We’ve waited a long time to type these words. A major law firm just raised starting salaries for first-year associates.
Before you start chanting “NY to 190,” however, there are some things you should know. The raise relates to associates in what some might call a “secondary” legal market; we’re not talking about New York, or Washington, or Los Angeles. Associates at this firm, even post-raise, won’t be making the magic number of $160,000 a year.
That said, the legal market in question is rather large, and the law firm in question is a national and even international player. So the move could have ramifications beyond just the affected associates….
One firm just started pocketing 20 percent of partner pay.
Many lessons can be drawn from the collapse of Dewey & LeBoeuf. We’ve learned, for example, that it’s dangerous to have a law firm name that’s highly susceptible to puns. (Dewey know why that is? Howrey going to find out? Heller if I know.)
Another lesson: avoid excessive dependence upon bank financing. When a firm starts to spiral downwards, that spiraling can be accelerated by a bank calling a loan, not renewing a credit facility, or otherwise taking steps to protect itself that, while reasonable for the bank, can be damaging to the firm.
The current CEO of Greenberg Traurig, Richard Rosenbaum, recently gave an interview to the Daily Business Review in which he discussed the firm’s recent capital call (among other subjects). We mentioned the interview in Morning Docket, but because it contains a lot of grist for the mill, it merits a second look.
The subtext of the interview — and, at one point, the explicit text of the interview — could be summarized as, “Look, we are not like Dewey!” The bad news is that such statements should even be necessary. The good news is that they seem to be true (at least based on the information currently available).
As businesses go, the business of law isn’t extremely capital intensive. Most of the capital in Biglaw is really human capital. As one bankruptcy lawyer put it, “It’s incredible how fragile law firms are. Unlike a company, the principal assets walk out the door every night.”
But law firms do need some capital. Those fabulous offices — and fabulous associates, at $160,000 and up — don’t come cheap.
Firms can obtain the capital they need to operate through borrowing; but credit needs to be used judiciously, lest a firm go the way of Dewey & LeBoeuf. And partners make capital contributions to the firm, most notably when they buy into the partnership.
But sometimes that capital isn’t enough. So firms issue capital calls to their partners, which brings us to today’s topic….
As we mentioned yesterday in Morning Docket, Judge Marcia Gail Cooke (S.D. Fla.) recently issued an omnibus order on multiple motions for sanctions in the high-profile case of Coquina Investments v. TD Bank. The plaintiff, Coquina Investments, moved for sanctions related to various alleged discovery violations.
At a contempt hearing held back in May, Judge Cooke heard testimony from employees of TD Bank and current and former lawyers from Greenberg Traurig, which previously represented the bank. She took the matter under advisement — but not before saying things like, “It is hard for me to describe in words the difficulty throughout this trial related to documents and discovery.”
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: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months, and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.
The evolution of relationships between the genders continues. Currently, in law firms, there is an interesting conundrum; balancing the desire for a gender-blind workplace where “the best lawyer gets the work and advances” and the reality of navigating the complicated maze created by the fact that, in general, men and women do possess differences in their work styles. These variations impact who they work with, how they work, how they build professional connections and how organizations ultimately leverage, reward and recognize the talents of all.
Henry Ford sat on his workbench and sighed. A year earlier, he had personally built 13,000 Model Ts with his own hands. Fashioning lugnuts and tie rods by hand, Ford was loath to ask for help. Sure, there were things about the car that he didn’t quite understand. This explains the lack of reliable navigation systems in the Model T. But Ford persevered because he knew that unless he did everything, he could not reliably call these cars his own.
“Unless my own personal toil is responsible for it, it may as well be called a Hyundai,” Ford remarked at the time.
The preceding may sound unfamiliar because it is categorically untrue. And also monumentally stupid. Henry Ford didn’t build all those cars by hand. He had help and plenty of it. Almost exactly one hundred years ago, Henry Ford opened up the most technologically advanced assembly line the world had ever seen. Built on the premise that work can be chopped up into digestible pieces and completed by many men better than one, the line ushered in an age of unparalleled productivity.
Today, an attorney refers business because he can’t do everything the client asks of him.
There are three reasons why this is way dumber than a made-up Henry Ford story…