Here’s the promised follow-up to yesterday’s post about Cadwalader’s successful raid on the energy law practice of McDermott Will & Emery. It’s big news in Biglaw. As of now, nine partners are moving — Paul Pantano, Karen Dewis, Greg Lawrence, Greg Mocek, Tony Mansfield, Ken Irvin, Rob Stephens, Daryl Rice and Doron Ezickson — but if they’re followed by associates, a few dozen lawyers could be involved.
In an email sent out on Wednesday by MWE leaders Jeff Stone and Peter Sacripanti, reprinted in full after the jump, McDermott tried to minimize the losses. Stone and Sacripanti pointed out that “[t]his group of partners focused mainly on one aspect of our overall energy practice, which was commodities and derivatives trading for financial clients,” and that “the departing partners’ total collections in 2010 amounted to about three percent of overall firm revenue.”
Still, three percent of total MWE revenue is nothing to scoff at. In 2009, McDermott had total revenue of $829 million, according to the American Lawyer. Assuming that 2010 revenue is similar (the Am Law numbers aren’t out yet), three percent amounts to $24.87 million. Dividing that out over nine partners yields revenue per partner of about $2.8 million — not a bad book of business.
Let’s check out some reader views on this news….
One knowledgeable source told us, “This is a very big move at McDermott. Cadwalader hosted a reception last night for all of the support staff, income partner and associates. Most of the associates are very, very surprised.”
Here are some opinions we’ve heard about the partners making the move from MWE to CWT:
Karen Dewis: The high-powered Dewis served as head of MWE’s corporate practice in D.C., as well as co-head of the firm’s global M&A group.
“One of the most reviled people at the firm,” opined one of our sources. “But she has a huge book of business, so they have let her abuse her attorneys and support staff with no consequences. She was definitely a ‘dirty little secret’ of the firm. It will be interesting to see how everyone [at CWT] is treated with Karen and PJP [Paul J. Pantano] in charge.”
(Karen Dewis sounds… diva-licious. She will be played in the movie by Annette Bening or Meryl Streep.)
Paul Pantano: “A major player and rainmaker at McDermott,” who “was at the firm for several decades and had his hand in most major management decisions. He helped launch several careers and started, headed, and grew McDermott’s energy/commodities practice. It’s unclear what direction McDermott’s energy practice will go with his departure but, from a pure numbers/client perspective, this is a big loss for McDermott. What’s left of Pantano’s old practice might be a niche portion of McDermott’s energy regulatory practice.”
Some claim that Paul Pantano, like Dewis, isn’t the easiest person to work for. Word on the street is that he has “a world-famous temper.”
(So maybe he’ll fit right in at Cadwalader. Does the name Dennis Block ring a bell?)
Doron Ezickson: “A former high-level confidant of Gov. Bill Weld (note: Weld was at McDermott before becoming Mass. Governor, and returned to the firm again after), turned NY McDermott partner, turned head-of-all-things-McDermott in London.”
Greg Mocek: “A bigwig in the now-hot DC financial enforcement circles, and he was a very big catch for McDermott a few years back when he joined the firm from the top of the CFTC’s enforcement office.”
Daryl Rice: “A key ‘deal guy’ from DC, [who] has worked closely for over a decade with Pantano.”
Rob Stephens: “[A] big catch for McDermott a few years back, [who] brought credibility to the firm’s Houston office. (MWE’s Houston office focuses on energy — not sure what will become of it now.)”
What does this move mean for associates? One of our tipsters wonders:
One open (and big) question: McDermott doesn’t pay bonuses until March. Most of the energy associates bill way over 2000. What will happen to their bonuses? The energy associates are always some of the best McDermott has — smart and very hardworking. They are a great group.
In the comments to our last post, one inquisitive reader posted a whole host of open issues:
– What happpens to summer associates that have not joined the group yet?
– What happens to associates that are seconded to a client?
– How many people are following KD from the corporate group?
– Will any tax people move?
– Will income partners with business be slotted for promotion at CWT?
– Will CWT make the new MWE partners use their associates and compete against MWE associates that move?
– What happens to people that work in Chicago and Boston?
– Will clients accept higher rates for services that can be done cheaper elsewhere?
– Will associates and paralegals have to share offices as most do at New York firms?
This commenter wasn’t sure if MWE associates and junior partners should be rejoicing over this news:
I can see why the partners that moved might be happy but it is less clear that this is a great development for associates and junior partners. More will be asked of them to make any extra compensation and the likelihood of making partner is much smaller. Have people already forgotten the blood baths at CWT? They happened at MWE too, but leaving one hell hole for another and being excited about it seems odd.
But another reader had a rebuttal:
You’re much better off at CWT and, unfortunately, that’s not because the answers to your questions are favorable, but rather because the alternatives if you were staying at MWE with or without the group would have been worse.
Think of it this way: you were on the Titanic and your small group has transferred to the US Indianapolis before the Titanic hits the iceberg. You’ve bought more years of sailing time and a much better chance of surviving the next sinking, but now you have to watch out for sharks.
All in all, a good move for you.
In the comments to prior posts, some readers wondered about McDermott partner Michael Yuffee and whether he’ll be moving over to CWT as well. Apparently not — we’ve been advised as follows:
Michael Yuffee had been looking to move to the right place for a long time (this was not a secret in the group) and just accepted an equity partner position at Hogan Lovells. The timing was just weird — the group leaving at the same time was not planned and was the best time for any capital partner to leave based on McDermott’s partnership agreement.
(Basically, the partners got a distribution on January 14th. The next distribution won’t be until April and it won’t be very big. They can also keep you for a period of time (I think 60 days), so the earlier they announce the better. I am sure there is more to it, but that is the big picture.)
In other McDermott news, the firm is closing its San Diego office — which, according to a tipster, “they spent millions building out and moving into in December 2008. People have been steadily leaving, with [the loss of IP partners David Gay and Astrid Spain to Jones Day] as probably the final straw.”
We’ll keep following how this drama unfolds. Two MWE memos are reprinted below, and links to news coverage are collected at the end of this post.
MCDERMOTT WILL & EMERY — MEMORANDUM — ENERGY PRACTICE DEPARTURES
From: Jeff Stone and Peter Sacripanti
Sent: Wednesday, January 19, 2011 11:49 PM
Subject: Update on Energy & Commodities Advisory Practice
We wanted to update you on a recent development regarding the Firm’s Energy & Commodities Advisory Practice.
We were notified yesterday that that a group of partners – Paul Pantano, Karen Dewis, Greg Lawrence, Greg Mocek, Tony Mansfield, Ken Irvin, Rob Stephens, Daryl Rice and Doron Ezickson – will be departing the Firm. We expect that news of these departures will start appearing in the press on Thursday, and wanted to give you a heads up.
While we are sorry to see these partners go, just as we would be sorry to see any partners leave the Firm, these moves do not change McDermott’s strong commitment to the global energy sector. This group of partners focused mainly on one aspect of our overall energy practice, which was commodities and derivatives trading for financial clients. To put things in perspective, the departing partners’ total collections in 2010 amounted to about three percent of overall firm revenue. Furthermore, this practice area has undergone significant transformation in the past year, especially with the passage of the Dodd-Frank legislation in the last Congress. In light of that transformation, our departing partners identified an opportunity to align their specific practice with a firm that specializes in this area.
Of course, McDermott’s global Energy capabilities are far broader than commodities and derivatives trading. McDermott continues to represent some of the biggest names in the energy industry across a broad range of corporate, transactional, regulatory, enforcement, litigation, tax and other matters, and we intend to continue growing our strength in these areas.
Some of you may be concerned that these departures might signify something larger or more significant about the Firm or the Firm’s prospects. To the extent that any of you have such concerns, we want to allay them. We remain a strong, vibrant, and growing firm.
As always, please do not hesitate to contact either of us should you have any questions. Should you receive any media inquiries, please direct them to Chris Rieck, the Firm’s Director of Media Relations at xxx-xxx-xxxx.
MCDERMOTT WILL & EMERY — MEMORANDUM — SAN DIEGO OFFICE CLOSING
From: Jeff Stone and Peter Sacripanti
Sent: Thursday, January 13, 2011 1:43 PM
Subject: San Diego Office
After a very careful review, we have recommended to the Management Committee — and the Management Committee has unanimously approved our recommendation — that we consolidate our office structure in Southern California. Accordingly, we will begin closing the San Diego office, the smallest of our four California offices, effective March 31, 2011, and transitioning the majority of our 8 attorneys and 31 staff to our Orange County office. Our Los Angeles and Silicon Valley offices will continue operating as normal; our Orange County office will be expanded.
Of course, this consolidation decision affects many valued members of the McDermott family, and we want to assure you that we have not made it lightly or without a great deal of consideration for the people it will affect. We know that news like this can be disruptive, and we are working hard to minimize the impact of this move on our individual lawyers and staff in San Diego, as well as on our clients.
Today, our Firm has more than 150 lawyers and another 155 staff based in California, and our commitment to them and the clients we serve remains as strong as ever. In fact, McDermott continues to be one of a small number of international law firms with multiple offices in the State.
To be clear, these are the kinds of decisions that strong and robust institutions make on a regular basis. Any institution that is not carefully assessing how and where it operates, and how it delivers its goods or services to its customers or clients on a regular basis, is not operating intelligently. We just completed a very successful 2010, in which we outperformed our budget, and paid bonuses and merit increases to our staff. We are a strong and vibrant institution well positioned for success in 2011, but we would not be doing our job as your leaders if we did not constantly challenge ourselves to ask how can we do better as we move forward. As difficult as this decision is for those most directly affected, it is the right decision for the institution as a whole.
One final point. We have been operating in San Diego since 2003, and our partner John Hankins has done an outstanding job in leading that office. We are delighted that John, good leader and partner that he is, will be relocating his practice to the Orange County office. John moved out to San Diego at our request several years ago to manage this office, and we all owe him a substantial debt of gratitude for doing so; he brought stability and thoughtful leadership to the office and did so professionally and gracefully. We hope you will join us in thanking John for what he has done in leading this office for many years, and thanking him in advance for what he will continue to do for us while working out of the Orange County office in the future. He is a good partner and a highly valued member of our team.
If you have any questions about this, please free to contact either one of us. If you receive any media inquiries, please direct them to Chris Rieck, Director of Media Relations at xxx-xxx-xxxx.
As always, we welcome any questions or comments you may have.
Wall Street firm targets District-based energy practice [Washington Post]
Cadwalader to Land Large Energy Group from McDermott, Will [WSJ Law Blog]
WaPo: McDermott Energy Group Expected to Join Cadwalader Could Include Dozens of Lawyers [ABA Journal]
The Churn: Lateral Moves and Promotions in The Am Law 200 [Am Law Daily]