Ed. note: Law Shucks focuses on life in, and after, BigLaw, including by tracking layoffs, bonuses, and laterals. Above the Law is pleased to bring you this weekly column, which analyzes news at the world’s top law firms.
Most summer programs have kicked off by now, but ATL pointed out a problem waiting in the wings. While law students are taking a sabbatical from studying, former associates are returning from their actual sabbaticals. As we’ve been saying forever, deferral programs like Dewey & LeBoeuf’s DL Pursuits program just delayed a problem. The inevitable conflict between fêting summers, hiring new graduates, and making space for returning associates is finally coming to a head. In some cases, returnees aren’t finding the welcome as warm as they expected.
It’s all well and good to insist that firms keep their promises to all the affected individuals, but what are they supposed to do with an excess of junior associates at a time when clients are actively looking to move the work formerly done by new lawyers to lower-cost alternatives? And it’s not just junior associates under the gun; clients are seeking to reduce outside counsel’s hours across the board, which means firms are going to have to respond somehow.
Firms in Texas and New Jersey have cut back their summer programs, and hiring has been at a glacial pace for more than two cycles already. Bryan Cave is sticking with the wait-and-see approach. Class of 2010 offerees are getting the same year-and-a-half delay the class of 2009 got.
More about the firms and their reactions, plus the deals, suits and other events of the week, after the jump.
As slow as firms are in reacting to economic factors, it turns out law students are just as bad at realizing the depth of the problem. Two years after the market tanked, some are apparently still surprised that the old model of good grades and hard work isn’t cutting it any more (but Hiring Partner has plenty of advice on the little things you can do to keep and succeed in your job).
On the plus side, those who participated in programs like DL Pursuits or Skadden’s Sidebar were appreciated by the pro-bono organizations they helped.
One firm we were surprised to see changing with the times is Cravath. It’s not just that junior partners are getting plenty of headline space (literally), but they’re getting it from work in practice areas that the firm used to hold in disdain.
At two other firms, long-time leaders who substantially changed their firms are stepping down. Bart Winokur of Dechert and John Conroy of Baker & McKenzie will see their runs end in the next few months. Conroy’s successor is particularly interesting, as when Eduardo Leite takes over the world’s largest firm, it will be the first time a lawyer based out of Latin America will be helming such an enterprise.
Firms are finally getting around to looking at costs. As we mentioned last week, outsourcing is going to lead to layoffs – lawyers if it’s legal process outsourcing, but more likely a lot of staff to IT outsourcing. Add Troutman Sanders to the list. The firm is sourcing its helpdesk to IntelliTeach, which touts its experience in the law-firm vertical. Don’t say we didn’t warn you!
Another interesting vector against law-firm hegemony might be crowdsourced research. Jason Mendelson, a former Cooley Godward lawyer, recently tried out SpindleLaw, which is sort of a Wikipedia of legal information.
- Vimpelcom merger ($23.8 billion) – Orrick Herrington & Sutcliffe and Skadden represented the Russian and Norwegian companies that merged their Russian and Ukrainian cellular operators in the largest merger in Ukrainian history.
- West-side development ($15 billion) – Paul Weiss, Carter Ledyard & Milburn, Fried Frank (which bumped Greenberg Traurig), and Schulte Roth all played roles in the signing of a deal for a new sponsor of a 26-acre development on New York’s West Side. We don’t do real estate, so we have no idea whether the number of conditions is standard or not, but a whole lot has to happen before anyone actually breaks ground.
- Sinochem investment in Statoil field ($3.1 billion) – US firms Baker Botts and Vinson & Elkins led the Chinese company’s acquisition of a 40% stake in a Brazilian oil field from a Norwegian owner.
- Centerbridge Partners acquisition of Extended Stay hotels ($3.9 billion) – Nearly a dozen firms got in on the action on this deal out of bankruptcy, with some of the biggest including Weil Gotshal, Covington & Burling, Latham & Watkins, and Gibson Dunn. But it was Fried Frank’s Brad Eric Sheler who won Dealmaker of the Week for his work.
Of course, not all deals go smoothly. Baker & Hostetler and Ropes & Gray are about to be in the middle of a nice fight between Javelin Pharmaceuticals and its would-be acquiror, Hospira. Javelin, by Ropes & Gray, has sued to force Hospira to close the $145 million tender offer. The Deal Professor breaks down the very interesting dispute and even finds a cross reference the lawyers missed. Quick practice note: if there’s one set of x-refs you can’t screw up, it has to be the termination provisions.
Some deals are hostile from the beginning. Those provide no end of entertainment. Dewey & LeBoeuf and Cravath are on opposite sides of Couche-Tard’s $1.9 billion hostile offer for convenience-store chain Casey’s General Stores.
And some deals die on the vine. Debevoise & Plimpton, Slaughter & May, Davis Polk, and Cleary Gottlieb are among the firms that won’t be collecting any success fees, now that Prudential has pulled the plug on its proposed $35.5 billion acquisition of AIG’s Asian operations.
The big story these days is the DLA Piper raid on Nixon Peabody. DLA has now taken nine Nixon Peabody partners in a variety of practices (insurance, M&A, sports & entertainment) since the beginning of May. Nixon Peabody is not the only firm that’s having attrition problems. Linklaters Stockholm has gone from 35 partners down to nine, and four associates just left.
Not content to defend large corporations against IP infringement claims, Kirkland & Ellis partner John Desmarais has gone over to the dark side. He bought a huge block of patents and will start his own business enforcing them. That’s no easy move to make, considering K&E had 2009 PPP of just under $2.5 million. But it does explain how he had the funding to buy so much IP.
Another unique move was the three lawyers who left Perkins Coie and Jones Day to join a Chinese firm.
The Inside Counsel SuperConference wrapped up this week with an interesting panel of general counsels, including plenty of information on how they got the jobs. For those considering the inhouse move at a less lofty level, the series Jumping In(House) continued this week with a synopsis on the beginning of the hiring process from the company’s perspective.
All the rest of the week’s BigLaw partner movements can be found on the Law Shucks Lateral Tracker.