This is a lot safer when Mom and Dad are holding you up.
I get pretty annoyed when the state tries to act like everybody’s mother. But the worst application of the “nanny state” is when the state actually supersedes the judgment of a caring parent. It just makes it worse when the government tries to ruin a family’s holiday season.
This summer, we had a report about a partner who was accused of providing alcohol for his daughter and a bunch of her friends during a party for her graduation. The charge has since been dismissed. Today, a tipster sent us a link about another Biglaw partner who has been charged with providing alcohol to her teenage daughter and some of her daughter’s friends, this time at a New Year’s Eve party.
Can we take a step back and ask why the government is running around charging people for letting teenagers drink at family parties?
I later found out that during this whole period of time… when I was being romanced by Citibank, that they had reason to believe — in fact, they knew — that Howrey was in default of material covenants, and they didn’t tell me that.
– Stephen O’Neal, a former partner of Howrey LLP, in a deposition in his pending litigation against Citibank. O’Neal and another former Howrey partner, David Buoncristiani, allege that Citibank committed fraud by encouraging them to finance their capital contributions with Citi, claiming that Howrey was financially sound when the bank knew Howrey wasn’t.
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….
It’s the last day of December, so it’s a good time to look back on the year that was. We’ll do what we’ve done for the past three years (wrap-up posts from 2009, 2010, and 2011 can be found here, here, and here) and identify the ten biggest stories of the past year as decided by you, our readers. With the help of Google Analytics, we’ve compiled a list of our top ten posts for 2012, based on traffic (as represented by pageviews).
By the way, for the third year in a row, the most popular category page on Above the Law was Law Schools. People have now been intensely focused on the declining value proposition of going to law school for as long as it takes to earn a Juris Doctor degree. Isn’t it time that we graduate from the current educational model?
The second and third most-popular categories on ATL in 2012 were Biglaw and Bonuses. Although this year brought us the largest law firm failure ever, nearly all other firms indiscriminately doled out offers to summer associates, and bonus season looked better for the first time in years. While the legal profession is still in transition, things are certainly looking up, and through the highs and the lows, we’ve been there to cover it all.
So what were the ten most popular individual posts at Above the Law in 2012? Let’s find out….
Today we have some updates about Steve Guynn (all via Teri Buhl). First, Guynn is reportedly getting divorced from his wife, Kristie Guynn. Second, the criminal case against him no longer appears in the online docket for the Connecticut courts (perhaps because it has been moved to a domestic violence docket). Third, he is no longer at King & Spalding.
(We reached out to King & Spalding to confirm Guynn’s departure from the firm. They did not respond to our inquiry, but Guynn’s bio has been pulled from the firm website. Here is a cached version, which shows Guynn’s impressive educational and professional background, including the two other top firms where he was once a partner.)
The allegations against Steven Guynn have never been proven. But here is one thing established beyond a reasonable doubt: his multimillion-dollar mansion is fit for royalty. Shall we take a peek?
I told careful readers six months ago that I would soon be moving to London. I made the move on September 1, and here’s the local news:
Senior partners at major London law firms can’t afford to live!
Well, not quite: But senior partners at many major London law firms can’t afford to live in London itself.
I recently had lunch with — prepare yourself — a senior partner at a major London law firm. When I told him where I was now living, he said that it was nice that my commute would be so short:
“Twenty years ago, the senior partners at most big law firms lived in London. But today, unless you have inherited wealth or bought your home long ago, most senior partners at London firms can’t afford to live anywhere near the City. Partner pay just won’t cover the cost.”
As an expatriate American, this startled me: I’m confident there’s no American city where senior partners at major law firms can’t afford local real estate. But in London, this has the ring of truth to it. From an American’s perspective, everything in London is nauseatingly expensive (or “quite dear,” as the locals so quaintly put it). But the cost of housing goes far beyond “nauseatingly expensive”; it’s eye-poppingly, grab-your-chest-and-drop-to-the-ground, out of sight. It leaves partner pay in the dust. Here’s what I mean . . . .
The most shocking result of the recent survey on partner compensation conducted by Major, Lindsey & Africa was how much better the average partner does in firms with open compensation systems — almost $350,000 better on average, year in and year out. To me, that is the difference between retiring at 55 or 65. A big deal.
Have some fun. Tell your average law student that the average compensation for Biglaw partners at closed compensation shops (irrespective of equity status and seniority) was only $465,000, and see the reaction. Or pop an associate’s bubble. And realize that with demand for Biglaw services trending down, there is only so much time left before partner compensation generally starts to take a hit. I always knew about the disparity between open and closed firms, and I had heard about it anecdotally (I think Lat mentioned in an article a few years ago a personal friend who saw his comp climb dramatically after lateraling away from a closed comp firm). But I never really appreciated the scale until this survey came out.
I would think that anyone (especially younger partners with growing books) who could get out of such a firm would at least be trying to (ergo the need for a growing book). Even if your numbers are stellar, and your book is growing along with your traditional working collections, it is too easy for a closed comp chieftain to declare that you need to repeat the performance to make sure its sustainable. Whereas in a open system, you have leverage right away, and can convincingly argue to the compensation committee that failing to reward you would risk discouraging other potential achievers. And that you will leave — but one needs to be subtle on that front. Threaten to leave a closed comp place, and if they really like you, they’ll offer to match whatever new offer you get (thereby confirming they have been skimping on you all along)….
The recent survey on partner compensation conducted by Major, Lindsey & Africa, which I discussed last week, is full of interesting information. First off, I never really knew how many Biglaw partners there are. The answer? Around 75,000, which includes partners from all firms ranked on the Am Law 200, NLJ 350, or Global 100 in the last five years. Throw in another 1,000 or so partners who were Biglaw partners but left to form high-end boutiques — not included in the survey, but I consider them Biglaw partners since they typically work for similar clients — and you still have a pretty small number relative to the number of lawyers in the world. The figure of 75,000 amounts to less than two years’ worth of new U.S. law school graduates.
Very interesting, especially considering the forty-year-or-so age spread between active partners. Seriously, how realistic is it for any one law graduate (irrespective of pedigree) to think they will beat the odds and eventually make partner? So many things need to go right — it is amazing.
Lat had it right last week. There is a big, and growing, partner compensation spread at nearly all Biglaw shops. And as I mentioned in an earlier column, it is not uncommon to make partner and not see a bump in guaranteed pay at all. Factor in the additional expenses Lat references, such as tax and insurance outlays, and the first few years of partnership can be a net loss for some partners. Even if you finance your buy-in. And especially if you were the beneficiary of some big bonuses, for the suicidal hours you had just put in (big profits for your Biglaw firm!) as a counsel or senior associate in order to get elected.
So please don’t assume that every one of the people you see named as new Biglaw partners (usually in a breathless press release, and sometimes even with an ad in the American Lawyer) are signing contracts for their dream “lawyerly lairs” straightaway. If they are, it’s because they have family money or are a two-professional, no-kid type-family. Otherwise, they are headed for some tight times once they realize that they have to pay federal taxes (including Medicare and Social Security), state taxes (often in every state their firm operates), local taxes (for their beautiful new property), and a real accountant who can figure the whole mess out for them.
Most people don’t realize this, and Biglaw is in no rush to pop the fantasy bubble. Better to have associates motivated by dreams of what Lat referred to as “instant riches.” Better to maintain the prestige of the profession by pretending that making partner at a Biglaw firm is a tremendous achievement, regardless of what firm, practice group, or locale. It’s an achievement, sure. Just like getting elected to some political office. But there is a big difference between getting elected to the U.S. Senate and getting elected as deputy tax commissioner somewhere….
Is being a partner that different from being an associate? Contrary to popular belief, becoming a law firm partner is not a path to instant riches. In the early years, your compensation might not be that much higher than it was when you were an associate or counsel. Your taxes might go up, you might have to pay for your own health insurance and other benefits, and you might have to buy into the partnership. Sure, you might be able to borrow the capital contribution from a bank — but remember, you’re liable on that loan, and the bank might pursue you if it doesn’t get repaid.
Our partner readers sometimes complain about the stereotype that they’re all fat cats. As one of them recently wrote, “[Please don't write] about being admitted to partnership and instantly becoming rich…. At virtually every firm, you become a partner and then start to hope that, over the course of a career, your income will increase to ‘average partner income’ and your hours will decrease to ‘average partner hours.’ Rainmakers reach that goal quickly, but many partners — perhaps a majority in most firms — spend a lifetime waiting for, and never reaching, those goals.”
Of course, that’s the subjective experience of one reader. What does the big picture show? There’s a new report out about partner pay that contains lots of interesting information….
Professor Joel P. Trachtman (JD Harvard Law School) has developed a unique, practical guide to help lawyers analyze, argue, and write effectively.
The Tools of Argument: How the Best Lawyers Think, Argue, and Win is a highly readable 200-page book, available for about $10 in paperback or e-book. Chapters focus on foundational principles in legal argument: procedure, interpretation of contracts and statutes, use of evidence, and more. The material covered is taught only implicitly in law school. Yet, when up-and-coming attorneys master these straightforward tools, they will think and argue like the best lawyers.
For most attorneys, time spent managing the books is a necessary evil at best. Yet it is undeniably a crucial aspect of running a successful practice. With that in mind, we invite you to view or download a free webinar by Above the Law and our friends at Clio to learn how to better manage your finances.
Take this opportunity to learn what it takes to streamline your accounting and get the most out of your time. The webinar agenda:
● The basics of accounting for lawyers.
● How legal accounting differs from regular accounting.
● Report and reconciliation issues surrounding trust accounts.
● How to pick and integrate the best accounting tools for your practice.
● Steps to prepare your tax return for your firm’s income.
Do not miss this crucial chance to optimize your accounting practices. Save time and get back to billing!
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.
Please note that Evan Jowers and Robert Kinney are still in Hong Kong and will stay FOR THE REMAINDER OF THIS WEEK. We still have a handful of available slots for meetings with our Asia Chronicles fans. If we have not been in touch lately, reach out and let us know when we could meet! There is no need for an agenda at all. Most of our in-person meetings on these trips are with folks who understand that improving a legal practice through lateral hiring is an information-driven process that takes time to handle correctly.
Regarding trends in lateral US associate hiring in Hong Kong, we of course keep much of what we know off of this blog. Based on placement revenue, though, Kinney is having one of our most successful years ever in Asia. We are helping a number of our law firm clients with M&A, fund formation, cap markets, project finance, FCPA and disputes openings. These are very specific needs in many cases, so a conversation with us before jumping in may be helpful. As always, we like to be sure to get the maximum number of interviews per submission, using a well-informed, highly targeted, and selective approach, taking into account short, medium and long-term career aims.
Making a well informed decision during a job search is easier said than done – the information we provide comes from 10 years of being the market leader in US attorney placements at the top tier firms in Asia. There is no substitute for having known a hiring partner since he/she was an associate or for having helped a partner grow his or her practice from zip to zooming, and this is happily where we stand today – with years of background information on just about every relevant person in all the markets we serve, and most especially in Hong Kong/China/Greater Asia. So get in touch and get a download from us this week if we can fit it in, or soon in any case!