Earlier this month, we asked: What’s Going On At Kirkland & Ellis? Some observers wondered whether K&E, arguably the nation’s best overall law firm, was experiencing an unusually high number of prominent partner departures.
We received some interesting responses from Kirkland sources, some defending the firm and some more critical. Let’s hear what these readers had to share with us….
We’ll start with the pro-Kirkland perspectives. In our prior post, we noted Leonard Klingbaum and Stephanie McCann leaving K&E’s top-tier private equity practice to join McDermott Will & Emery. One Kirkland defender dismissed the significance of the moves:
Klingbaum left because McDermott promised him the moon and I think he felt like there were so many big hitters at Kirkland in his practice group that it would be tough to claw to the top. Chose to be a big fish in a medium-size pond rather than a medium-size fish in a big pond.
As for McCann, she was a nonshare partner. Very possible that she left after being let know that shares were not in the cards (she was right around that time). Most NSPs don’t make shares, just like most senior associates don’t make partner, and they leave.
You guys should really note that two-track system when talking about “partner” departures. Nobody here blinks an eye when an NSP leaves. It would be like a very senior associate at another firm leaving. As far as I can tell, it’s just business as usual here. People come and go.
This is a fair point. We’ve discussed the share/non-share issue before:
Kirkland & Ellis has a fairly large class of non-equity or income partners. Kirkland uses the “non-share partner” classification liberally, and they tend to make more lawyers “partners,” at earlier stages in their careers. Some K&E “partners” would be senior associates at other firms.
After making non-share partner, you generally have five years or so to make share partner. If you don’t make it, you move on.
UPDATE (4:05 p.m.): Regarding Stephanie McCann, a source had this to say: “She asked for reduced time to [address issues relating to the health of a child] and was told the firm was ‘up or out.’ I think she believes in the firm that has been her sole employer since law school and thus left — and probably should instead have sued.”
My guess would be that the young guns that Kirkland has ponied up sizable amounts of equity for (e.g., Sean Rodgers from Simpson Thacher and Sarkis Jebejian from Cravath) could have cut into the power / income of established partners. Kirkland can sometimes be a difficult place for older partners — less of a priority placed on seniority, like there might be at an old white-shoe firm like DPW [Davis Polk & Wardwell]. Share partners are always bragging about how low the average partner age is here.
So Kirkland might not be the best place for very senior share partners. Meanwhile, we’re also hearing some discontent from the opposite end of the seniority spectrum. From a different tipster, an associate:
[You previously reported on associate dissatisfaction] in regards to 2013 bonuses, which you correctly noted were individualized. What you did not mention, and perhaps may not know, is that Kirkland also made the decision this year to pay below market salaries to a large percentage of its associates.
This year Kirkland moved to a new evaluation system where it scores associates on a scale of 1-5, with 1 being the best. Associates receiving a 4 or 5 were ineligible to receive any merit bonus. They were also denied the customary salary increase for succeeding to the next class year.
This sounds like a more refined version of Kirkland’s older rating system of “above class,” “with class,” and “below class.” But wait, there’s a rub:
Unlike the bonus, this salary increase had always been fairly standard by class. While the bonus was intended to recognize “exceptional” performance, it was understood that the salary increase compensated associates for the fact that Kirkland was now able to bill them out to clients at higher rates.
As a result of this change, Kirkland now has a large number of 4th years being paid like 3rd years, 3rd years being paid like 2nd years, etc. Of course this means that Kirkland now also has a large proportion of its associates who are underpaid relative to their peers at other large law firms.
I’m not sure if the move to pay smaller salaries to its associates is indicative of the larger financial health of the firm or not. But if I were a law student considering a career at Kirkland, it is something I’d want to know.
This source assumes that Kirkland is billing out the somewhat low-rated associates at lower seniority levels. We have heard reports — anecdotal, to be sure, and not involving Kirkland specifically — of firms that hold associates back on base salaries but bill out the associates to clients at non-held-back rates (i.e., the rate reflecting the associate’s law school graduation year).
Are more partner departures from Kirkland & Ellis forthcoming? We’ve heard vague rumblings about the IP group in Chicago and the M&A practice in London, but nothing terribly concrete. Feel free to email us or text us (626-820-8477) if you have info about K&E that you’d like to share.
Earlier: What’s Going On At Kirkland & Ellis?