“It was a nice profession,” Old School Partner told me, especially for a senior partner at a white-shoe firm. Collegiality, interesting work, and a good living were his. Despite occasional internal dust-ups about compensation within the partnership, partners were generally content with what they were making.
But things were about to change, and what had been a guarded and close-knit segment of the legal profession was soon thrust into an unwanted spotlight. It was a “watershed” moment for partners.
The “watershed” that mucked things up? The launch of American Lawyer magazine….
(As an aside, the American Lawyer really needs to use its bully pulpit to give partners a better glimpse into industry-wide compensation. Profits per partner is not a very informative statistic when at most firms two-thirds or more of partners make less. How about some data on “spread ratios” between lowest- and highest-paid partners, compensation ranges among partners by practice group, or even some measurement of the compensation jump between associate/counsel and partner? It is not uncommon at non-lockstep Am Law 100 firms for the value of that jump to be zero but for a discretionary bonus component.)
Old School Partner’s comment reminded me that when it launched, the American Lawyer was really doing something very new. As OSP put it, “they spotted a critical industry in the U.S.A. that was operating in a cave,” and they began to discuss it. The American Lawyer articles and lists that caused the most ruckus were those (still problematic and less informative than they should be) regarding Biglaw compensation, of course. And the effect on Old School Partner, and other senior partners at the time, was apparently an unwelcome one.
“Almost right away, we had partners who went from happy to unhappy, without any change in their professional circumstances, other than knowing how much their colleagues at other firms were supposedly making.” For Old School Partner, who was very engaged in the annual compensation discussions at his firm, this was both an annoyance and a competitive threat — especially as lateral movement became more prevalent. Partners who were previously placated by explanations that they were lucky to be working in a elite firm became more strident. And some would leave.
“I would explain to whoever complained that 90 percent of our partners were making more money in our successful business than they could ever have hoped to earn outside of law,” OSP said. “And the ten percent who would have been possibly more successful doing something else would still need to think long and hard about leaving a stable, successful business for something riskier.” After the American Lawyer launched, those conversations became more frequent and difficult for Old School Partner, and more of his time went to participating in the lateral market. Over time, it meant that he would start spending a lot of his own time on lateral interviews for candidates looking to join his firm.
Apparently, once the American Lawyer started publishing the equivalent of Biglaw standings, there was almost immediate pressure to show greater profitability and revenue. “I was wary of hiring laterals, as they all share one common trait — they were willing to leave for more money.” Old School Partner talked to me about the destabilizing effects of laterals, particularly since they needed to be paid more than existing partners with similar productivity. The “organic growth” strategy that his firm had traditionally employed was jettisoned to some extent, and the industry was changing.
“Associates were also affected, as the profitability challenge forced the firm to micro-specialize them — so that we could justify getting the rates we were charging for them.” In the space of a generation, Old School Partner saw that current and future associates would most likely be denied the opportunity afforded to him, to work on interesting matters no matter the subject matter. Associates were hired in greater numbers, and attrition began to both take its toll on the associate ranks and become a desired outcome as firms looked to churn through associates. Basically, the Biglaw that I grew up in was beginning to take shape: an environment in which you are immediately thrust into a “practice group,” and need to fight to add skills other than doc review.
For Old School Partner, the days of “one firm, with partners and associates working together” were quickly coming to an end. “I was ready for a new challenge, so I looked to go in-house somewhere…”
Finis Part 2.
Earlier: Buying In: Meeting a Biglaw Insider
Anonymous Partner is a partner at a major law firm. You can reach him by email at [email protected].