Ed. note: Gabe Acevedo will be covering LegalTech for Above the Law this year. If you are interested in communicating with someone from ATL about LegalTech coverage, please contact Gabe at [email protected]. Thanks.
It seems that judges are no longer afraid to unleash the power of the gavel when it comes to e-discovery violations.
The past few weeks have brought a fair amount of news about King & Spalding. Some of it has been good — e.g., addingtalent from Orrick. And some of it has been bad — e.g., getting benchslapped (and disqualified from a case) by the Federal Circuit.
This week also brought compensation news to King & Spalding. The information has been a long time coming. Back in February, a K&S source told us:
King & Spalding continues to leave its associates in the dark with respect to 2009 bonuses and 2010 salaries. Back in September we were all demoted one year, and the Atlanta office salaries were slashed by an additional $10k. On top of that, our salaries are frozen and we received no increase on January 1st as we normally receive. Currently 1st, 2nd and 3rd year associates in Atlanta all make the same salary ($135,000). We were told late last year that we would receive bonuses for 2009, but no announcement has been made with respect to the amounts of those bonuses which have typically been paid at the end of February each year.
On Tuesday, associates at the firm received their bonus and salary info. And some of them were pleasantly surprised….
It might not look like it, but there is a lot of carnage on this list. Orrick is down four spots. Proskauer is down four spots. King & Spalding is down 3 spots.
And many of the firms here that are marginally up or holding steady still went through significant layoffs.
After the jump, Law Shucks offers some stats.
As you know, the past year has been a difficult one in all industries. The economic turmoil has led to a reduction in demand for legal services and increased pressure on firms to reduce costs. Although King & Spalding remains strong thanks to the quality of our people and our diverse portfolio of practices, clients, and offices, we are not immune to the broader economic environment. As a result, over the course of the past year, we, like other leading firms, have had to make a number of difficult but important changes to ensure our cost structure remains competitive and we are able to generate the opportunities that keep us all engaged.
Earlier this year, many firms “froze” salaries at 2008 levels or reduced them even lower. After closely monitoring those changes, we have decided to make commensurate adjustments to our salaries. Effective September 1, 2009, the annualized salary for U.S. partner-track associates will be equal to their 2008 salary. Partner-track associates in Atlanta and Charlotte will have an additional market-based reduction equal to $10,000 on an annualized basis. The salary for U.S. counsel, other lawyers, and consultants will be reduced by five percent. These salary changes will only apply going forward and will not be retroactive to the beginning of the year. Our plan is to announce 2010 salaries some time during the first quarter of next year, as some firms already do.
Ugh. Doesn’t K&S know that the cool thing isn’t just to cut salaries? All the popular kids are busy making fun of lockstep compensation. Oh wait, I guess K&S did get that message.
After the jump, another wedgie for lockstep.
Proskauer Rose announced start dates yesterday. Incoming associates have got some time to kill and some money to spend, says a tipster:
Proskauer [is] pushing their new associates back to March 2010. They’re offering a $20K stipend, or the option to get a public interest job, start Jan. 2011 and get a $60K stipend. They’re also still honoring a $10K salary advance they had previously offered.
Most firms, like Proskauer, have offered baby associates deferral stipends when pushing back start dates. However, a few disgruntled 3Ls have written to ATL saying that stipends are not forthcoming at their firms. Here are reports from tipsters:
Locke Lord Bissell & Liddell not offering any stipends [not even salary advances] to deferred Class of 2009 associates. Deferred Associates are still receiving their graduation bonuses ($1500), I guess that’s supposed to carry them through until January 2010.
You guys got to say something about the fact that Shearman, unlike most of the other firms, isn’t paying any kind of a stipend to those it is deferring until January ’10.
King & Spalding, all offices, has been pushed to January 19, 2010. Incoming associates were informed in late March. No stipend, and the salary advance is also not an option anymore.
Goldberg Kohn gave their incoming associates a $7500 bar stipend (which was reduced from the originally promised $8,000); they paid for Bar Exam fees; and they gave them a hand wave goodbye. As for their reported “pushing back start dates”, Goldberg Kohn has told their incoming associates that their start date was INDEFINITELY deferred. They said that March 2010 was a possibility but that the date was arbitrary and they are making no promises at all….They have offered no deferral stipend.
We would like to note that Shearman is paying a $65,000 stipend to those deferred to September 2010.
We wanted to call this post “The Final Round-up,” but that seemed overly optimistic. Check out the newest additions to the nationwide start date watch, after the jump. This time around, we’ve included firms (that we know of) that have not yet announced start dates.
Update (5:40): King & Spalding has confirmed this report. Read the statement after the jump.
We’ve heard all kinds of things about King & Spalding over the past week. We now believe that layoffs are in fact happening at the firm today.
The preliminary numbers we are hearing are that about 80 people will be let go today across all King & Spalding offices. But the Atlanta office should be the hardest hit, with half of the layoffs taking place there.
Update (5:45): The firm has now confirmed the news to Above the Law. The official numbers: 37 associates, 85 staff.
Most of our tipsters are surprised that the firm has managed to avoid layoffs for this long.
We understand that laid off attorneys are being offered a three month severance package. However, people are being told about the layoffs individually over the phone. Our sources do not expect an official firm wide announcement to go out. As one tipster put it:
We are told in person, not by email, so you’ll just see someone walk by crying. It’s scary.
Atlanta-based King & Spalding is in talks to acquire most, but not all of Thacher Proffitt & Wood’s lawyers, say two sources aware of the discussions. In order to avoid dissolution, New York-based Thacher hopes to find a partner to acquire it, these sources say.
One New York legal consultant says the discussions have been ongoing for the past three to four months, and that the firms hope to reach an agreement by year-end. The consultant says King & Spalding is considering taking on about 100 of Thacher’s 195 lawyers, but that it’s not yet clear which practices and offices the 100 lawyers would come from. “There’s a tremendous amount of uncertainty about who’s going to be invited to the party,” says the consultant, who asked not to be named.
Not sure we’d call it a “party.” But the alternative to a K&S acquisition isn’t appealing:
[Thacher's] overall headcount is down more than 100 lawyers compared to last year — and so are its profits. Profits per partner fell more than 22 percent in 2007 to $1.02 million, according to the Am Law 200.
The firm has had a constant stream of high-profile departures, including its vice chairman Thomas Leslie, who decamped for Greenberg Traurig in October, and Washington managing partner Richard Schaberg, who left for Hogan & Hartson’s D.C. office last month. The New York consultant and another individual familiar with the discussions say that if the deal falls through, Thacher Proffitt will likely go under.
It’s worth noting that TPW has placed its New York headquarters up for sublease (as reported by Lindsay Fortado and David Levitt of Bloomberg). If TPW is seeking a subtenant for all five floors it leases at Two World Financial Center, then one has to wonder if the firm plans to continue operations (at least in its current form).
As for King & Spalding, it’s growing strategically, despite the downturn. The firm recently snagged three energy partners from Kirkland & Ellis. KS hopefully has room in the lifeboat for Thacherites seeking a new home.
This is just a rumor, so take it with a grain — nay, a shaker — of salt. But we hear that Thacher Proffitt & Wood — which has been badly bloodied by the mortgage meltdown and Wall Street crisis, and has gone through multiple rounds of layoffs — is in “serious” merger discussions with King & Spalding.
The idea that TPW might be seeking a white knight shouldn’t be that surprising. Back in July, Thacher’s managing partner, Paul Tvetenstrand, had to deny rumors that the firm was headed for dissolution.
In his email, Tvetenstrand acknowledged that “[l]ike many firms in this unusual market we have had to take steps to adjust to the credit crisis.” One such step, of course, is to take refuge in the arms of someone who’s weathering the storm better. See, e.g., Merrill Lynch / Bank of America.
We reached out to both firms for comment. TPW didn’t get back to us. Kimberly Brooks, public relations manager of King & Spalding, had this comment:
It is our responsibility as a law firm to offer clients the highest level of service possible. As such, King & Spalding regularly explores opportunities that might provide for additional expertise and accessibility.
As a matter of policy, we do not comment on rumors in the market.
So they won’t comment on “rumors in the market” — but maybe some of you would like to? If you have additional insight into this rumor — it’s true, it’s false, it’s somewhere in between — feel free to email us. Thanks.
We’re back with another installment in our series of open threads on the Vault 100. This is an opportunity for insiders to sound off on their firms for the benefit of wannabe potential first-year and lateral associates.
Here are the next ten on the Vault list, with prestige scores in parentheses:
The most interesting set of “notable perks” in this bunch can be found at Boies Schiller. On the upside, there is an annual trip to Jamaica for attorneys and their families — in December, no less — but on the downside, it’s a “sweatshop run by a genius.” This makes us think of David Boies as the legal profession’s Santa Claus — who likes to take the elves to Montego Bay.
We invite the curious to ask questions about these firms, and for those in-the-know to take pity. Earlier:Vault 100 Open Threads – 2009
As we reported earlier this week, the Atlanta office of Paul Hastings has adopted a new pay scale, with a starting salary of $160,000.
The Fulton County Daily Report picks up the news today. It’s not new, since it was announced on Wednesday. But the article, by Meredith Hobbs, has a nice round-up of where things stand in the Atlanta market, post-Paul Hastings:
Like most of their competitors, Paul Hastings paid first-years $130,000 in 2007, the rate established by last spring’s round of pay raises. The firm had delayed unveiling its response to the increase to $145,000 triggered by Alston & Bird in August (with smaller raises up the classes) until now.
Paul Hastings’ new pay scale goes from $160,000 for first-years — the current market rate for first-years in more expensive cities such as Washington, Chicago, Los Angeles and New York — to $215,000 for seventh-years.
By comparison, King & Spalding announced in October a 2008 scale starting at $145,000 for first-years and going to $195,000 for seventh-years. At that time, King & Spalding established a richer bonus system, which upped pay for first-years receiving bonuses to $152,500, and star seven-years to as high as $250,000.
Paul Hastings does not calculate bonuses until after the end of its fiscal year, so associate bonuses correlating to 2008 compensation will not be determined until the end of February 2009, said Philip J. Marzetti, the firm’s Atlanta managing partner.
The evolution of relationships between the genders continues. Currently, in law firms, there is an interesting conundrum; balancing the desire for a gender-blind workplace where “the best lawyer gets the work and advances” and the reality of navigating the complicated maze created by the fact that, in general, men and women do possess differences in their work styles. These variations impact who they work with, how they work, how they build professional connections and how organizations ultimately leverage, reward and recognize the talents of all.
Henry Ford sat on his workbench and sighed. A year earlier, he had personally built 13,000 Model Ts with his own hands. Fashioning lugnuts and tie rods by hand, Ford was loath to ask for help. Sure, there were things about the car that he didn’t quite understand. This explains the lack of reliable navigation systems in the Model T. But Ford persevered because he knew that unless he did everything, he could not reliably call these cars his own.
“Unless my own personal toil is responsible for it, it may as well be called a Hyundai,” Ford remarked at the time.
The preceding may sound unfamiliar because it is categorically untrue. And also monumentally stupid. Henry Ford didn’t build all those cars by hand. He had help and plenty of it. Almost exactly one hundred years ago, Henry Ford opened up the most technologically advanced assembly line the world had ever seen. Built on the premise that work can be chopped up into digestible pieces and completed by many men better than one, the line ushered in an age of unparalleled productivity.
Today, an attorney refers business because he can’t do everything the client asks of him.
There are three reasons why this is way dumber than a made-up Henry Ford story…
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months, and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.