* “How do we find a new inventory of high net worth clients?” The answer for Kelly Drye was really quite simple: it seems that pro athletes are willing to pay just about anything to keep themselves from going bankrupt. [Capital Business / Washington Post]
* “I don’t know why it’s better to use a bigger firm.” When it comes to the latest law firm mega-mergers, some say that it’s not the size of the boat, but the motion of the ocean. [Wall Street Journal (sub. req.)]
* It’s like Groundhog Day for these Biglaw attorneys: Apple and Samsung are preparing for the “patent trial of the century,” part deux, and both MoFo and Quinn Emanuel have enlisted new lineups. [The Recorder]
* SAC Capital’s general counsel is okay, “[a]ll things considered.” His painful appendectomy is nothing compared to the $1.2 billion his hedge fund has to pay the government. [DealBook / New York Times]
* Ted Cruz might be an “AASS,” but he’s done at least one awesome thing in his life. He once drank so much Everclear that he completely ruined a play put on by the Harvard Law drama society. [Boston Globe]
* Since you’re so funny, crack some jokes about this one, Obama. Senate Republicans will be filing an amicus brief in support of a challenge to the constitutionality of the President’s recess appointments. [New York Times]
* Thanks to this Third Circuit ruling, you can rest easy knowing that you can rely on the First Amendment to protect your homemade sex tapes from all of those strict porn record-keeping and labeling requirements… for now. [Reuters]
* Due to Kelley Drye’s EEOC settlement, the New York State Bar Association is asking firms to end mandatory retirement policies. Because old folks need to make bank till they croak. [Thomson Reuters News & Insight]
* The ABA’s Commission on Ethics 20/20 has decided to ditch its proposal to allow limited nonlawyer ownership of law firms. Cue tears and temper tantrums from the likes of Jacoby & Meyers. [Am Law Daily]
* “If I believe that Chris Armstrong is a radical homosexual activist, I have a constitutional right to express that opinion.” Yeah, yeah, yeah. Tell that to the judge who dismissed your suit, Shirvell. [Detroit Free Press]
* Presenting “her royal hotness”: apparently Pippa Middleton has been seen cavorting around France with gun-toting lawyer Romain Rabillard, of Shearman & Sterling. [Daily Mail]
It's a terrible thing when you have to wait too long for your chance to rule.
The entitlement reign of the really old will not end soon. With advances in modern medicine, advances that the Supreme Court will tell us how we’re allowed to pay for, today’s old people will live and work longer than any previous generation on Earth.
Or at least take up space.
While a family might be able to shove Grandpa into a nursing home, modern businesses are having a really tough time getting septuagenarian or even octogenarian partners to go away, and leave their clients behind. The Equal Employment Opportunity Commission ruled that Kelley Drye owes one of its partners over half a million dollars for trying to push him into retirement, and it opens a wide door for old people to hang onto to their offices and their clients well after they can no longer chew the leather.
Maybe it’s the right thing to do, but it’s got to be annoying for the Prince Charles-esque 60-year-old “up and comer”….
Kelley Drye’s settlement with the EEOC resulted in a $574,000 payment to labor partner Eugene D’Ablemont (mental note: when f**king with old people, make sure they’re not experts in labor and employment law). The firm was in trouble for its (now defunct) policy of making 70-year-old partners transition to “life partners,” and lose their equity stake.
Kelley Drye has since changed its policy.
The Am Law story about the settlement contains a rich discussion about whether partners are “employees” or “owners,” and what to do with them. But I’m more interested in a different part of the story:
“The law firm world should not look at this as a Kelley Drye case,” says Robert Hillman, a professor at University of California Davis School of Law who studies partnership law. “It’s a law firm case.”
Jeffrey Burstein, a senior trial lawyer with the EEOC’s New York office who handled the case, backed up that sentiment. “We certainly hope this sends a message that EEOC is looking at this issue and is concerned about mandatory retirement policies,” he says. Without divulging any details, Burstein said the agency would certainly consider bringing cases against other law firms, with or without a complaint from a partner being filed first.
Look, how do we legally force partners out? Because there are a lot of partners out there right now who refuse to leave gracefully. Instead of mentoring the next generation (and by “next generation,” we’re talking about 50-year-olds), and passing on the baton of client relationships, there are a bunch of partners who believe themselves to be “indispensable men.” They’ve made themselves so by jealously guarding their secrets, and refusing to bring others up to speed. Their loyalty is no longer to the firm, but to themselves as they fight off boredom and the miserable family lives that are the result of too many hours spent in the office.
Or, you know, they’re just old and useless, but don’t know it yet.
Either way, where earlier generations would retire or die, the current crop of aged Americans seems determined to hang on for as long as possible. That creates a bottle neck at the top, and it backs up the pipeline all the way down to the senior associate who can’t learn how to make rain when all of her “mentors” are hogging all the business.
Forced attrition is never pretty, but businesses figure out a way to do it when it comes to young people. Some law firms are doing it to partners who never materialized into rainmakers. Surely there’s a way to legally push out really old people whose time has passed.
Otherwise, we’re going to have way too many Bert Coopers — old people hanging around firms with no shoes on for no discernible reason other than that they’ve been there for a long time.
* The EEOC suit against Kelley Drye was brought “for a reason.” You hear that, Biglaw? Other firms with mandatory retirement policies better take a look at their partnership agreements and make some changes. [Am Law Daily]
* Media whore lawyers unite! Cheney Mason of Casey Anthony fame has come out of the woodwork to support George Zimmerman. Still waiting on vital impressions from Gloria Allred. Oh wait… [Naked Politics / Miami Herald]
* Just think, maybe if Planned Parenthood of Texas had taken Tucker Max’s money, they wouldn’t be suing the state for banning their organization from the women’s health program. Nah, they’d still be suing. [Reuters]
* Georgetown Law is planning to launch an executive education program, but don’t worry, they’re not going to be competing with Harvard. They know they’re the safety school in this scenario. [National Law Journal]
* Love will definitely make you do some really crazy things, like watch The Expendables. Or allegedly commit a murder-suicide because your husband might’ve had an affair. Things like that. [Atlanta Journal-Constitution]
* Kim Kardashian’s dubious defense of the day: “I’m Armenian and hairy.” The only-famous-for-her-sex-tape star is trying to use that as an excuse to get a lawsuit over a hair removal product dismissed. [Fox News]
* Well, at least somebody’s getting a spring bonus. A Biglaw firm has folded against the EEOC’s will on the de-equitization of partners. And all of the underpaid old farts at Kelley Drye & Warren rejoiced! [Bloomberg]
* Jets fans, are you ready for some football? That’s too bad, because no amount of Tebowing could have saved Reebok from settling this Nike suit. You’re going to have to wait for your damn jerseys. [WSJ Law Blog]
* George Zimmerman’s lawyers, Craig Sonner and Hal Uhrig, have dumped him as a client. They’re probably just pissed that the “defense fund” he set up wasn’t linked to their PayPal account. [Miami Herald]
* Marrying a terminally ill client who’s as old as dirt may seem like a great way to make some quick cash, but it’s more likely that you’ll just be disbarred. [San Francisco Chronicle]
* When you’ve been late to court so many times that a judge calls your behavior “premeditated, blatant and willful,” you better be ready to open your wallet. That’ll be $500; at least pay on time. [New York Law Journal]
* If at first you don’t succeed, try, try again — but only after a few years, banking on the off chance that the bar admissions people have forgotten about all the bad sh*t you did in law school. [National Law Journal]
* Frank Strickler, Watergate defense lawyer to two of President Nixon’s top aides, RIP. [New York Times]
* Well, this could definitely be one of the reasons why Cravath hasn’t given out any spring bonuses to associates yet this year. They probably had to spend all of their money to clean up their allegedly fly-infested cafeteria. [Am Law Daily]
* Women in Virginia will now be able to politely decline their pre-abortion transvaginal ultrasounds in favor of abdominal ones. Oh, how nice! Look at that, girls, we totally won the war on women. [CBS News]
* Things Dharun Ravi texted to Tyler Clementi on the night the latter committed suicide? “I’ve known you were gay and I have no problem with it.” Of course you knew, you watched his sexual encounters via webcam. [CNN]
I have a friend who is looking for a job at a small law firm. (No, this is not one of those instances in which a person refers to herself as a “friend.” Do you see any quotation marks?) Not surprisingly, she is finding it difficult to land said job. As reported on Vault’s Law Blog, June was a particularly bad month when it came to legal unemployment.
My friend’s situation is not great. Of course, I did not say this to her. Indeed, like most conversations with my good friends, I say this behind her back instead. I am, after all, a good friend.
While things may not be looking so rosy for my friend as an aspiring small-firm lawyer, they are looking pretty sweet for some employed small-firm lawyers….
According to the Survey of Law Firm Economics (2011 Edition), conducted by ALM Legal Intelligence and The National Law Journal, average gross receipts and income per lawyer grew by an average of 14% for small firms last year. Furthermore, gross receipts and income per equity partner are up by 19% at small firms this year.
The Survey reported some additional notable trends:
Billable hours inched up, but have not returned to mid-2000 levels. Hourly rate increases were reported by small and large firms, but midsize firms have either not changed their rates or have lowered them slightly (-3%).
Firms are moving away from the billable hour. Some 95% of firms have reported billing via an arrangement not based solely on hourly rates. The majority (62%) have used alternative fee arrangements (AFAs) for up to 10% of their billings and the largest law firms in the survey (more than 150 attorneys) have used AFAs for between 11% and 25% of their total billing.
Compensation returned to levels that exceeded 2007 compensation amounts for the most senior partners and associates. For instance, median total compensation for 25-29th year Partners increased 8.2% from $322,813 to $349,300. Interestingly, for the fourth year in a row, average starting salaries for new graduates remained unchanged at $85,000. The biggest jump in total compensation for both partners and associates was seen at the largest law firms (150 or more attorneys).
Staffing continued to be an issue in 2010, with U.S. law firms reporting some of the lowest staffing ratios since the Survey of Law Firm Economics started trending the data in 1985. Ratios were about 70 associates to 100 partners in the early 2000s. After a 1.8% decrease in 2010, they’re now down to just 55 to 100.
What is contributing to the revenue increase among small-firm lawyers? Neither the Survey nor Larry Bodine’s column discussed a cause for the increase in 2010. If this trend continues into 2011, however, one reason may be explained by a report released earlier this month.
The report, discussed on Law.com, found that small firm acquisitions were “the driver in an active second quarter of law firm mergers and acquisitions.” For example, twelve new combinations were announced from April 1 through June 30, putting the total number for the first two quarters of the year at 28, up 47 percent over the same period in 2010. Ten of those 12 deals involved acquisitions of firms with 20 or fewer lawyers and the other two involved acquisitions of firms with fewer than 50. Seven out of the twelve acquiring firms had less than 200 lawyers.
Some of the most prominent mergers include:
• In April Kelley Drye & Warren announced the acquisition of 15-lawyer Los Angeles entertainment boutique White O’Connor Fink & Brenner.
• That same month, Womble Carlyle Sandridge & Rice, in Winston-Salem, N.C., announced that it acquired 44-lawyer Buist Moore Smythe McGee, one of the oldest and largest firms in Charleston, S.C.
• Also in April, Atlanta-based labor and employment firm Fisher & Phillips announced the acquisition of 19-lawyer Cleveland boutique Millisor + Nobil.
• In June, Blank Rome announced it was acquiring Abrams Scott & Bickley, a nine-lawyer litigation boutique based in Houston.
• Also in June, Saul Ewing announced the acquisition of Dionne & Gass, a seven-lawyer firm in Boston.
Why the uptick in small firm mergers? There are a few possible answers. One reason may be due to the fact that many mid-size firms have already been acquired. Another reason is that “[a] lot of smaller firms find themselves with aging leaders and rainmakers who are getting ready to retire. Being acquired can be a good succession plan for a firm in that situation.”
* On the same day that Lady Kaga wrote her first dissent, Governor Deval Patrick nominated Barbara Lenk, an openly gay woman, to the Supreme Judicial Court of Massachusetts. Big week for… uhh, female judges. [New York Times]
* The prosecution in the Barry Bonds case rested their case yesterday, and the judge is considering throwing out previous testimony about Bonds’s shrunken testicles. National League something something small ball. [San Francisco Chronicle]
* Fordham Law School hosted a conference on Bob Dylan and the law, featuring “law professors, a Dylan historian, a disc jockey and a guitar player.” Then she opened a book of poems and handed it to me. Written by an Italian jurist from the 20th century. And every one of Scalia’s words rang true and glowed like burning coal. [City Room / New York Times]
* White O’Connor, the Hollywood entertainment-law firm, is merging with “NYC white-shoe powerhouse” Kelley Drye. [Deadline.com]
Here at Above the Law, we’re trying to help you. We write about lawyers who do embarrassing things so that you can learn from their examples. Heck, you should get ethics CLE credit for reading this site.
One of our most widely-used lessons — now part of new employee training at a Wall Street firm, in fact — is the cautionary tale of Acela Bob. Pillsbury Winthrop partner Robert Robbins conducted what should have been a confidential conversation about impending layoffs at his firm — in a loud voice, using his cellphone bluetooth, on a crowded Acela train. An ATL reader heard the whole thing and tipped us off; we wrote it up. Shortly thereafter, Pillsbury — which had not yet admitted to any layoffs — confessed that cuts were coming (and “apologize[d] for the unfortunate manner in which our deliberations about reductions have become public”).
Here’s one lawyer who apparently never heard about Acela Bob, or perhaps forgot the story: James J. Kirk (no relation to Captain James T. Kirk).
Last Friday, January 7, James Kirk was on the D.C. to New York Acela train (business first class, of course; he is a managing partner). The train car was packed, with not one empty seat.
(Wait a sec — James Kirk was on the Acela? Obviously the transporter was malfunctioning.)
James J. Kirk
Even on the super-fast Acela, the ride still takes a few hours. So Kirk decided to make some business calls from the train — using his cellphone, and speaking loudly enough so that multiple people in the train car could hear him.
An Above the Law reader (who doubles as a Klingon spy) overheard James Kirk’s conversations in their entirety — and described them to us in detail. Kirk’s first call was to a fairly young partner at a litigation boutique in New York. Our tipster actually gave us this partner’s full name, but since he’s an innocent party — a victim rather than a perpetrator of the confidentiality breach, who might not have told his current firm of his departure plans — we’ll keep him anonymous.
Jim Kirk called this young partner to make him an offer to join Kelley Drye as a non-equity partner. Here are the terms of the offer, as heard by our source:
1. Base compensation: $300K in the first year.
2. Additional compensation: $50K upon bringing in $1MM; 15 percent of anything over $1MM.
3. Equity: Possible equity in the partnership after one year.
(Not bad — and that was just the offer. We don’t know if it was accepted; it’s quite possible that negotiations are still ongoing. In case you’d like to compare yourself to the offeree and assess your market value, he graduated from a top law school about a decade ago, clerked for a federal judge, and worked in Biglaw before joining a litigation boutique, where he’s currently a partner. He handles complex commercial litigation, securities cases, and internal investigations.)
After communicating the offer, Kirk told the young partner that he’d “work on finalizing the offer over the weekend” and “should have everything complete within 10 days.”
Kirk concluded the call to the offeree and then phoned a human resources employee back at Kelley Drye & Warren. He provided the young partner’s name and home address — which our reader also heard and took down, thanks to Kirk’s loud and clear speaking voice — and directed the KDW employee to “start the background check.” (Again, we are withholding the young partner’s home address, since it’s not his fault that James Kirk was so indiscreet.)
Without names, Kirk’s conversation might not have been that bad. But Kirk let it all hang out: firm names, individual names, and even the young partner’s home address. Our horrified tipster summed it up nicely: “Ridiculous over-sharing in a public place.”
But let’s say James Kirk hadn’t mentioned his own name, his firm name, or the name and home address of the young partner. Could some of the details have been figured out after the fact?
Quite possibly — since, just like the Alston & Bird associate who left behind her business card after ticking off a bartender on New Year’s, James Kirk left his Amtrak ticket stub on his seat (where it was retrieved by the ATL reader / Klingon spy):
James Kirk's Acela ticket stub (click to enlarge).
The other James Kirk. Loose lips sink (star)ships?
This is really a lesson about the importance of diversity in law firms. If James Kirk had a Vulcan partner, he might have learned that it is illogical to conduct sensitive business on a crowded train.
So law firm partners, repeat after me: “I will not discuss confidential matters, using my cellphone and speaking in a loud voice, on the D.C. to New York Acela train.”
Got it? Good — ’cause we’re tired of telling the same story over and over again. Next time you commit an indiscretion, please let it involve a stuck elevator, two people from the Help Desk, and copious amounts of half-melted dulce de leche ice cream. Thanks.
P.S. We reached out to James Kirk and to a Kelley Drye spokesperson yesterday morning. Neither has gotten back to us as of the time of this posting.