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…
“Being a partner at an elite law firm isn’t what it once was,” as I recently wrote in a Wall Street Journal book review, but “while the brass ring might be tarnished, it still gleams brightly for many.” And with good reason: even if it’s harder than ever to become (and remain) a partner, for those who do manage to make it, the pay, perks, and prestige are plentiful.
The American Lawyer just released its latest New Partner Survey. The magazine heard from almost 500 lawyers who began working as partners between 2010 and 2013. About 60 percent of the survey respondents are non-equity or income partners — which makes sense, given the proliferation of two-tier partnerships, as well as how junior these partners are — and the rest are equity partners.
What are the most notable findings from the survey? Here are five:
If you’re a law firm managing partner, the captain of a Biglaw ship, have you done all that you can to make sure your vessel is as seaworthy as possible? You don’t want your ship to suffer the fate of the S.S. Dewey.
Some steps are easy and obvious. Conduct layoffs of unneeded associates, whether openly or stealthily. Offer buyouts to surplus support staff (or lay them off, if feeling less generous). Usher underperforming partners towards the exit, to lower the denominator for your profit per partner figure; keeping PPP high reduces the likelihood of crippling defections and helps you attract star laterals.
Those are the basic moves, which everyone is doing. For something that’s a little more challenging, a maneuver that might even impress the East German judge in its level of difficulty, you can play with your partnership capital structure….
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 . . . .
When the merger of Edwards Angell and Wildman Harrold was announced back in August 2011, some observers, such as our beloved commenters here at Above the Law, viewed the move as an act of desperation. Because both firms had a tough time during the recession, the notion of their combining with each other reminded some people of… well, this.
Now, as we approach the two-year anniversary of the merger’s announcement, how are things going over at Edwards Wildman? Are Angells flapping their wings with joy and Wildmen hoisting glasses of grog?
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….
* This guy could teach a master class in how to stand by your (wo)man. Mary Jo White’s husband, John White, will relinquish his equity partner status at Cravath upon her confirmation as the head of the Securities and Exchange Commission. [Am Law Daily]
* Macho, macho man: it looks like we’ll never know if Dechert actually has a “macho culture,” because the FMLA and paternity leave case that questioned the very existence of this Biglaw subculture was settled out of court. [National Law Journal]
* Why you gotta go and ruin Valentine’s Day for everyone at O’Melveny and Akin Gump? Apple’s request to speed up the Greenlight Capital case was approved, with arguments now scheduled for February 19. [CNET]
* Despite her nomination being crapped on by the Senate, Jenny Rivera, the CUNY School of Law professor, was recently confirmed as an associate judge of the New York Court of Appeals. [New York Law Journal]
* “Behold, the instrument of your liberation!” Survivors of the Aurora movie massacre are being harassed by conspiracy theorists, and the DA asked the judge to scrub their names from the record. [Courthouse News]
Now is the time on ATL when we dance — around the subject of money. With just two months left in the year, law firms are focused on collections, associates are focused on bonuses, and partners are focused on profits. Even though money is not the be-all and end-all of law practice, as we have emphasized in these pages before, it’s a topic that people follow — and a topic that we will therefore be covering closely in what remains of 2012.
Earlier this week, the American Lawyer magazine touched upon a topic that doesn’t get as much attention as it should in the world of Biglaw: compensation for non-equity partners. Let’s take a look at Am Law’s findings….
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: firstname.lastname@example.org.
We currently have a very exciting and rare type of in-house opening in China at one of the world’s leading internet and social media companies. Our client is looking for an IP Transactional / TMT / Licensing attorney with 2 to 6 years experience. The new hire will be based in Shenzhen or Shanghai. Mandarin is not required (deal documentation will be in English) but is preferred. A solid reason to be in China and a commitment to that market is required of course. This new hire will likely be US qualified (but could also be qualified in UK or other jurisdictions) and with experience and training at a top law firm’s IP transactional / TMT practice and could be currently at a law firm or in-house. Qualified candidates currently Asia based, Europe based or US based will be considered. The new hire’s supervisors in this technology transactions in-house team are very well regarded US trained IP transactional lawyers, with substantial experience at Silicon Valley firms. The culture and atmosphere in this in-house group and the company in general is entrepreneurial, team oriented, and the work is cutting edge, even for a cutting edge industry. The upside of being in an important strategic in-house position in this fast growing and world leading internet company is of the “sky is the limit” variety. Its a very exciting place to be in China for a rising IP transactional lawyer in our opinion, for many reasons beyond the basic info we can share here in this ad / post. This is a special A+ opportunity.
If your firm is in ‘go’ mode when it comes to recruiting lateral partners with loyal clients, then take this quiz to see how well you measure up. Keep track of your ‘yes’ and ‘no’ responses.
1. Does your firm have a clearly defined strategy of practice groups that are priorities of growth for your office? Nothing gets done by random chance, but with a clear vision for the future. Identify the top practice areas for which you wish to add lateral partners. Seek input from practice group leaders and get specifics on needs, outcomes, and ideal target profiles.
2. In addition to clarifying your firm’s growth strategy, are you still open to the hire of a partner outside of your plan? I’ve made several placements that fit this category. The partner’s practice was not within the strategic growth plan of my client, but once the two parties started talking with each other, we all saw how it could indeed be a seamless fit. Be open to “Opportunistic Hires.” You never know where your next producing partner might come from, so you have to be open to it. I will be the first to admit that there is a quirky element of randomness in recruiting.
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