We’ve been conditioned to believe that lateral moves are all about money. Popular thinking — which may not be far from the truth — holds that law firms, held in collective thrall by the American Lawyer’s profit-per-partner numbers, focus on lateral hiring as the first step in a virtuous cycle that will increase their PPP metric, in turn attract more profitable laterals, and so on and so on. Laterals themselves, meanwhile, are viewed as economic actors lured away from their firms primarily through the prospect of increased, or guaranteed, compensation.

(Given the prominent role that guaranteed compensation is said to have played in the downfall of Dewey, and the pains Weil Gotshal took to point out its relative lack of compensation guarantees when announcing its recent layoffs, this particular carrot may be falling out of fashion. Even Weil conceded, however, that it has compensation guarantees in place for first-year laterals.)

In light of the focus on dollars in connection with lateral moves, it may surprise the reader to hear the head of a compensation committee say that in many cases, lateral candidates do not talk enough about money. To be more specific, lateral candidates often don’t scratch beneath surface questioning about their prospective new firm’s compensation system. If they did, their answers would inform them more deeply not only about their future paychecks, but the character of the firm they are considering….

As most laterals know, law firm compensation structures come in two general flavors. In the first, compensation is determined formulaically (e.g., X revenue from personal working time x Y revenue in originations = Z income). Other firms take a broader approach that bases compensation on a lawyer’s total contributions to the firm, including factors such as leadership and teamwork.

While most firms incorporate elements of both approaches, they tend to fall towards one end of the spectrum or the other. Also, most firms retain a bonus pool — ranging from 5% of profits to 15% or beyond — to be paid out based on any range of criteria.

What, beyond these obvious features, should laterals be inquiring about?

  • Does your firm have an open or closed system? At “open” firms, all equity partners know what their fellow partners make. At “closed” firms, partners know only their own point level or percentage of profits. Some firms prefer closed systems because it gives management greater discretion to act — for instance, to make a strategic investment in a particular practice area — without having to justify the decision in all cases to the larger partnership. This is as much a cultural issue as anything.
  • Is compensation focused on short-term or long-term results? Firms vary in how heavily they weigh a partner’s previous year’s performance, as opposed their longer track record. The size of the firm’s bonus pool will have an impact here (tending to reward short-term performance), but this element also reflects whether the firm has a long-term orientation generally.
  • Who belongs to the compensation committee? A firm that reserves seats on its compensation committee for particular geographic locations or particular practice areas — rather than simply selecting a cross-section of well-respected partners — could be indicating a territorial mindset where each member of the committee is expected to fight for the compensation of attorneys in that member’s practice area or geographic location.
  • What kind of input will I have into compensation decisions? Most firms allow individuals to “make their case” in some manner, whether through written submissions or an interview process. What form that process takes, how seriously it is considered, and whether the firm follows up with individuals after compensation decisions are made will indicate how genuinely they listen to their individual lawyers.

For the most part, there is not a right or wrong position on any of the above issues. But by probing about them, lateral candidates can certainly get a fuller picture of any firm they’re evaluating. They say money talks, and in this case they’re right.

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What do the biggest patent trial in history, the biggest U.S. M&A deal and the biggest bankruptcy of 2012 have in common? The answer is Morrison & Foerster — and the skills, dedication and confidence of lawyers who continually give new meaning to the term “high stakes.”

With more than 1,000 lawyers in key technology and financial centers in the United States, Asia and Europe, Morrison & Foerster advises financial institutions, investment banks, Fortune 100, technology and life science companies. MoFo’s lawyers share a singular commitment to providing clients with the exceptional service that has become our calling card. It’s why Autodesk, Genentech, Goldman Sachs, Intel, Novartis, Oracle, UPS and Yahoo! entrust our lawyers with their most critical matters. And it’s why MoFo is consistently ranked among the very best in the legal industry.

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In March, Chambers Global named Morrison & Foerster its 2013 USA Law Firm of the Year. “The US-based giant,” the editors said in announcing the award, “has experienced one of the most successful years in its long and illustrious history.” Last year the firm was involved in the global smartphone disputes that culminated in one of the most closely watched patent trials of our time. We also had a leading role advising both ResCap in its landmark restructuring and the Chapter 11 trustee for MF Global. At the 2013 Chambers USA Awards for Excellence held in New York on May 23, Morrison & Foerster was named Intellectual Property Firm of the Year and Bankruptcy Firm of the Year for our work on these and other noteworthy matters.


August 1, LTN ran an article headlined “Judge Orders Bickering Lawyers to Solve Their E-Discovery Dispute” and it got me thinking about what we’re doing here. It’s a story about two companies who sound identical to me and about how six people left one to join the other one and drama ensued. And, somehow, in that drama, e-discovery became part of the plot-line. So, I’d just like to take a moment to bring what we do back from the electronic, intellect-centered, thought-leader-y places that blogs like this one tend to inhabit. I’m talking about bringing e-discovery down to Earth, where the humans do whatever humans do. Are you still with me?

Great. I chose to read this story, frankly, because it had the word “bickering” in the headline. What a great word. So descriptive, so condescending. I stayed with the story because it reminded me of why this blog matters and also why it doesn’t. It does matter that we think about the proper use of technology in legal review because all legal decisions – if the system works – are ultimately responses to the evidence. And, more and more, the evidence is documentary and the documents are electronic. Basic stuff, right?

It does not, however, matter what we think of best practices in making sense out of your documents, if you’re more engaged with fighting the other side than you are with discovering the truth.

So, why I’m here? You know that we have products and services – solutions – that we would like you to purchase. We know that you have expenses and burdens – problems – that you would like us to solve. No one on either side of these sentences is here just for the intellectual exercise.

One of the great pleasures I take in writing these articles is that they are not written for academic purposes. I’m not writing so that you will write about what I’ve written. But, still . . . I get caught up in the experience of communicating the great information I have to share and “evangelizing” the great solutions we have. I lose touch with the fact that, behind every e-discovery project, there were human characters making human choices and stepping on the toes of other human characters who reacted in kind.

I am a fan of great science fiction and great fantasy and great escapism, but what I really respond to are stories that talk about my life with a clarity I can’t muster because I’m frankly just too smashed up against the window. And this is one of those stories: two environmental consulting and engineering firms about whom I know nothing are at war. They are at war not so much because of their technology – about which I know nothing – but because they are comprised of people. Real people who did things that irritated, angered and threatened each other. In this case, six of these real people left one environmental consulting interest and went to its rival environmental consulting interest. Trade secrets, the Claimant states, went with them.

I have a two-year-old daughter who loves the Octonauts. In one of my favorite episodes (please skip to 8:22 in this SFW link), the brave Octonaut medic Peso Penguin finds himself caught in the crossfire between two warring tribes of anemone. The anemones, identical except in color, sting each other repeatedly with non-lethal but painful blows. Each fights for its place on either side of a single rock on a beach. They can’t kill each other and they can’t move on either. While they receive the blows, it is Peso in the middle, trapped in their crossfire, who really suffers. This is how I imagine Judge Beeler feels in this case.

Since suit was filed in June 2012, one side claimed that it had reviewed 55,000 documents and that only 8% were responsive. Meanwhile, it claims that it had turned over 200,000 documents. How many of those could have possibly been responsive? The other side, for its part, claimed nearly 400 misappropriated trade secrets in its suit. J. Beeler’s opinion ordered that they focus on only FIVE of them. 5. Out of 400. Digital Miners, friends, I’m the canary here and I’m running out of oxygen just trying to do the math. What’s clear is that the agreed-upon search terms were over-broad, the claims over-reaching, and the judiciary figure over-annoyed. It’s August 2013 and the parties are still tossing non-lethal barbs at each other instead of pulling apart the issues and actually discussing what was stolen, if anything, and what value needs to be repaired, if any.

And, what’s clear is that the problem isn’t about eDiscovery or technology but about human abuse or neglect of eDiscovery or technology. The second page contains a single paragraph and a concluding sentence which sum up everything my recent writing has tried to convey. I quote it here in full (with identifying names removed), so that you don’t have to click if you don’t have the time:

[An associate representing one side] told LTN that the two sides have previously spoken about the possibility of using technology-assisted review, but that nothing had been decided. “I had a good experience with predictive coding in another case of mine,” said [an attorney working on the case]. “I thought it was very effective at culling documents to produce documents in response to one other.”

[The other side] did not respond to a request for comment.

I’m reminded of a famous book on training entitled No Bad Dogs. The implication is that there are only bad owners. E-Discovery is a just a set of tools and a set of problems, neither good or bad. No matter how good our tools are – and I direct you again to my company’s solution, where you will find a host of documents about the solution and free videos about how to use it – the problem will remain that there are humans behind all of the technology who are either abusing the system or simply failing to learn how to properly use it.

Eric Killough is the virtual canary AccessData has released into your digital mine. He is a JD, a CEDS, and a librarian. He thinks about electronic discovery probably more than he should. Please join him here, at Twitter, at LinkedIn, and at his own blog. He’ll be happy to meet you.

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In her closing plenary address at LegalTech New York 2013, back in January, FBI special agent Mary Galligan warned that “[w]e have hundreds of law firms that we see increasingly being targeted by hackers.” For those in attendance, and for those who read the resulting tweets and blogposts in the newscycles that followed, this was not un-remarkable. In fact, this was chilling: the kind of stuff that keeps those with vested interested in a law firm’s virtual document stores awake. (Not that they get much sleep anyway.) Galligan, the special agent in charge of cyber and special operations for FBI, was a last minute addition to the speaking roster after a late drop-out from NYC’s chief of police. I suspect that few who attended really had any expectations about what they would hear, but this certainly was not it. This was a dire warning indeed. “We all understand,” she continued, “that the cyber threat is our next great challenge.”

OK, fast forward a few months, in May of this year, Galligan was interviewed by NYLJ. Perhaps hoping that Galligan would say something printworthy about the woefully continued vulnerability of law firms, the iterviewer asked a perfectly reasonable question: “Are law firms equipped to handle the threat?”

Galligan had a surprising response:

Law firms are taking cyber security extremely seriously. As a result of their concerns, the FBI has done a significant outreach program to law firms to give them best practices, and to respond when they have an incident. The FBI recommends things like understanding their network, where their data is, patching all their vulnerabilities and having an inventory of all their software.

This canary sees a surprise in each sentence here, so I’d like to take them one-by-one:

1) It surprises me to learn that law firms, only a few months since her initial incendiary statement, are now all taking the matter seriously. No law firm I’ve ever worked for or with has been able to pull-off a quick turn-around like that on anything that did not immediately effect the balance sheets. And the isssue Galligan brought to our attention in January was not of the quick-fix variety. It was a cultural problem owing to perceptions of priorities and expertise within the firm walls. For such a straight shooter, this is an uncharacteristically empty statement including the unquantifiable terms “extremely” and “seriously”.

2) It surprises me to learn that the FBI has been so busy to respond to incidents when they happen, if the firms have become so serious about attending to their security. Security solutions have existed for years and, as events like Black Hat remind us, for every shady Anonymous hacker out there, there is a dedicated ex-hacker working to beat them all. The ability to defend themselves has existed for years, it surprises me to learn that so many law firms, if they are serious about the threat, need the assistance of the FBI and that the FBI is able to assist them all.

3) Finally, it really surprises me to learn that – after all’s been said – the recommendations are that the firms understand their networks, where the data is, what software they’re using and where the holes are. If firms still need to understand their networks, etc., how can they possibly be taking the threat seriously? When I was in digital kindergarten, these recommendations were right there next to “wash your hands after flushing”.

I know, this was a brief interview in broad daylight and I didn’t expect it to dive into sensitive materials. But, still, it troubled me. And I think it should trouble you too …

But, what does this have to do with E-Discovery?

Well, as a result of E-Discovery, law firms collect and hold enormous stores of client data, right? Still, it is no secret that cyber-security is not one of their core competencies. In fact, most law firms and, thus, most attorneys’ electronic files are not well protected. Indeed, most firms (and most small- to-medium-sized businesses in general) simply can’t (or won’t) provide the resources necessary to vigilantly protect their highly sensitive, confidential, documents. Many firms are not even aware that they have suffered a breach until well after the incident, when an agency like the Federal Bureau of Investigation informs them that their client’s data has been found on a server in another country as a result of a security compromise linked back to the firm.

So, what data is being targeted? How about every conceivable form of documented intellectual property? For instances:

• Proprietary knowledge around an invention: specifications, lab notebooks, draft patent applications.
• Financial details concerning a merger or acquisition (even transactions that never fully materialized).
• Details about an organization’s inner-workings – details typically shared with attorneys during many different types of litigation.

The bottom line is that clients generally do not approach law firms when things are going well and they have no sensitive issues. They seek counsel when they are engaged in either deeply sensitive and highly expensive conflicts, which tend to generate correspondingly sensitive information that is of potentially great value to third parties.

So, what do you do? ASK FOR HELP

AccessData has been in the business of detecting, preventing and, when that fails, helping businesses recover from cyber threats for nearly three decades. We understand that the threat continues to evolve at a rapid pace and that answers to and anticipations of the threat require constant and vigilant development as well. In order to find out more about how AccessData is helping organizations deal with cyber security threats, please take a moment to visit us here. And contact our Professional Services department and allow us to assess your needs and provide managed security options.

To quote Special Agent Galligan (the scary, January 2013 version) one last time: “The cyber threat is too big for any of us to fight alone.”

Eric Killough is the virtual canary AccessData has released into your digital mine. He is a JD, a CEDS, and a librarian. He thinks about electronic discovery probably more than he should. Please join him here, at Twitter, at LinkedIn, and at his own blog. He’ll be happy to meet you.

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: asia@kinneyrecruiting.com.

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.

The first sign of a deal flow pick up, from the very low depths of 2012 (a very down year in Hong Kong/China) was around last November. There was a marked improvement in deal flow activity then, although it was still a mediocre market. Back in December 2012, there was some cautious optimism for boom times to perhaps return in the second half 2013, but during the first quarter of this year, while the market was improved over 2012, there was not a continued pick up in the market. Part of it was of course the double holiday season of western new year followed by Chinese new year, but that happens every year. The feeling in the market even as recently as one month ago was not very positive regarding the Hong Kong/China market making a big rebound in the second half 2013. However, in the past few weeks we have seen an across the board increase in deal flow, including at all the top US firms that are established in Hong Kong/China.

Late last year and earlier this year we already saw pretty good hiring activity for US associates in M&A in Asia. Now we are starting to see US capital markets hiring again. The larger US capital markets teams in Hong Kong are likely not going to need new hires for a while longer because they were overstaffed during the downturn (and also some of these firms added new HK local cap markets teams in the past couple of years which added to staffing sensitivities), but a number the smaller US cap markets teams are hiring again. We have seen steady M&A hiring in Hong Kong/China in the past 8 months and that is only increasing now. FCPA / White Collar is turning into a real source of hiring US associates in Hong Kong/China. We see this area continuing to grow for years to come and most firms with such a practice in the US will eventually have that practice on the ground in their Hong Kong/China offices. This is a long-term trend.

Just in the past couple of weeks, we have a number of new US associate openings in Hong Kong/China, including: 5 new openings in US capital markets; 4 new openings in PE / M&A or M&A; 2 new openings in FCPA / White Collar; and one new opening in project finance. We also have a couple of new US associate openings in Singapore this week.

If the Hong Kong/China markets continue to improve then it will be much easier for US partners there to get clearance to make lateral hires. We could see a pretty busy lateral hiring market in Hong Kong/China by late summer / fall.

As always please feel free to reach out to us at asia@kinneyrecruitng.com. Check out our blog at theasiachronicles.com for more frequent updates.


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