced.
Let the games begin. This policy committee better enjoy their new money and power, because if the firm is around next year, they will be voted out of office. In fact, the campaigning already has commenced.