Our somewhat flagging coverage of the perks or fringe benefits of law firm life is getting reinvigorated, thanks to your suggestions. If you have an idea for a perk that merits discussion, please review our prior coverage (scroll down), to make sure we haven’t covered it already. If we haven’t, then please send your idea to us by email (subject line: “Biglaw Perk Watch”).
A tipster submitted this interesting topic:
[Y]ou should do a thread on firms that allow associates to participate in equity compensation schemes, i.e., purchase stock in clients. This is pretty common among the native Silicon Valley firms, but nowhere else, and is the only way I see any upside to practicing law!
This practice was very popular during the late 90′s tech boom. But that was before the tech bubble burst.
Do firms continue to do it today? If so, how lucrative can it be for participants? Can any associates who have taken advantage of this benefit describe how they made out financially?
Please discuss in the comments. Thanks.
Last week we wondered whether conditions in the stock and credit markets might lead to layoffs or affect bonuses. The situation has continued to deteriorate, particularly in the credit market. Now others are starting to join us in the rampant speculation about layoffs.
From the NYT’s DealBook:
The current turmoil in the credit market has some law firm leaders predicting future layoffs of associates, according to The Legal Intelligencer.
Those who would be most likely to receive pink slips are those working in what have been the most lucrative practice groups over the last four years or so — structured finance, real estate and corporate mergers and acquisitions.
“Future layoffs are a realistic possibility, and they would come in the areas of corporate finance and real estate,” Duane Morris’s chairman, Sheldon Bonovitz, told The Intelligencer. “This is by reason of the turmoil in the debt markets, which has made finance of many transactions in the pipeline problematic or not feasible.”
So, what do you think — are layoffs coming?
More discussion after the jump.
* Barry Ostrager of Simpson Thacher bills out at $1,000 an hour? Well, just keep him away from your bathroom. [WSJ Law Blog]
* Eager to soak the rich (hedge fund kings)? Good luck with that. [DealBreaker]
* Remember the wacky Stephen Dunne, who blames the gays for his bar failure? Not being admitted may be the least of his problems. [Keeping Up With Jonas]
* A funny parody? Or a disturbingly accurate account of how the law review submission process works? [Concurring Opinions]
* Truth in advertising? This was probably well-intentioned, but ultimately unwise. [copyranter]
* Voting irregularities: not limited to “coolest law school” contests. [Machinist]
* Lawyer opinions solicited: Is this an effective ad for malpractice insurance? [Copyranter]
* Another ugly day for the stock market. [Volokh Conspiracy]
* On that subject: Is the vast family fortune of Rachel Kovner, ATL’s official It girl, in jeopardy — as recently rumored by our sibling site? Not exactly. But if Bruce Kovner’s legendary fund is up only 3 percent year-to-date, things could certainly be better. [DealBreaker]
* What? The iPhone is not God’s greatest gift to man? Bite your tongue! [Althouse]
* Ignoring a handslap will get you a benchslap. See page 15, footnote 7. [U.S. Court of Appeals for the Second Circuit (PDF)]
In this week’s New York Observer, there’s an article (by yours truly) that may be of interest to ATL readers. It’s entitled Profits vs. Partners: Are the country’s top law firms going the way of the dinosaur?
You can check it out by clicking here. The piece has also been picked up by DealBook and the WSJ Law Blog (with a somewhat snarky title — but if we can dish it, we can take it).
The point of the article is not that law firms are becoming more businesslike and profit-oriented (yawn), but what this means for the profession — and also for firms as profit-maximizing businesses. Here’s an excerpt:
It’s a noteworthy shift for the legal profession, whose denizens like to think of themselves as intellectual types—and view their Wall Street cousins as money-obsessed philistines. Many angst-filled attorneys suspect they should have gone into something more tweedy and creative than relocating commas within merger agreements. As Clarence Darrow said, “Inside every lawyer is the wreck of a poet.”
Such questions of professional identity aren’t just theoretical; they have ramifications for law firms as businesses. If law firms become “just like banks,” but with smaller paychecks, firms may lose their appeal to the talent they must attract in order to thrive.
In other words: Is Biglaw, by emphasizing money so much, hoisting itself by its own petard? If it’s all about the benjamins (baby), why not just go to an i-bank or hedge fund? Are firms going to lose their top talent to the world of finance — which would then impair Biglaw’s ability to thrive as a business?
(If Biglaw has nothing to offer but monetary rewards, which are offered in larger amounts by Wall Street, will law firms end up as dumping grounds for the mathematically-impaired? (Please don’t take offense; that includes us. We can’t balance our checkbook without a calculator.))
More excerpts and discussion — including predictions from law firm consultants about when the next round of associate pay raises is coming, which we know you’re dying to hear — after the jump.
Earlier this week, we reported on the unexpected early promotions of four corporate associates at Cahill Gordon. According to various comments, the four soon-to-be partners, whose promotions will take effect in July, are Doug Horowitz, Corey Wright, Bill Miller, and Jonathan Frankel.
As some speculated, this quartet was promoted early to prevent them from leaving for greener pastures. Here are more details:
The way it apparently went down is that all 7th and 8th year litigators were sat down individually by a partner and told, a week or so ago, that 7th and 8th year corporate associates — corporate associates only — were going to be voted on this summer. The given reason was to prevent these people from leaving to go to i-banks.
Litigators were apparently told that they should not consider this to be a negative commentary on their value to the firm, and that they would be considered in the normal course, either end of this year (8th years) or end of next (7th years). Their chances of making it were described as “the same as they were yesterday.”
It’s my understanding that there is a growing rift between corporate and litigation at the firm. Each group — partners included — increasingly resenting the other. Corpies think litigators are lazy, don’t have to work nearly as hard for the same amount of money. Litigators resent being treated as second-class citizens.
Very interesting. Some food for thought:
1. Several top law firms have struggled to deal with the problem of star associates leaving for investment banks, hedge funds, and other opportunities in the world of finance. Will other Biglaw shops start employing this strategy of early promotion to retain their best associates? Could we be witnessing the start of a trend?
2. According to conventional wisdom, corporate lawyers generally have “better” — or at least more lucrative — exit opportunities than litigators. As a result, law firms face more outside competition for them. Could we eventually see a system in which partnership tracks are shorter for corporate associates than for litigation colleagues, in reflection of the different markets for the two practice areas?
“In an effort to uphold the rule that the Masters of the Universe can pretty much get away with anything simply because they’re the Masters of the Universe (see, also: Jobs, backdating), a federal judge has ruled that Goldman cannot be included in a lawsuit by Fannie Mae shareholders.”
“[T]he SEC filed a lawsuit against a Hong Kong couple, Kan King Wong and Charlotte Ka On Wong Leung, accusing them of insider trading. The couple had purchased $15 million of Dow Jones shares prior to the May 1st announcement.”
They liquidated the position after News Corp.’s unsolicited offer to boy Dow Jones, for a tidy profit of $8.2 million. More details here.
3. In the Future of a Defamation Lawsuit, Dimon Is the Law. Here’s a teaser, concerning the lawsuits that are flying between Dow Chemical and a former executive and board member: “It’s the legal equivalent of a John Woo action scene.”
You can check out the full post here.
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When Chintan Panchal decided to leave a global BigLaw partnership to start his own firm, he could only hope that he would face the high-quality problem of firm building that many had cautioned him about. Focused on the uncertainty surrounding of a new firm launch, he decided to tackle staffing needs, IT challenges, and financial planning requirements after he had built up his legal practice.
Panchal Associates LLP–a corporate/finance and outside general counsel boutique–was quickly off to a great start. Clients and matters were flying in the door, and Chintan soon had a team of lawyers and staff with a variety of operational needs. To continue building an excellent team and provide them with a competitive benefits package, to expand his physical presence to include a European practice and additional partners, and to scale his operations and IT capabilities to support this growing enterprise brought with it demands of time, money, and expertise. Chintan knew he needed help.
“With the assistance of NexFirm, we have upgraded the capabilities of our firm to meet, and in some cases exceed, the standards we were used to at our former BigLaw firms. Operationally, we can now attract and service clients we didn’t have the bandwidth to support in the past, and continue to build our team with the best and brightest legal talent in the industry,” said Chintan Panchal, adding “It has worked out quite well in our case; NexFirm is an essential partner for us.”
The holiday season is upon us, and yet again, you have no idea what to get for the fickle lawyer in your life. We’re here to help. Even if your bonus check hasn’t arrived yet, any one of the gifts we’ve highlighted here could be a worthy substitute until your employer decides to make it rain.
We’ve got an eclectic selection for you to choose from, so settle in by that stack of documents yet to be reviewed and dig in…
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