Everybody has to sacrifice to survive in the new “economy” (if that’s what we’re still calling it). Today, we’ve received word that Buchanan Ingersoll could be asking partners to shoulder part of the burden. A tipster explains:
Buchanan Ingersoll was not able to pay nonequity partners any of their holdback at year end and equity partners only received a very small portion of their money. Partners forced to borrow to pay in capital by Jan 30.
But according to the firm, this is the normal timing for Buchanan’s decision making process. A firm spokesperson told us:
In terms of payouts to non-equity and equity partners — We are on a January 31 year-end for partner compensation so it’s only after that date that we determine the payout to equity and non-equity partners. There will certainly be a payout to non-equity partners and a substantial equity payout as well.
If there is any level of payout uncertainty in the partnership ranks, you can imagine how associates are doing. We explore after the jump.
PPP are $1,080,000, which is up from last year by a little bit. Also, 6.7% of total hours billed by the firm were to pro bono matters.
And the firm is passing some of those profits back down to associates. Individualized bonus memos are making the rounds at WilmerHale today, and at 2000 hours associates will be receiving a Cravath level bonus. Our Boston based sources are pretty happy with that.
Perhaps more importantly, WilmerHale announced that they will not be freezing salaries. So while associates at Goodwin Procter will be getting a better bonus, WilmerHale associates will be getting pay raises that are reflected in their February paychecks.
White & Case also shows a revenue increase after the jump.
We know what Cleary is doing for associate compensation: they are paying Cravath bonuses but have decided against freezing salaries. Is anybody interested in what the partners will be taking home this year? According to AmLaw:
Gross revenue is up roughly 8 percent to $965 million; profits per partner increased about 12 percent to $2.4 million. Revenue per lawyer, however, was basically flat, down less than 1 percent.
Christopher White, though, says the firm is now positioned for 2009 following a series of layoffs in its troubled structured finance practice.
“I’d like to think that we put most of our pain in 2008,” White says, adding that the $1.88 million profit number “is not too shabby.”
The drop, while severe, beat previously published rumors that profits per partner would fall 50 percent.
Should all those people CWT fired take comfort that making drastic cuts early in the year probably helped save 2008 for the firm at large? The needs of the many outweigh the needs of the not quite as many?
White says it’s wrong to put the focus on Cadwalader’s structured finance side, which, while still large, was shrunken through layoffs last year. “Our financial restructuring people are very busy, parts of our litigation department are very busy, and those are important engines in a downturn,” he says.
In today’s National Law Journal, Leigh Jones reports that non-equity partners at major law firms are also worried about the future. With all of the frightening career news floating around, it seems reasonable that either you are bringing in business, or you are terrified.
The upshot is that some law firms — especially those that have maintained armies of nonequity lawyers primarily to service accounts — are rethinking their business model, and some nonequity partners likely are reassessing their careers.
“Some firms are going to have to take a hard look,” said Brad Hildebrandt, chairman of Hildebrandt International, a law firm consultancy.
In good times, non-equity partners are a nice luxury for firms looking to use experienced people who generate great fees:
K&L Gates Chairman Peter Kalis said he is “very” comfortable with the equity-to-nonequity ratio at his law firm. He said the business model at K&L Gates is akin to a diamond, with the widest portion of the structure representing a group of nonequity partners who have created a more attractive service model for clients.
“Clients have little or no interest in paying for credit card-waving first- and second-year associates to fly around the country and run up bills,” he said. “What clients are interested in is paying for appropriately priced people who have both skills and substantive knowledge and who add value.”
The nonequity tier at K&L Gates, said Kalis, comprises attorneys with a wide variety of career goals — some with definite plans for full partnership and others who have less desire to develop business.
But these are not good times.
The bloated “inner tube” of non-equity partners, after the jump.
A week ago we asked if new partner promotions were an indication law firm’s financial health. Skadden-Mart just released its new partner roster, and it does appear that the firm’s tepid bonus announcement is reflected in the new promotions.
The New York Times reports that Skadden-Mart made five new greeters partners:
Simpson’s latest class is smaller than the eight partners it elected a year ago and less than half the 13 partners it named in late 2006, when the deal boom was in full swing.
This year, as big mergers are scarce and leveraged buyouts even scarcer, three of Simpson’s five new partners are from the corporate department, all based overseas. The other two new partners, from the litigation and tax departments, work out of Simpson’s New York headquarters.
So at least in this case, Simpson is keeping up the appearance of financial stress that they indicated to their associates week ago.
‘Tis the season — not just for getting your holiday shopping started, but for many law firms to announce their new partners. Earlier this month, we commented on the announcement by Wachtell Lipton of six new partners. Given the firm’s relatively small size, six is a robust number, suggesting that all is well at WLRK despite the downturn.
Partnership announcements can shed light upon the financial health and practice-group priorities of law firms. Many firms like to say that they pick partners based solely on the talents of the lawyers in question, independent of such factors as the economy. Then again, many firms also like to say that dismissals of lawyers are strictly “performance-based.”
Some tipsters were even more helpful, offering analysis of what the partnership news says about the firm. For example:
Not sure if you’re are keeping track of how many partners firms are making, or if it’s even a good metric, but Ropes & Gray made 12 new partners, several in corporate and private equity — the press release is on their website. Also, their start date [as partners] has been confirmed and is not pushed back. Thanks for all the good work.
So it sounds like Ropes Gray is faring relatively well. But then again, we already knew that.
A dissection of the Wilson Sonsini partnership announcement, after the jump.
The economy is in the toilet and law firms are scrambling to adjust. Usually this means “firing associates,” but DLA Piper has done something really interesting and brought changes to the partnership instead of firing associates:
Some 275 “income” partners who don’t have an ownership stake will be invited to join the ranks of 300 equity partners, provided each makes a capital contribution that could range up to $150,000, according to legal industry sources.
Look, for all we know associate layoffs could be right around the corner at DLA or any other Biglaw firm. But almost doubling the number of equity partners means that profits per partner will be squarely in the hands of each individual partner to generate business.
Legal industry recruiter John Cashman of Major Lindsey & Africa LLC says DLA’s move is unprecedented and likely to turn up the heat on attorneys to bring in clients — a crucial factor in partner compensation.
“It’s very clear to their (junior-level lawyers) it’s either up or out: We want business generators or worker bees. They want to send that message,” Mr. Cashman says.
Partners at top D.C. firms are worried that they might not be getting bonuses this year, just like associates. The Washingtonian reports that management might not be able to reward their partners as they have in years past:
Usually firm managers try to lowball revenue estimates and then surprise partners with a bigger-than-expected bonus. That final paycheck will come after the first of the year, after all bills and accounts for 2008 are tallied. Many law firms are worried that adjustments will be small or that revenues will not make the estimates. So end-of-the year cost cutting has been rampant.
If associates could get squeezed out of a bonus for simply doing all the work that came across their desk, then we hope partners aren’t expecting huge payouts for bringing in barely enough rain to fill a shot glass.
It’s fashionable to call associates greedy, entitled, warm buckets of spit whenever the markets tank. But now some partners are complaining about not being able to retire to their golden encrusted nursing homes as they had planned.
Firm leaders say that some partners scheduled to retire late this year have postponed their plans because of drops in the value of their IRAs and other retirement vehicles.
Are we living in a bizzaro-world where the pain will be spread evenly between partners and associates? Read more after the jump.
Yesterday was Election Day not just for the nation, but also for Wachtell, Lipton, Rosen & Katz. Wachtell, one of the country’s most prestigious and profitable law firms, traditionally elects its new partners on the Tuesday after the first Monday of November.
The firm just elected half a dozen new partners — a robust number, suggesting that things are going well at WLRK. Congratulations to our former colleagues Ian Boczko (litigation), Damian Didden (antitrust), Matthew Guest (corporate), David Kahan (executive compensation and benefits), David Lam (corporate), and Ante Vucic (corporate). They will become partners of the firm effective January 1, 2009.
Thanks to Wachtell’s insanely high profits and (roughly) lockstep compensation system, they will soon be millionaires. Back in the late 1990s, rumor had it that newly minted partners earned $1.5 million in their first year. The number must surely be higher today, since WLRK’s profits per partner are so much higher now — for 2007, PPP clocked in at a shade under $5 million (or $4.9 million, to be more precise).
We might start doing weekly round-ups of partnership announcements. If you’re at a major firm — say, Vault or Am Law 100 — and have partnership news to pass along, please email us (subject line: “New Partners”).
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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: firstname.lastname@example.org.
Deal flow has clearly picked recently up for most US associates, counsels and partners in Hong Kong/China and Singapore. We are on the phone with a lot of these folks on a daily basis, many of whom we have known for years. Further, the head of our Asia team, Evan Jowers, and Kinney’s founder and president, Robert Kinney, frequently meet in person with leading US partners in Asia to assess their needs and keep on top of the inside scoop at as many firms as possible. The need for legal recruiting help in Asia from experienced recruiters appears to be live and well. In March, Evan and Robert were in Beijing at such meetings, in April, Evan was in Hong Kong, and for half of June Evan will be in Shanghai and Hong Kong. Thus its pretty easy for us to tell when there has been an across-the-market pick up in capital markets and corporate work.
On an average day in Asia when Evan and Robert visit firms, they typically have 5 to 9 meetings a day, mostly with US partners in the market. The reason they have these meetings is not simply because Kinney makes a lot of US attorney placements in Asia and that a particular firm may have openings; instead these are just visits with friends. After years of working together as business partners, the folks at Kinney are actually these peoples’ friends. The firms Kinney work closely with in Asia (which is just about every law firm – call us if you want to know the one firm in the world we will never place anyone with again, ever, and why) look forward to the visits, or at least act like they do. After seven years in the market, many of the client partners are former associate candidates. Also, these US partners see Kinney as a very good source of market information as well, because they know how deep their contacts are in the market and how frequently they are speaking to counterparts at peer firms.
In a land that is right here and in a time that is right now, a technology has arisen so powerful that it can replace basic human document review. Is it time to bow down before our new robot overlords?
First, here’s a little story about me: my life in the legal world began as a paralegal. My first case was a GIANT patent infringement case that was already six years old and had involved as many as five companies, multiple US courts, the ITC and an international standards committee. I knew nothing about any of this.
On my first day, my supervisor (a paralegal with at least eight other cases driving her crazy) sat me down in front of a Concordance database with a 100,000+ patents and patent file histories. “Code these,” she said. I learned that “coding”, for the purposes of this exercise, meant manually typing the inventor’s name, the title of the patent, the assignee, the file date, and other objective data for each document. I worked on that project – and only that project – for at least the first six months of my job. After a week or so, time began to blur.
What I know, in retrospect and with absolutely certainty, is that as time began to blur, so did my judgment. So did my attention to detail. If you could tell me that I did not make at least one mistake a day – one inconsistent spelling, one reversed day and month, one incorrectly spaced title – I frankly would need to see your evidence. I would not believe it. The human mind is trainable but it is not a machine.
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