On this conservative analysis, an associate is bringing $640,000 in revenue to the firm while costing only $340,000, meaning that each associate has a surplus value to the firm of around $300,000/year.
On this model, a partner in a leveraged firm (i.e., four associates per partner), could make $1.2 million in a year without billing an hour.
– Samuel Blatchford, breaking down the economics of associate compensation in Ramblings on Appeal. (That’s assuming an associate billing a mere 2000 hours/year, which many associates should have hit by August.)
It was just two weeks ago that we told you about the merger talks between Patton Boggs and Locke Lord. At the time, we wondered about redundancies between the two firms’ offices. We thought that “most jobs” would be safe, considering the fact that there were only three overlapping locations.
Well, it looks like we were dead wrong. Guess which firm just laid off both support staff and lawyers?
As noted in Morning Docket, Citi’s quarterly review of the financial landscape facing law firms just came out. The surface level verdict is — as it has been for some time — slow and steady, with a bunch of red flags.
The firms are happy to see positive revenue growth, even if it’s only 2.7 percent. I mean, other industries aren’t so lucky. But when the industry is a few years into the “New Normal” and analysts are still pointing to the same failings, it’s hard to feel too optimistic.
The year-end Biglaw management machine is starting to grind into motion. The compensation committee is starting to look at the numbers for individual partners — to decide who will be rewarded and who will be de-equitized. And the firm’s A/R collections crew is starting to pressure the partnership to get bills out the door and talk to clients about what will be paid by year’s end. The associate bonus committee? If one still exists, is must be having a hard time reserving conference room space to meet.
The end of the year is a serious time for law firms. For many individual lawyers in Biglaw, it is the time of year when their die may be cast, in terms of compensation, lateral movement options, or even their continued employment. As anyone who follows Biglaw knows, we are living in interesting times, with many firms navigating choppy seas in terms of client demand, financial performance, and expense management. And at many firms, there has never been a wider gulf between the rank-and-file partner and firm management when it comes to the ability to make or influence decisions about the firm. Partners at many firms are often clueless about what the firm is doing and why, to the extent that partners are asked to vote on lateral candidates or even mergers based solely on the “reassurances” and “enthusiastic outlook” of management.
The net effect of this divide between management and the partnership? An increasing sense among partners that they are simply assets of legal “brands” rather than owners or even stewards of a professional enterprise. For many, it is a bit of a hopeless feeling, especially when they consider the Biglaw options down the street, which usually present the same level of management opacity to the putative “owners” as their current firm. But just because management likes to tell the partnership to “leave the managing to us, you just focus on building your practice” does not mean partners aren’t entitled to information — even if it’s just the personal views of the managing partner on certain issues.
Here are five questions for your managing partner. The topics are varied, but the answers given should give partners a good sense of both their relative standing within their firms and the values that drive the business decisions of their leadership….
Let us give thanks to all the talented attorneys who leave Biglaw partnerships to serve as federal judges. First, this type of public service, often made at significant financial sacrifice, is in the legal profession’s finest traditions. Second, by throwing their hats into the federal judicial ring, these nominees let us ogle their personal finances — a subject of keen interest, and one that’s less than perfectly transparent.
Last month we used a pair of Ninth Circuit nominations to gain insight into partner pay at Munger Tolles & Olson. Today we use a D.C. district court nomination as a vehicle for looking at profits per partner at two other elite law firms, Baker Botts and Covington & Burling….
* The Supreme Court might have dismissed the Oklahoma abortion case as improvidently granted, but not to worry, because the high court may yet get the chance to abort a woman’s right to choose in this new case from Texas. [New York Times]
* Wherein Justice Scalia seems highly concerned about toupees: yesterday, Supreme Court justices put their fashion sense to the test when trying to determine what ought to count as clothing under the Fair Labor Standards Act. [WSJ Law Blog (sub. req.)]
* The Senate is forging ahead with the Employment Non-Discrimination Act, but the bill will likely fail in the House because discrimination on the basis of sexual orientation is still cool with John Boehner. [CBS News]
* Bill de Blasio, the Democratic candidate in the NYC mayoral race, apparently has “deep ties” to Gibson Dunn, the firm behind Citizens United. Gather round, conspiracy theorists. [International Business Times]
* An InfiLaw school is changing its name to Arizona Summit Law. How kind to tip law students off to the fact that even if they climb all the way to the top, there’s nowhere to go but down. [National Law Journal]
Certain firms are, in my opinion, routinely underrated in the Vault 100 rankings of law firm prestige. One of them is Williams & Connolly, currently #16, which strikes me as a top 10 firm. Another is Munger Tolles & Olson, which is all the way down at #34.
Munger is an amazing firm. Its attorneys work on major matters, including great pro bono cases, and its lawyers boast incredible pedigrees, with more Supreme Court clerks than you can shake a gavel at (wooed by $300,000 signing bonuses). At the same time, MTO gets top scores for diversity. These commitments to diversity and pro bono helped propel Munger to the #1 spot in the American Lawyer’s A-List rankings, which measure overall firm fabulosity (based on revenue per lawyer, pro bono work, attorney diversity, and associate satisfaction).
In light of all this, I’m still wondering why Munger doesn’t fare better in the Vault rankings (for whatever the Vault rankings are worth, and you’re free to argue about that). Perhaps MTO is hurt by its relatively small size and tight geographic focus, with offices in just two cities, Los Angeles and San Francisco. Or perhaps prestige is tied partly to partner profit, and Munger doesn’t hunger enough for money.
How much do MTO partners earn? Financial disclosures for two younger Munger partners, both nominated to the Ninth Circuit, shed a little light on this question….
Last month we wrote about a Biglaw firm that’s in big trouble. The firm in question: Dow Lohnes, a former Am Law 200 firm that has been hemorrhaging lawyers and clients (and lost two more partners last week, to Venable). In our story about Dow Lohnes, we noted that “[i]t seems possible that the firm could merge out of existence — if it’s lucky enough to find a partner.”
Fortunately for the remaining lawyers and staff at Dow Lohnes, the sinking ship has located some lifeboats. A larger and stronger firm, a member of the Am Law 50 and Vault 100, will be picking up many (but not all) of Dow Lohnes’s lawyers.
Who’s the white knight riding to the rescue of Dow Lohnes?
We recently learned that Justice Antonin Scalia is not a fan of women cursing. What would he make of partners at a leading law firm cursing?
And not just garden-variety cursing, but rather colorful deployment of highly profane language. As Hamilton Nolan of Gawker puts it, “The biggest law firm collapse in history began with ‘f**kwad’ emails.”
Which former Dewey & LeBoeuf partner referred to various former partners as “pathetic,” “little prick,” and “f**kwad”? Let’s take a look at James Stewart’s New Yorker magazine article on what caused Dewey’s demise….
If the Houston office of Weil Gotshal & Manges ends up shutting down in the wake of the recent partnerdefections, management in New York might not shed a tear. In fact, it might have been part of their master plan.
As one Weil source told us, the Houston litigation defections were “not a surprise,” since the June layoffs “took away all but one assistant and all of the associates. The associates that were allowed to stay were switched to contract positions and have since left. Basically, it was an elimination by New York of the Houston group from the bottom up.”
Dallas, however, is a different story. It’s more of a standalone office, with a more diversified mix of practices, and it makes a bigger contribution to the firm’s bottom line.
But the latest partner departures do raise serious questions about its future. Which Dallas partners just left, and where are they going?
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 seven years. You can reach them by email: firstname.lastname@example.org.
Please note that Evan Jowers and Robert Kinney are still in Hong Kong and will stay FOR THE REMAINDER OF THIS WEEK. We still have a handful of available slots for meetings with our Asia Chronicles fans. If we have not been in touch lately, reach out and let us know when we could meet! There is no need for an agenda at all. Most of our in-person meetings on these trips are with folks who understand that improving a legal practice through lateral hiring is an information-driven process that takes time to handle correctly.
Regarding trends in lateral US associate hiring in Hong Kong, we of course keep much of what we know off of this blog. Based on placement revenue, though, Kinney is having one of our most successful years ever in Asia. We are helping a number of our law firm clients with M&A, fund formation, cap markets, project finance, FCPA and disputes openings. These are very specific needs in many cases, so a conversation with us before jumping in may be helpful. As always, we like to be sure to get the maximum number of interviews per submission, using a well-informed, highly targeted, and selective approach, taking into account short, medium and long-term career aims.
Making a well informed decision during a job search is easier said than done – the information we provide comes from 10 years of being the market leader in US attorney placements at the top tier firms in Asia. There is no substitute for having known a hiring partner since he/she was an associate or for having helped a partner grow his or her practice from zip to zooming, and this is happily where we stand today – with years of background information on just about every relevant person in all the markets we serve, and most especially in Hong Kong/China/Greater Asia. So get in touch and get a download from us this week if we can fit it in, or soon in any case!
The legal industry is being disrupted at every level by technological advances. While legal tech entrepreneurs and innovators are racing to create a more efficient and productive future, there is widespread indifference on the part of attorneys toward these emerging technologies.
When the LexisNexis Cloud Technology Survey results were reported earlier this year, it showed that attorneys were starting to peer less skeptically into the future, and slowly but surely leaning more toward all the benefits the law cloud has to offer.
Because let’s face it, plenty of attorneys are perhaps a bit too comfortable with their “system” of practice management, which may or may not include neon highlighters, sticky notes, dog-eared file folders, and a word processing program that was last updated when the term “raise the roof” was still de rigueur.