Partner Profits

Not A Popular Policy: Withholding 20 Percent of Partner Pay

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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.

Firms have responded by turning to their partners for more financing. An increasing number of firms are issuing capital calls to partners or requiring high capital contributions.

So perhaps we shouldn’t be surprised to learn that one law firm has instituted a new policy of withholding 20 percent of partner pay….

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Morning Docket: 06.19.13

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Lauren Giddings

* You think you know Justice Clarence Thomas, but you have no idea. Here are several myths about the silent Supreme Court star that he was capable of busting in just this term alone. [WSJ Law Blog (sub. req.)]

* According to the CBO, the immigration reform bill being considered in the Senate would allow eight million immigrants to gain legal status and lower the deficit by billions. But alas, dey still terk er jerbs! [NPR]

* Google is doing its best to try not to be evil by asking the FISA court to ease up on gag orders preventing the internet giant from telling the world about what it’s required to give to the government. [Washington Post]

* Florida firm Becker & Poliakoff will withhold 20% of equity partners’ pay, a move that made some lawyers cry. The firm is apparently planning to save the cash for a rainy day. [Daily Business Review]

* Paul Mannina, an attorney with the Labor Department charged with sexually assaulting a coworker, was found in his cell with his throat slashed. Police are investigating the death. [Washington Post]

* FYI, your aspirational pro bono hours — or complete and utter lack thereof — will now be public record in New York, and you must report them on your biannual registration forms. [New York Law Journal]

* Coming soon to a law school near you: really old books from the 13th century that’ll probably turn into dust if you dare try to read them. You can find this nerdgasm over at Yale Law. [National Law Journal]

* The family of Lauren Giddings, the slain Mercer Law graduate, has filed a $5 million wrongful death suit in federal court against accused killer Stephen McDaniel in the hopes of finding her remains. [Telegraph]

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The ‘Biglaw Partner Compensation’ Is Too Damn High

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Biglaw partners may not be having coke-fueled orgies on piles of cash any more, but partners are still doing well compared to mere mortals.

In fact, the biggest rainmakers are doing really really well compared to many of their colleagues. According to Steven Harper, the Northwestern professor and author of The Lawyer Bubble: A Profession in Crisis (affiliate link), the highest-paid Biglaw partners used to make three times more than their run-of-the-mill colleagues. Today, rainmakers can pull down ten times more.

And this is not good for the legal industry…

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The 2013 Am Law 200: A ‘Hiring Binge’ Hangover

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As we mentioned in Morning Docket, the American Lawyer recently released its Am Law 200 law firm rankings — a list that’s still closely watched, but not quite as prestigious as being a ranked member of the influential Am Law 100. Sorry, but being a part of the “Second Hundred” just doesn’t have the same ring to it.

While the Am Law 100 celebrated a year of “slow growth” in 2012, it looks like the Am Law 200 will be known for its “bets on bulk.” When all of the big boys were busy playing it safe, perhaps out of fear of becoming the next Dewey, firms in the Second Hundred were gobbling up talent like there was no tomorrow.

Of course, as could’ve been expected, this kind of aggressive hiring had some pretty major effects on firms’ financial performance. So how did the Am Law 200 stack up? Let’s find out…

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Nationwide Layoff Watch: Negative News From New York and D.C.

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Are layoffs becoming daily news in Biglaw once again? Today marks the fourth consecutive day that we have news of reductions to report.

The latest layoffs involve both lawyers and staff, based out of two large legal markets, New York and Washington, D.C….

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Nationwide Layoff Watch: Feeling the Pain at Akin

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On yesterday’s post about layoffs at a major international law firm, one of my favorite commenters, “Successful Troll,” took note of our stock photo for such stories: “I feel sorry for the pretty blond woman in the picture. It seems she keeps going from firm to firm being laid off — probably 20 times already this year.”

It was funny, but also depressing. How much longer can layoffs, especially staff layoffs and “stealth” layoffs of lawyers, go on? Who is left to be laid off? Where are laid-off employees of law firms supposed to look for new jobs, in an environment in which it seems that all firms, including some very elite ones, are cutting headcount?

For now, these questions remain unanswered. Today we have more layoff news for you….

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Survey Points To Managing Partners’ Malaise

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The first quarter of 2013 was not particularly kind to large law firms. There’s no crisis at hand, but things aren’t exactly great either, with demand registering as slightly sluggish.

Citi Private Bank’s Law Firm Group, which possesses great insight into the legal industry because of Citi’s role as a leading law firm lender, just released its quarterly survey of managing partners’ confidence. The results are consistent with the general sense of “meh” that we’ve been anecdotally picking up from partners we hear from….

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How Did Biglaw Fare in the First Quarter of 2013?

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I was recently chatting with a young litigation partner about how the year was going for his firm thus far. He confessed it was off to a sluggish start. He was not extremely busy himself, but he said that his colleagues on the transactional side were practically twiddling their thumbs.

He wondered: was this slowness specific to his firm, or was the legal industry in general not exactly going gangbusters? I shared with him my sense, admittedly anecdotal, that 2013 to date has been pretty “meh.”

Now we have actual data on the first quarter. My partner friend should be relieved. Misery loves company….

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Buying In: Some Reflections on the Am Law 100 Rankings

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I have been thinking about how to explain the Am Law 100 rankings to a layman. Quite frankly, there is little use in trying to engage in a productive discussion of the rankings with colleagues. One segment of the Biglaw population is fixated on the fictional profits-per-partner figure, while another marvels at the “global reach” and exploding headcounts of the giga-firms. Some like to talk about the firms they interviewed with in law school, while others only care about the firms that have stronger resources in their practice areas. If you are in Biglaw, or hoping to be, you will come up with your own way of making sense of it all. Have fun.

What is more interesting to me is the following question: How can a normal person relate to this year’s Am Law 100 rankings? Put another way, if I was told that I was eligible for a large cash prize if I could explain the Am Law 100 chart to ten random strangers in a way that was compelling to them, what would I say?

Think about your own answer, then keep reading….

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The 2013 Am Law 100: A Year of ‘Slow Growth’

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As we mentioned in Morning Docket, the American Lawyer recently released its highly influential, closely watched Am Law 100 law firm rankings. They say that “slow and steady wins the race,” and with regard to economic recovery, Biglaw firms seem to have taken that up as their new motto.

Yes, partners are still living as large as they ever were, but their success now comes in the form of single-digit returns with regard to key financial metrics. The divide between the “haves and the have-nots” in the world of major law firms has grown to epic proportions, and some Am Law 100 staples have fallen out of the top hundred firms altogether. Welcome to the new normal.

Are you ready to get excited about “modest” and “spotty” gains across the board? Let’s dig in….

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