The first bump is coming from Thacher Proffitt & Wood. As TPW was dissolving, Sonnenschein scooped up 100 lawyers from Thacher Proffitt. The partners involved received significant compensation packages.
According to The Lawyer, those well-compensated partners are now thinking of leaving Sonnenschein, before the merger…
The Lawyer reports that a number of legacy Thacher Proffitt partners only had to stay until July 1 to keep their capital:
A GROUP of Thacher Proffitt & Wood partners who joined Sonnenschein Nath & Rosenthal (SNR) when Thacher Proffitt dissolved are seeking to leave SNR, something Denton Wilde Sapte was not informed of during the two firms’ merger negotiations…
A number of the partners came in on two-year equity deals that are understood to be between $750,000 (£512,100) and $1.4m, while SNR’s average profit per equity partner (PEP) in 2009 was $780,000. It is understood that 20 of the 40 Thacher Proffitt partners were contractually obliged to remain at SNR at least until 1 July this year or they would lose some of their capital.
The Thacher Proffitt partners were receiving compensation that outpaced many of their new colleagues at Sonnenschein. It’s unclear if that situation will continue at SNR Denton, which might be why the former TPW partners are flexing their muscle now.
Also unclear: why the hell partners at Thacher Proffitt — partners from a firm that was run into the ground on their watch — deserve to be paid more than the rest of the Sonnenschein partners in the first place:
A source close to SNR spoke of “resentment” among the firm’s partnership, given that the Thacher Proffitt lawyers had continued to receive enhanced remuneration packages despite the fact that many of their practices had suffered due to the economic situation. The source added that SNR partners felt that were “taking a hit due to the acquisition”.
Former Thacher Proffitt partner Bob McCarthy, who sits on SNR’s policy and planning committee, said: “I haven’t seen the resentment. Partners understand that to bring a group in you have to bring them in with a strong package.”
I’m sure that the Sonnenschein partners “understand” the need for a strong package better when those partners also bring in strong business. But if the business is faltering, there’s little reason to continue the high draws legacy TPW partners are earning.
At least publicly, legacy TPW partners say they are part of the team:
According to SNR partner Paul Tvetenstrand, former managing partner of Thacher Proffitt, there was “nothing to tell Dentons” because “the Thacher Proffitt lawyers aren’t leaving or looking to leave”.
These are the same people who found themselves a lifeboat from TPW just as the firm was sinking — leaving some of their other colleagues and many of their associates completely screwed.
SNR Denton’s new management might want to keep an eye on these guys, just in case.