Money

Howrey LLP Abovethelaw Above the Law blog.JPGAs you may recall from our prior coverage, in posts titled Howrey Is Planning Something Weird and More About the Howrey Weirdness, the law firm of Howrey LLP was planning to ditch lockstep compensation for its associates — in favor of something weird (or innovative, or both).
Starting in 2008, Howrey was going to employ a “competency model,” in which it would “determine salary based on individual evaluations and various forms of progress indicators.” At least that was the plan.
Consider the plan on hold, or at least put off for a while. Sources at Howrey advise us that at a meeting of the Associate Affairs Committee today, it was announced that the new, non-lockstep compensation system will not be implemented until at least 2009. In other words, Howrey will keep a lockstep pay scale through 2008.
It’s still planning to move in the direction of a new pay paradigm. The associate evaluation system upon which the new compensation will be based is going to be rolled out in 2008. But evaluations under that system won’t affect associate paychecks until 2009, at the earliest.
Why the postponement? A source tells us, “apparently the delayed implementation is a result of concerns voiced by associates to the firm’s outside consultants during focus group sessions about the new system.”
That’s nice. Who says partners don’t listen to associates?
Update: Or, as one commenter puts it, “they have been listening to those comments in exit interviews as Howrey hemorrhages associates who are terrified of a compensation structure based on an inadequate performance review system.”
Earlier: Nationwide Pay Raise Watch: More About the Howrey Weirdness
Nationwide Pay Raise Watch: Howrey Is Planning Something Weird

DealBook special section merger lawyers AboveTheLaw Above the Law blog.jpgAs some of you have noticed, we have an article in today’s New York Times, in the DealBook Special Section. It’s about fee arrangements in the (highly lucrative) context of mergers-and-acquisitions work. Here’s a teaser:

For some firms, billable hours are just the beginning. As the boom rolled on, law firms specializing in mergers and acquisitions increasingly engaged in premium billing, charging fees in excess of their total hourly billings. Think of it as a tip for good work. Whether a client pays a premium depends upon its satisfaction with the result, the size and complexity of the transaction, and the nature and length of the attorney-client relationship.

But since the credit market began to tighten this summer, an event that brought new deals to a crawl and has upset several old ones, many lawyers have been wondering whether the premium party is over…

And here’s one of the more juicy portions:

One firm, though, has moved beyond billable hours to the flat fee preferred by bankers: Wachtell, Lipton. A former Wachtell lawyer described a typical bill as follows: “There’s a paragraph stating something like, ‘For legal services rendered in connection with Transaction X,’ then a dot leader, then a number followed by six zeros.” He said he worked on some deals where Wachtell was paid more than the bankers.

Wachtell charged a flat fee when it advised the Bancroft family, which controlled Dow Jones & Company, during the $5 billion bid by Rupert Murdoch’s News Corporation For its work on the deal, Wachtell first submitted a bill for $10 million.

You can read the full piece here (or here). Feel free to email it liberally to friends and family. Thanks!
When $1,000 an Hour Is Not Enough [Dealbook / NYT]

WilmerHale Wilmer Hale 2 Abovethelaw Above the Law blog.JPGToe up, that is. After our recent post about WilmerHale having “issues,” multiple sources wrote in to tell us that the firm’s Baltimore office is closing, effective January 1, 2008.
Once again, the firm ignored us did not respond to our request for comment (which we, like Robert Novak, don’t like very much). If you have more information, about the Baltimore office closing or any other WilmerHale developments, feel free to email us.
Here are two comments that caught our eye in the last WilmerHale thread:

“the original post about the WH employee with cancer is ABSOLUTELY TRUE. this story is not a fabrication. this person DEFINATELY [sic] exists, is back at work, in a different dept, different job. for all of you who dont believe this story, pull your head out of your a***s. wcp has gone to hell, a f*cking billable hr GULAG….”

“WH is a billable hours hell, however the summer associates get wined and dined all summer, boat trips, KenCen, pool parties at partners’ houses, free lunches, breakfast sessions, receptions, goodie bags full of WH items. You name it. The support staff that babysits them all summer get diddly. The personality of WCP has changed 180 degrees since merger with H&D, and not for the good. Morale among the worker bees (support staff) is lower than snake s**t. They’re even asking long time partners to leave, for whatever reason. WCP used to be based in Washington, now takes orders from the Boston office of H&D…..”

A billable hours “gulag” or “hell”? Times sure have changed from the 1930s! Back then, attorneys at WH predecessor firms worked under 1,500 hours a year (but for starting salaries of $1,200). See here.
Attorney Working Hours and Salaries [RumorsDaily.com]
Earlier: What’s Up With WilmerHale?

One year ago, we wrote about how Columbia law professor Hans Smit was trying to unload his 12,000 square foot home — the only freestanding single-family mansion in Manhattan — for a cool $29 million.

One year later, the good professor’s home is still on the market. Its white-marble-clad facade greeted us when we visited the New York Times homepage this morning (screencap and link to listing below).

The only difference from last year? The asking price, now up to $30 million.

If at first you don’t succeed, try, try again. And up your asking price by a million!

(In all seriousness, Professor Smit’s decision to round up to $30 million probably isn’t as crazy as it might seem. Despite the weak real estate market in the rest of the country, the market in New York City — especially at the high end — continues to be strong.)

Hans Smit mansion still for sale Above the Law blog.jpg

Magnificent Mansion [Brown Harris Stevens]

Earlier: Lawyerly Lairs: Professor Smit’s Uptown Mansion

Bryan Cave LLP logo AboveTheLaw Above the Law blog.jpgIn “selected U.S. offices.” Here’s the memo, which was issued yesterday:

From: Professional Resources
Sent: Tuesday, October 02, 2007 12:31 PM
To: LAWYERS
Cc: NBREC
Subject: Selected US Offices – Associate Salary Increases

Consistent with the Firm’s effort to attract top tier talent in each of our markets, the Firm continuously monitors each market to determine if our compensation and benefits packages remain competitive. In this regard, we are pleased to announce the following increases in Associate starting salaries affecting our Chicago, Irvine, Kansas City, Santa Monica, St. Louis and Washington, DC offices.

Effective January 1, 2008, Associate starting salaries in our Chicago, Irvine, Santa Monica and Washington, DC offices will be increased from the present $145,000 to $160,000. Effective June 1, 2008, Associate starting salaries in our St. Louis office will increase from the present $110,000 to $120,000 and Associate starting salaries in our Kansas City office will increase from the present $105,000 to $110,000.

The Firm will continue to monitor compensation trends in all of our markets around the world during this dynamic period in our industry. Thank you for your continued efforts on behalf of the Firm and its clients.

Lynn McCreary and Steven Kornblau

No word on what compensation for more senior classes will look like.
The move to $160,000 in Bryan Cave’s Chicago, D.C., and California offices, which won’t take place until next year, comes months after $160K became the new market rate in these locations. But hey, better late than never. Congratulations, Bryan Cave associates!

Atlanta Georgia GA Hotlanta Big Peach Abovethelaw Above the Law legal tabloid.jpgIn our most recent open thread about year-end bonuses, devoted to Texas, there were some requests for an Atlanta post in the comments. But there was also some dissent:

There is no need for an ATL bonus thread because the bonus structure there is so simple. For everyone billing less than 2400 hours, nothing.

For everyone billing more than that, you get to keep your job, a pitiful 5k bonus. And a salary increase of MAYBE that much next year.

Is the bonus outlook for ATLANTA really this grim? We invite the many readers of ATL in ATL to discuss, in the comments. Thanks.
Earlier: Year-end bonus open threads for New York, Los Angeles, Chicago, Boston, San Francisco, Texas, and Washington, DC.

WilmerHale Wilmer Hale 2 Abovethelaw Above the Law blog.JPGSome time ago, we received this interesting tip, about WilmerHale (in D.C.):

WH continues to go downhill. Why is it that no one ever seems to write or care about this?

I’m an associate and treated fairly well. But the support staff receives brutal treatment. I heard that one of our HR people who almost died of cancer this spring was told that the firm couldn’t accommodate her disability because it didn’t make “good business sense.” She has been here for 13 years, [with] excellent evaluations, and has been fighting for her life. Now she has to fight for her job when her doctor says she still is disabled. She [was] given six weeks by our Chief Human Resources Officer to come back full-time. After one week she was demoted and given no particular reason why.

It won’t be long before they treat the rest of us the same way. By the way, lawyers and staff alike continue to leave in droves. Does anyone care that a Washington institution has crumbled into hubris and greed?

The firm did not respond to our inquiry into this item. If you have more info, feel free to email us.
A little more about WilmerHale, including some happy news, after the jump.

double red triangle arrows Continue reading “What’s Up With WilmerHale?”

Better Know a Legal Market Above the Law blog.jpgAs we mentioned on Friday, due to the popularity of Non-Top-Tier Law School Week, we’ve extended it to include all of this week. We will continue to explore — and to challenge — the following claim:

Even if times might be great for Biglaw shops and the top-tier grads they hire, it’s hard out here for graduates of non-elite law schools (especially those not at the top of their class).

The thesis was articulated last week in this post, based on this Wall Street Journal article.
This latest post falls on the “challenge” side of the ledger. Several readers have emailed us to point out that, in essence, not all non-top-tier schools are created equal. Geography — i.e., presence in (or proximity to) a strong legal market, especially one without many top law schools to compete with — makes a big difference.
What do we mean by all this? Find out, after the jump.

double red triangle arrows Continue reading “Non-Top-Tier Law Schools: Better Know A District Market”

sorting hat Harry Potter Above the Law blog.jpgLaw school can be thought of as a Harry Potter-style “sorting hat” for law students (as Dave Hoffman suggests). Similarly, the recent round of pay raises can be thought of as a sorting hat for law firms.
Nathan Carlile has this excellent article in the current issue of the Legal Times:

Call it a near miss.

Earlier this year, New York’s Simpson Thacher & Bartlett raised starting salaries for first-year associates to $160,000. In the competition to recruit top talent, the tactic was similar to one used by Kenyan marathon runners: a midrace burst to separate elite competitors from the pack of pretenders.

But while Simpson’s bump momentarily opened up a $25,000 gap between top-end New York firms and their Washington counterparts, the pack soon matched the move. Eight months later, starting salaries for first-years at most of the 200 largest firms nationwide remain bunched at $160,000.

More discussion — including rumors of Skadden leading a new round of pay raises in New York City — after the jump.

double red triangle arrows Continue reading “D.C. Pay Raises: Separating the Men from the Boys? (Plus Rumors of Skadden NY Raises)”

Chelsea Clinton Osso Bucco Nino Selimaj Above the Law blog.jpg* Ann Althouse on the Chelsea Clinton restaurant photo controversy from earlier this week: “‘We reserve the right to exercise any and all options available to us.’ What kind of crap is that?” [Althouse]
* Our apologies to Brian Dalton of Vault for the snark from earlier today. How were we to know that a New York Times reporter would screw up a quote so badly? [Void for Vagueness]
* During a little over a year at Patterson Belknap, Michael Mukasey apparently earned about $1.9 million. And he wants to be AG to a lame-duck president, for a little over a year, because… [Bloomberg News via WSJ Law Blog]
* Congratulations to Hofstra on its #1 status! (Among tier 3 and tier 4 faculties.) [TaxProf Blog]
* John Carney argues that SEC chairman Chris Cox should reject the new proposed proxy access rule, which would actually harm ordinary investors. That Carney, he’s so contrarian. [DealBreaker]
* Are you a young lawyer looking for financial advice? Check this out. [WSJ Law Blog]

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