Staying Put the Great Recession Led to a Ten-Year Low in Lateral Partner Moves
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www.americanlawyer.com February 2011 THE LATERAL REPORT STAYING PUT The Great Recession led to a ten-year low in lateral partner moves. BY VICTOR LI FTER A RECORD YEAR for lateral moves What accounts for the drop? For one thing, the 2009 in 2009, law firm partners looked around numbers were artificially high because the market was in 2010 and decided that there was flooded with partners from firms that went under, such as no place like home. In the 12-month Heller Ehrman, Thacher Proffitt & Wood, Thelen, and period ending September 30, 2010, WolfBlock. (Those four firms accounted for 15 percent only 2,014 partners left or joined of the 2009 moves.) Additionally, continued economic un- Am Law 200 firms. That number certainty in 2010 meant that some firms were reluctant to was a hefty decrease—27 percent—from the same period hire. “In general, firms have been much more opportunistic a year earlier, when a whopping 2,775 partners moved. In [about partner recruiting], and that’s due to the relative sta- fact, 2010 marked the lowest number of partner moves bilization of the industry,” says Ari Katz, national director since 2000, when only 1,859 partners switched firms, and of legal recruiting at Bingham McCutchen. was well off the average of 2,458 partner moves each year Still, some firms defied this trend. DLA Piper could from 2005 to 2009. have installed turnstiles in its lobbies with all the turnover Illustration By JOHN UELAND it experienced as it brought in 67 partners, more than any other Am Rochester-based partners departed for LeClairRyan after our survey Law 200 firm, and was also among the leaders in departures—42. U.S. time frame. “The legal market is very fluid. We’ve seen lawyers come managing partner Terry O’Malley says that his 3,500-lawyer firm and go, and we’ll continue to see that,” says John Snellings, a Nixon built up its fund formation and patent litigation practices, and jumped partner and member of the firm’s management committee. at the chance to hire partners with established global practices, such Other practice areas were popular. The Dodd-Frank Wall Street as Chicago-based Latin America cross-border transaction specialist reform and financial regulatory bill drove many firms to look for Gianluca Bacchiocchi from Greenberg Traurig. As for the departures, lawyers with expertise in that area. “The Obama administration is O’Malley says, “We’re not for everybody. Especially for people who keeping lots of lawyers busy . due to Dodd-Frank. It’s one of the want to be in a smaller environment.” hottest areas out there. Firms that have never had it want it. Firms Other firms that typically experience a lot of churn reappeared on that have it are sitting on a gold mine,” says Bingham’s Katz. our rankings. Greenberg Traurig hired 57 partners and lost 19. K&L Last year’s leader, litigation, decreased slightly as financial con- Gates had the fourth-highest number of arrivals last year with 42, but straints curtailed prolonged lawsuits. “Commercial litigation was netted a loss as it said goodbye to 53 partners. K&L Gates chairman down due to the fact that a lot of clients are settling rather than go- Peter Kalis says most of these departures ing to trial,” says Julie Zammuto, Nixon’s were lawyers who had joined the firm as a re- ➔ global director of lateral recruiting. Intel- FIVE-YEAR TREND sult of several mergers over the last couple of lectual property was next in line, accounting years. Lateral partner moves dipped for 11 percent of 2010’s moves. precipitously in 2010. There was also a flurry of activity at Labor and employment attorneys, long Nixon Peabody, but most of it took place at 3,000 considered to be one of the few practice the exits. The firm lost 50 partners, putting areas immune to the recession, stayed in it behind Hogan & Hartson and K&L Gates demand. Jackson Lewis brought on 37 for most departures, and hired nine. Several partners last year and opened offices in of the defections were high-profile, such as 2,500 Baltimore and Milwaukee. Managing part- global finance head Mats Carlston, private ner Patrick Vaccaro says the firm’s strategy equity rainmaker Dominick DeChiara, and has been to swallow small employment insurance chair Michael Murphy [“Growing 2,000 boutiques or hire groups of partners from Pains,” September 2010]. Additionally, six 2006 2007 2008 2009 2010 general practice firms. When a group of + TOP-GAINING FIRMS – Lateral Partner Hires Firms continued to take on lateral partners last year despite the weak economy. Here is where the top-gaining firms got their new DLA Piper – 67 hires. (Note, if laterals arrived in Greenberg Traurig – 57 a group of five or more, we named 6 5 11 35 6 4 6 46 3 2 the firm they left.) HOGAN LOVELLS* • MCDONOUGH HOLLAND MAYER BROWN • OTHER FIRMS • CORP • GOv’T NIXON PEABODY • OTHER FIRMS • CORP • GOv’t Reed Smith – 47 K&L Gates – 42 Jackson Lewis – 37 44 3 6 33 12 5 29 12 OTHER FIRMS • CORP HOGAN & HARTSON* • OTHER FIRMS FORD & HARRISON • OTHER FIRMS CORP • GOv’t CORP • GOv’t Polsinelli Shughart – 32 Latham & Watkins – 30 7 24 1 5 14 11 BRYAN CAVE • OTHER FIRMS • CORP VINSON & ELKINS • WHITE & CASE OTHER FIRMS McDermott Will – 30 Jones Day – 29 Perkins Coie – 24 5 19 3 2 1 27 2 5 19 DARBY & DARBY • OTHER FIRMS OTHER FIRMS • GOv’T HOWREY • OTHER FIRMS CORP • GOv’t • EDU * Hogan & Hartson and Lovells merged on May 1, 2010, to form Hogan Lovells. THE LATERAL REPORT four DLA Piper partners, headed by Richard Hafets, approached Jackson Lewis about opening a branch – FIRMS WITH THE BIGGEST LOSSES – Partner Defections office in Baltimore, Vaccaro jumped at the chance. These firms took the biggest hits. We list firms by the number of moves, and note the percentage “The DLA Piper partners came from a firm where of the partnership the departures represent. their rates were way above the norm, and the firm 1 AGE didn’t let them be very flexible. Here, they’ve grown TIONS TION TAL NUMBER O their practice and attracted clients they couldn’t at T PERCENT AM LAW 200 OtHER FIRMS CORPORAGOVERNMENNONPROFIEDUCAT JUDICIAT L DEPARTING OF PARTNERS DLA,” says Vaccaro. He adds that Jackson Lewis partners typically bill $350–$500 an hour, while 2 Hogan & Hartson 18 28 4 3 1 54 11% Hafets’s rate at DLA Piper was approximately $600 an hour. DLA’s O’Malley declined to comment spe- K&L Gates 10 25 11 42 1 53 6% cifically on Hafets or the other partners who left his firm, only saying that “people have lots of reasons Nixon Peabody 33 12 5 50 14% for leaving law firms.” Merger mania also led to many lateral moves. Fif- DLA Piper 33 9 42 3% ty-four partners flew the coop at Hogan & Hartson Reed Smith 5 20 8 21 36 5% (which finalized its merger with U.K.–based Lovells in May), while Sonnenschein Nath & Rosenthal 3 Sonnenschein 22 7 5 11 36 10% (which finalized its merger with U.K.–based firm Denton Wilde Sapte in September) shed 36 partners. Howrey 31 1 32 11% Warren Gorrell, co–CEO of Hogan Lovells, says that some departures were inevitable. “There were some Mayer Brown 30 1 31 5% situations where partners who played a very signifi- cant role at Hogan & Hartson realized that their role Alston & Bird 13 8 6 1 28 8% wouldn’t be as significant in the new firm—kind of Bryan Cave 17 5 3 21 28 7% going from being a big fish in a small pond to a small fish in a big pond.” Foley & Lardner 9 10 26 1 28 6% The casualties included 18 Hogan partners in the Berlin office who formed their own firm, Raue, as well Morgan, Lewis 20 2 4 2 28 6% as lawyers in cities where both Hogan and Lovells had offices, such as Warsaw and Geneva, which became White & Case 27 1 28 7% the branch offices for K&L Gates and Akin Gump Strauss Hauer & Feld, respectively. “They were wel- 1. Percentages are based on the number of partners reported to The National Law Journal at the start of the survey (October 1, 2009). come to stay,” adds Gorrell. 2. Hogan & Hartson and Lovells merged on May 1, 2010, to form Hogan Lovells. There were other factors behind the drop in hir- 3. Sonnenschein merged with Denton Wilde Sapte on September 30, 2010, to form SNR Denton. ing. Almost every hiring partner we spoke to ex- pressed a reluctance to hire laterals who weren’t on the job market voluntarily. Gorrell says that his firm Then again, partners have also been hesitant to jump, and the ones tries to target partners it thinks would succeed at Hogan rather than who decide to leap want to have as much information as possible. partners who are actively looking for new jobs. “We are more skepti- “For years and years, I was astonished that very successful and smart cal of those people than in the past because we know that firms are partners would just assume that a firm was successful without want- managing their performance,” says Gorrell. Guy Halgren of Shep- ing to look at the books, the partnership agreement, and the capital pard Mullin Richter & Hampton was even more direct. “When it ap- requirements,” says legal recruiter Jon Lindsey of Major, Lindsey & pears a partner has been asked to leave, or their reasons for leaving Africa.