Patton Boggs, the once heralded D.C. lobbying firm, has been in trouble for more than a year now. It all started in March 2013 when the firm conducted significant layoffs, and things continued to spiral out of control from there. Additional layoffs followed, flanked by fleeing partners and the closure of the firm’s Newark, New Jersey, office. Profits have plummeted, so much so that Patton Boggs hired the Dewey & LeBoeuf turnaround team of financial advisers Zolfo Cooper and bankruptcy attorney Al Togut. Things certainly aren’t looking very good for the firm, even though managing partner Edward Newberry claims it’s all lollipops and unicorns over there.
Admittedly, first Newberry was afraid, he was petrified. He thought Patton Boggs could never live without cash by its side. But then he spent so many nights thinking how his firm went wrong, and he grew strong. He learned how to get along. His firm will survive — “healthy and profitable” — the same way all floundering firms do: additional layoffs are making their way down the pipeline, and it’s partners’ heads that will roll.
How many partners will have to find new homes? Let’s find out…
Let’s not mince words: Patton Boggs is stuck in the muck. In the most recent Am Law 100 rankings, the firm showed a 15 percent decline in profits per partner — one of the biggest dips in the entire survey, contrasting with the modest growth that most of Biglaw enjoyed. Gross revenue also fell, by 6.5 percent.
The Am Law 100 rankings looked at 2012 performance compared to 2011 performance. Perhaps things have improved for Patton Boggs in 2013?
Alas, no. While many firms have resorted to voluntary buyouts or layoffs of support staff this year, few have laid off lawyers (at least not openly). But Patton Boggs has already been through two significant, open and notorious rounds of layoffs in 2013 to date, affecting not just staff but lawyers as well.
How is Patton Boggs trying to save itself, and will its plan work?
As we’ve repeated countless times in these pages, Biglaw isn’t what it used to be, and good luck to you if you happen to be a partner. Sure, you’ve grabbed that brass ring, but you also have what could be described as “the worst job in Biglaw.” Here in the new normal, where layoffs and de-equitizations abound, despite increases in firm profits, many partners now have the same fears as associates.
So what happens when partners are pushed out of the law firms they once loved? Now we know, thanks to the results of a a new survey. You won’t believe how messy these bad romances can get…
These days, getting a Biglaw job is the golden ticket you need in order to make law school pay off. Thousands of students are paying grossly inflated tuition rates, and a Biglaw salary is one of the only ways those students can reasonably pay back their massive loans.
The problem, of course, is that Biglaw jobs are generally awful. They’re not giving you that money for free. A starting salary of $160,000 right out of law school sounds like a great deal, until you realize that $160,000 is just the going market rate for your eternal soul.
So let’s talk about why you would leave Biglaw. Don’t worry, I know many of you won’t leave, at least not now. But if you can, here are ten reasons why you should….
Blink and it is October. The last quarter of the Biglaw year is officially in play. Unfortunately, there is no indication that this fourth quarter will see the flurry of pre-tax-law-changes deal activity that salvaged 2012 for a lot of Biglaw firms. So firm leaders will actually have to manage, over the next few months, (1) the usual expectations from the partnership regarding end-of-year bonuses and distributions; (2) the lateral activity “silly season” we’re now in, especially if the firm is recruiting laterals for the purposes of adding talent and not just a short-term revenue boost; (3) the broken associate system at many Biglaw firms, where attrition is celebrated with a fervor that used to welcome the huge Biglaw first-year classes of yore with their promise of profit-driving leverage; and (4) the decision on whether to invite any of their surviving counsels and associates into the partnership. Yes, Biglaw firms will continue to make new partners. The smarter non-lockstep one-tier shops will make as many as they can. Or at least should.
And people who are gunning for partner in today’s Biglaw should be more vocal about making the business case for their candidacy. If they can’t, they have their answer. But if they can and don’t, then they are actually proving that they are not yet partner material. Because for most Biglaw firms, more partners, especially younger ones, are essential. And trying to buy that young core on the lateral market is a difficult and expensive task.
Why should Biglaw firms be thinking of minting more rather than fewer partners?
Despite the problems and challenges facing large law firms, making partner at a Biglaw firm remains a big deal. As an old friend told me a few years ago, comparing his pre- and post-partnership existences, “My life has been transformed. I feel like I’ve been let into a special club. Overnight, the same people treat me in completely different ways.”
My friend isn’t the only partner who feels like he got kissed by a princess and turned from a frog into a prince. Others recognize the transformative power of making partner as well. In the words of our very own Anonymous Partner, “You now occupy a new professional status, and the nature of making partner is such that no matter how badly you screw up the rest of your life, you have accomplished something very rare. It is a life milestone, on par with getting married or winning the lottery in terms of its immediate alteration of your identity.”
Comparing making partner to winning the lottery is apt: many lottery winners don’t live happily ever after (as brilliantly captured by this Onion article, Powerball Winners Already Divorced, Bankrupt). A fascinating new piece in The New Republic goes behind the scenes at one major law firm and shows that being a Biglaw partner in the twenty-first century isn’t all peaches and cream. In fact, aspects of being a partner sound as appealing as rotten fruit (and this isn’t just sour grapes)….
I’m not reviewing the book, but instead using it as a jumping-off point to discuss a tangent. Harper explains in his book two things that every sentient lawyer has noticed over the past several years: (1) students are graduating from law school buried under a mountain of debt, and many of those students can’t find jobs, and (2) many law firms have lost sight of the law’s noble history as a learned profession and are now obsessed with maximizing their profits per partner in the coming year.
Harper’s right about these things, of course, and this isn’t exactly late-breaking news to anyone who’s been following either Above the Law or Harper’s blog, The Belly of the Beast, for the last few years. Harper’s book advances the discussion, however, by exploring these issues in more detail than others have. He also proposes possible solutions to these problems, including “allowing the federal government to recover [law school loan] guarantees from a law school (and its university) whenever a student loan became the principal contributor to an alumnus’s later bankruptcy.” (Page 159.) Or encouraging law firms to release their “Working Culture Index,” which would show the percentage of lawyers billing more than 2000, 2100, 2200, 2300, 2400, and 2500 in the previous year (perhaps with separate totals being released for partners and associates). (Page 173.)
These ideas are well worth discussing, and I’m glad that Harper has taken the time to analyze these things. But I have another topic to highlight, which is an odd tangent to Harper’s two issues . . . .
Last week I wrote about some aspects of client service in today’s Biglaw. Today I want to focus on Biglaw’s embrace of partner de-equitizations and layoffs. These tactics are one of the ways Biglaw has been dealing with the fallout of the Black Death that has struck our industry.
Unfortunately, it seems like this year has gotten off to a bad start Biglaw-wise, in terms of both demand and a continuing lack of creativity by management at nearly every single firm. That brings consequences. Stay tuned. I have already said that I don’t mind if the paunchy mid-section of the Am Law 100 starts embracing a “bottom’s out” approach to the partnership — but at least have the guts to embrace it, not spin it.
I am really starting to dislike the tone that managing partners are starting to adopt when they talk about eliminating partners. Yes, I said eliminate. You may have seen them. Public statements where managing partner X almost gleefully informs the public of the elimination of nearly ten percent of his “partners” in the face of falling revenues. And looks for applause because his firm’s PPP went up $17,000 as a result. Go read some of the recent Biglaw “report cards” for a taste of this rancid stew.
We should be clear about the consequences of such a practice….
During the Great Recession, it felt like associates were being laid off in droves. In the past year or so, the big trend has been staff layoffs (often fueled by sending staff functions to an outside service provider).
Associates, staff — what about partners? Well, it seems that their time has come, at least according to some new surveys….
Is this just my weird perception, or are law firm managing partners being surveyed constantly? It seems that every other week, some law firm lender or consultancy or recruiting firm is touting the results of a managing partners survey. Managing partners have things to do other than respond to surveys — like, well, managing law firms.
Despite the proliferation of such surveys, we do appreciate the information and insight they contain. So let’s check out the recently released results of one of the most prominent surveys, the American Lawyer’s annual Law Firm Leaders survey….
Ms. JD is hosting their 2nd annual cocktail benefit to raise money for the Global Education Fund. The event will be held on August 21, 2014 at 111 Minna in San Francisco. Our goal is to raise $20,000 to fund the legal educations of four dedicated law students in Uganda who count on our support to continue their studies at Makerere University during the 2014-15 academic year.
The Global Education Fund enable womens in developing countries to pursue legal educations who otherwise would not have access to further education. According to the World Bank, investment in education for girls has one of the highest rates of return to promote development. In Uganda, more than 45% of women over the age of 25 have no schooling at all, and men are more than twice as likely as women to have access to higher education. Together, we can work to end educational inequality. For more information about the program, please visit http://ms-jd.org/programs/global-education-fund/
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: email@example.com.
We at Kinney Asia have made a number of FCPA / White Collar US associate placements in Hong Kong / China thus far in 2014. Most of such placements have been commercial litigation associates from major US markets, fluent in Mandarin, switching to FCPA / White Collar litigation. Some have already had FCPA experience, but those are difficult candidates for firms to find (this will change in coming years as US firms are now promoting FCPA / White Collar to their 2L summers who are fluent in Mandarin and have an interest in transferring to China at some point).
Legal Week quoted Kinney’s Head of Asia, Evan Jowers, extensively in the following relevant article here.
There is a new trend in the market, though, where mid-level transactional US associates, fluent in spoken Mandarin and written Chinese, are interviewing for and in some cases landing junior FCPA / White Collar spots in Hong Kong / China at very top tier US firms.
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.