De-equitized partners

Inside Straight: Beyond The Lawyer Bubble

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Here’s one great benefit of blogging: Publishers send you free copies of books, hoping that you’ll review them!

I received and read, but now choose not to review, Steven J. Harper’s valuable new contribution to the literature: The Lawyer Bubble: A Profession In Crisis (affiliate link).

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 . . . .

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Buying In: The Bottom Ten

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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….

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Nationwide Layoff Watch: Partners in Peril

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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….

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How Are Managing Partners Feeling About 2013?

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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….

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Morning Docket: 11.29.12

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* Enjoy your Biglaw bonuses now, because according to managing partners, layoffs and de-equitizations may soon be making their return. Oh, only in Pennsylvania? Woohoo, break out the bubbly! Just kidding, that really sucks if it’s true. [Legal Intelligencer]

* The Environmental Protection Agency has temporarily banned BP from entering into future U.S. government contracts because of the company’s “lack of business integrity,” aka the Deepwater Horizon explosion. Ouch, super sick burn, EPA! [National Law Journal]

* Considering going to law school? Then you should also take into consideration the fact that you’ll have to become a lawyer if you want to stand a remote chance of ever being able to pay off your loans. [Fox Business]

* Paul Ceglia pleaded not guilty to fraud charges yesterday in federal court. If only he actually owned half of Facebook as he claims, he probably wouldn’t have a court-appointed attorney representing him. [Bloomberg]

* “No matter how many high-priced lawyers and publicists she employs, she has been exposed for what she is.” Jill Kelley’s lawyer is on the offensive, and his targets are none too pleased about it. [Associated Press]

* Avvo has decided to sell its health business to focus entirely on providing services to lawyers and legal customers. Now the company will be able to do the law justice. (SWIDT?) [Puget Sound Business Journal]

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The Best and the Brightest: Some Reflections on Entry-Level Law Firm Hiring

By Bruce MacEwen

Ed. note: This is the first in a new series, “Across the Desk,” from Bruce MacEwen and Janet Stanton of Adam Smith Esq. and JDMatch. “Across the Desk” will take a thoughtful look at recruiting, career paths, professional development, human capital and related issues. Some of these pieces will have previously appeared, in slightly different form, on AdamSmithEsq.com.

As noted in the American Lawyer recently, the lateral recruiting boom of recent years continues unabated. As the Am Law article points out, “At the same time [as they’re focused on hiring lateral partners], firms appear to be homing in on their poor performers. Nine out of 10 survey respondents said their firm has ‘unprofitable’ partners, and seven out of 10 said their firms have partners at risk of being deequitized or ‘put on performance plans.’ As one survey respondent put it: ‘There are too many partners without sufficient billable work.’”

Now, wouldn’t you think it would make sense — if firms are worried about underperformers — to pay some attention to associates as well as partners? After all, some of those associates should, speaking theoretically at least, be your future partners.

Yet there’s unrebutted evidence that firms look at the wrong criteria when hiring associates….

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Partners in Practice: The Era of Mandatory Retirement

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Ed. note: This is the first installment in a new series of posts on partner issues from Lateral Link’s team of expert contributors. Today, Larry Latourette, Executive Director – Partner Practice, brings us his insights on what it’s like to practice law in the era of mandatory retirement, and how older partners can make a lateral transitions to new firms.

When I first met “Mark” for lunch this summer, he appeared to be in his mid-fifties, in excellent health, and talked about his competitive tennis game, needing to put his teenage kids through college, and his thriving legal practice that he couldn’t imagine giving up in the next ten years. In reality, Mark was 64, faced forced retirement from his firm in nine months, and wanted to know what his options were for moving laterally to another firm.

As a legal recruiter, I have met a growing number of lawyers like Mark who are bumping up against their firms’ mandatory retirement age. This trend will, in fact, accelerate over the next five years, for several reasons. Like other sectors of the economy, the Baby Boomers have had a dramatic effect on lawyer demographics. About 60 percent of law partners are now 55 or older, and by some estimates, a quarter of all practicing attorneys will be 65 or older by next year. At the same time the population is graying, however, it is also living longer. Especially with the increasing number of women in the legal profession, the life expectancy of lawyers who are 65 is now almost 20 years higher, with most of that time spent in good physical and mental health. Finally, the recent downturn in the economy has also caused some lawyers to postpone retirement as their nest eggs have dwindled.

Objectively, there is no question that most older lawyers are up to the challenge of practicing law….

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Morning Docket: 04.27.12

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Yeardley Love

* Dewey get to see a member of this firm’s chairman’s office strut for a perp walk in the near future? After all, partners reportedly say that it’s thanks to him that D&L may close up shop “as early as next week.” [Law360 (sub. req.)]

* De-equitize this: Oh, how Biglaw firms in America wish that they could return to merry old England, where mandatory retirement policies for old fart partners are the norm, and the courts agree. [Legal Week]

* “We’re about to beat a dead horse here.” Even the judge presiding over the John Edwards trial got pissed when the defense repeatedly asked variations of the same question on cross-examination. [MSNBC]

* Ain’t no shame in his game (well, actually, there is). Judge Wade McCree’s lawyer says he’s sure the judge is sorry for his sext messaging. Yeah, sorry he got caught. [Detroit Free Press]

* Is this the first test of the “ministerial exception” in the Perich case? A teacher at a Catholic school was fired for getting in vitro fertilization treatments, and now she’s suing. [CNN]

* Insert your own UVA joke here, bro. Yeardley Love’s family has filed a $30M wrongful death suit against former college lacrosse player, George Huguely V. [Washington Examiner]

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Morning Docket: 04.18.12

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* Since you’re so funny, crack some jokes about this one, Obama. Senate Republicans will be filing an amicus brief in support of a challenge to the constitutionality of the President’s recess appointments. [New York Times]

* Thanks to this Third Circuit ruling, you can rest easy knowing that you can rely on the First Amendment to protect your homemade sex tapes from all of those strict porn record-keeping and labeling requirements… for now. [Reuters]

* Due to Kelley Drye’s EEOC settlement, the New York State Bar Association is asking firms to end mandatory retirement policies. Because old folks need to make bank till they croak. [Thomson Reuters News & Insight]

* The ABA’s Commission on Ethics 20/20 has decided to ditch its proposal to allow limited nonlawyer ownership of law firms. Cue tears and temper tantrums from the likes of Jacoby & Meyers. [Am Law Daily]

* “If I believe that Chris Armstrong is a radical homosexual activist, I have a constitutional right to express that opinion.” Yeah, yeah, yeah. Tell that to the judge who dismissed your suit, Shirvell. [Detroit Free Press]

* Presenting “her royal hotness”: apparently Pippa Middleton has been seen cavorting around France with gun-toting lawyer Romain Rabillard, of Shearman & Sterling. [Daily Mail]

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Morning Docket: 04.12.12

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* The EEOC suit against Kelley Drye was brought “for a reason.” You hear that, Biglaw? Other firms with mandatory retirement policies better take a look at their partnership agreements and make some changes. [Am Law Daily]

* Media whore lawyers unite! Cheney Mason of Casey Anthony fame has come out of the woodwork to support George Zimmerman. Still waiting on vital impressions from Gloria Allred. Oh wait… [Naked Politics / Miami Herald]

* Just think, maybe if Planned Parenthood of Texas had taken Tucker Max’s money, they wouldn’t be suing the state for banning their organization from the women’s health program. Nah, they’d still be suing. [Reuters]

* Georgetown Law is planning to launch an executive education program, but don’t worry, they’re not going to be competing with Harvard. They know they’re the safety school in this scenario. [National Law Journal]

* Love will definitely make you do some really crazy things, like watch The Expendables. Or allegedly commit a murder-suicide because your husband might’ve had an affair. Things like that. [Atlanta Journal-Constitution]

* Kim Kardashian’s dubious defense of the day: “I’m Armenian and hairy.” The only-famous-for-her-sex-tape star is trying to use that as an excuse to get a lawsuit over a hair removal product dismissed. [Fox News]

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