Beyond Biglaw: A Superstar League

How is "superstar" culture changing the landscape of Biglaw?

I had a chance to sit for tea recently with the CEO of a large international firm. During our conversation, I heard something that I found particularly interesting. We were talking about the state of IP (particularly patent) litigation in Biglaw, and discussing how things appeared to be going great for many groups in the short term — even as the long-term future of patent litigation as a Biglaw practice is in greater doubt now than it has been for the last decade (for a variety of reasons, some of which I may address in a future column).

One issue we discussed is the coming wave of retirements facing many Biglaw patent litigation groups. On two fronts. The first, which may be more boon than bane for many firms, is that senior service partners will likely be phased out as large-scale patent litigations start to die down, and as the continued price competition for both plaintiff- and defense-side work squeezes margins to the point that the Biglaw billable hour model becomes more of a hindrance than a help for firms hoping to secure work. The second, more serious issue, is that the senior leadership of many Biglaw IP groups is well past the traditional Biglaw (55-60) retirement age. At some point, people have to retire, and when they do, there will be a large reshuffling of the Biglaw deck in terms of which firms are able to hold on to the profitable work that has made IP litigation a great practice for many firms.

I found it only slightly surprising when this firm CEO mentioned to me that while he anticipates losing some senior IP people, he is not sure whether his firm will be willing or sees the need to make the investment in hiring replacements. Yes, he thinks his firm has some promising younger partners who may mature quickly and fill the breach. But IP litigation is a “superstar’s game” at the highest (most profitable) levels, and unless you replace a retiring or departing superstar with an equivalent, your firm will inevitably lose ground. But paying for superstars is an expensive proposition, even for profitable firms. So some triage is necessary to determine in what groups is an investment in superstars warranted. And it seems like IP litigation is one of those groups where it may not be — especially in the current patent litigation climate.

I have been reading the recent news about mega-bucks Biglaw lateral “signings” in light of this conversation. The comparisons of the Biglaw lateral market to sports free-agency are legion, but there is something to be said about the recent trend, where super-profitable firms are willing to (over?) pay for competitive talent at levels previously unseen — all in an effort to maintain elite status and profitability. This newest Biglaw development suggests that Biglaw is further on its way to becoming a “superstar league.”

As anyone who has played, or enjoys watching, competitive sports knows, having a superstar on your team is usually a great thing. Not just good, great. Because superstars project confidence, and can inspire others to achieve more than they ever thought capable. Just like sports superstars generate opportunities for their teammates to play in meaningful playoff games, for example, so do Biglaw superstars allow their fellow attorneys to participate on big deals or cases — providing opportunities to garner experience that more run-of-the-mill partners never generate. As long as the superstar cares about the team, or his current colleagues, having a superstar around is great.

Adding a superstar to a Biglaw practice group can be a galvanizing experience for all involved, in a positive way. The ambitious lawyers in the group will appreciate the newfound opportunities generated by the arrival, and benefit from the group’s raised profile in the marketplace. And the new arrival will do his or her best to show that they can build something even better than what was in place at the firm they left — without the nagging feeling that they are underpaid relative to their contribution, a feeling which, even if unexpressed publicly, surely contributed to their move at some level.

For those trying to determine how a continued move towards a “superstar-focused” model will affect Biglaw, a look at the NBA can be illustrative. Of all the professional sports leagues in America, the NBA perhaps parallels Biglaw the closest. First off, the league, like Biglaw, has become international in scope, drawing talent and competing for business on a global scale. Second, the league has experienced (like Biglaw) a fantastic recent run from a business perspective, to the point that even with a salary cap in place, the average annual NBA salary exceeds $4 million, while the median salary is around $2.2 million. Heady figures, and ones that match nicely with the high end of the Am Law 100 profits-per-partner figures for the elite Biglaw firms.

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Both the NBA and Biglaw have been successful, no matter which way you choose to categorize their success. If you want to argue that the NBA is a superstar league, where you either have the elite player (or more likely need two or three, as Carmelo Anthony’s struggles with the Knicks illustrate) that can take you to a championship, fine. Superstars in the NBA do not remain “bargains” for their teams for long, if at all. And a successful star can enjoy ten years or so of maximum earning power, pulling in an astronomical “max” salary over the course of two contracts most likely. At the same time, if you want to think of the NBA as a means of making millionaires out of role players, you would be right as well. If you are a good rebounder, or 3-point shooter, or just lucky enough to be over 7-feet tall, there can be a very nice salary awaiting you in today’s NBA. Even if you never leave the bench. So while only 4-5 teams may have a shot at a championship, just being in the league is a pretty sweet proposition. Just like being a Biglaw equity partner today.

When you think about the state of Biglaw, the parallels with the NBA become obvious. Most Biglaw superstars have an expected maximum earning period of about ten years or so, and it is unsurprising that when given the opportunity, they will look to join the firms that are best able to pay them during that window. At the same time, the stratification between the truly elite and profitable firms continues, so there should be no surprise that financially secure firms will be willing to make the investment in the next generation of talent. But only in those practices that can support the investment. Because a superstar on a bad team can be a waste, while adding a superstar to an already strong team can be the best way to guarantee success.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.


Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique. The firm’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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