TechnoLawyer

Originally published on October 18, 2011 in our free BigLaw newsletter. Instead of reading BigLaw here after the fact, sign up now to receive future issues in realtime.

Law firms, lawyers, and recruiters all expect the best in any lateral move. The firms expect a superstar with a massive portable book. The lawyers expect a better platform — broader footprint (better technology, stronger cross-selling, etc.) on which to display their talent. Recruiters expect fat commissions, usually in the neighborhood of 25% of the moving lawyer's projected total annual compensation.

But sometimes lateral moves don't work according to plan. This month, we thought we'd catch up on recent lateral moves gone awry. And to make this task more challenging, we've avoided the low-hanging fruit. Suits over placement commissions are a dime a dozen. The stories below address some of the more-novel aspects of lateral moves gone wrong.

Look Before You Leap

Chris Gilbert's career was going swimmingly at K&L Gates, but he was happy to field a cold call from recruiter Diane Caldwell who told him he needed to escape from K&L Gates' lockstep compensation structure and move to a firm where his skills would truly be appreciated. According to Gilbert, she spun a tale of becoming a practice leader and making more money. According to Caldwell, he was a big boy — a partner no less — capable of making his own decisions.

Starry eyed, he left K&L Gates for Patton Boggs, but it didn't work out. Gilbert doesn't provide too much detail in his complaint of what went wrong, but the relationship didn't last long. He's now at Bryan Cave and has sued Caldwell for fraud, negligence, breach of contract, etc. She denies any responsibility.

Runaway Bride

Sometimes taking that extra day to think about a move causes a sea change in expectations. Much like a runaway bride, Stephen Kon just couldn't make that walk down the aisle. The SJ Berwin EU and competition boss was all set to move to Milbank Tweed, but at the last minute, he and partner Cameron Firth called the whole thing off. Kon and Firth were pretty well down the path, having tendered their resignations and been voted into the Milbank Tweed partnership.

SJ Berwin has a pretty good reputation, and is well within the top 20 UK firms, but Milbank Tweed is a global behemoth, which would have been quite the culture shock. Kon, as one of the founding partners of SJ Berwin, probably had more of an emotional attachment to the firm — although he was also one of the leads in the aborted merger discussions with Proskauer Rose. Kon is now likely one of the strongest contenders to take over as senior managing partner in the spring elections.

You Can't (Usually) Take It With You

Lawyers, perhaps because we write the rules, enjoy some unique benefits in our mobility. Unlike other professions where non-competes of various strictness may be enforced, lawyers have largely unfettered rights to take their files with them, all under the guise that the client's right to counsel of her choice shouldn't be restricted.

Some limits exist though, so departing lawyers have to make sure they're playing by the rules. Not surprisingly, spurned firms already feel insecure, which can cause them to react angrily when the files, and fees, walk out the door. Just ask Hunter Shkolnik who was sued by his former firm, Rheingold, Valet, Rheingold & McCartney.

Even more rare than seeking a TRO for the return of files as Rheingold Valet sought is an injunction against a lawyer's practicing for a period of time. Philadelphia personal-injury firm Kline & Specter recently sought one against an associate, claiming he had failed to give the required notice. An associate's departure might be one of the few cases in which a court could convince itself that the client still had access to the partners, although this case certainly seemed like a close call.

Making Them Pay

While we can't restrict our clients' access to the counsel of choice (notwithstanding the cases above), firms have figured out one way to keep wanderlusting lawyers around — cutting their retirement benefits. That's what Stroock & Stroock & Lavan did to Michael Perlis, a 20-year partner. Just weeks after taking his securities litigation team to Locke Lord, he sued for the retirement benefits the partnership agreement purported to cause him to forfeit.

Conclusion

Other than personal bonds and loyalty, both of which are apparently in short supply at many law firms these days, very few tools exist to keep a partnership together. It's no surprise that firms like Stroock have created contractual attempts to prevent departures.

Partner departures individually tend to have very little effect on large firms, but they are often early indicators of firms in trouble, and can become self-fulfilling prophecies. Looking back, early departures from firms like Brobeck and Howrey signaled something wrong beneath the surface. Then, people started connecting the dots and speculating. Partners started looking at their own options, worried they'd be left holding the bag, which kicked off the vicious cycle that led to the demise of these firms. One of the benefits of this BigLaw column and the Lateral Tracker is that they enable you to spot these trends early.

Written by Law Shucks, which curates and analyzes data on large law firm lateral hiring.

How to Receive BigLaw
Many large firms have good reputations for their work and bad reputations as places to work. Why? Answering this question requires digging up some dirt, but we do with the best of intentions. Published first via email newsletter and later here on our blog, BigLaw analyzes the business practices, marketing strategies, and technologies used by the country's biggest law firms in an effort to unearth best and worst practices. The BigLaw newsletter is free so don't miss the next issue. Please subscribe now.

Originally published on September 20, 2011 in our free BigLaw newsletter. Instead of reading BigLaw here after the fact, sign up now to receive future issues in realtime.

August is usually a quiet month for large firm laterals, but this year it was hot, hot, hot. We'll highlight two trends — law firms entering new markets overseas and beefing up their talent in hot practice areas.

Kirkland's Hong Kong Coup and More International Expansions

The four big UK Magic Circle firms (e.g., Slaughter & May) and American firms like Baker & McKenzie and White & Case have long believed in having local presences around the world. We may be seeing a renaissance in that mindset as firms look at opportunities. And they're not necessarily playing nice about it.

The headline move for August was certainly Kirkland's grand entry into Hong Kong. In one fell swoop, Kirkland rounded up three corporate partners from Skadden (leaving eight), three from Latham, and one from Allen & Overy (along with a senior associate who is joining as a partner). Kirkland's bold move instantly gives the firm a significant presence in the market.

Kirkland immediately caused ripples as Skadden turned around and lured banking lawyer Clive Rough out of his recent retirement from Freshfields and moved in M&A partner John Adebiyi from London. Skadden has stated that it remains committed to the Hong Kong market, so additional moves should not surprise anyone. But as we noted last month, associates who aren't taken along with their departing partners need to be on layoff alert.

Other firms targeting international expansion include:

• Locke Lord and Troutman Sanders in London.

• Dewey & LeBoeuf in Kuwait (the firm already has four offices in the Middle East).

• Sheppard Mullin in Beijing by hiring a Squire Sanders partner.

Bird & Bird may or may not have been actively looking to expand in Germany, but the opportunity to pick up the Hogan Lovells Hamburg media team couldn't be passed up. That firm has been hemorrhaging lawyers in certain markets since last year's merger.

Another firm that saw an opportunity it couldn't resist was Linklaters, which made its first Paris lateral hire in four years, picking up a capital markets partner from Gide Loyrette Nouel. As we saw last month with Cravath's hire of Christine Varney, even the firms that have traditionally avoided lateral hires have reconsidered that strategy.

Serendipitously, LegalWeek just published a retrospective on Proskauer's foray into the London market, which highlights just how difficult it can be to break into a developed market (subscription required).

The Patent War Results in a Talent War

The HogLove merger was more opportunistic than anything, but Google's $12.5 billion acquisition of Motorola Mobility in August demonstrates why firms constantly seek partners in big-ticket practice areas.

Only Google knows all the reasons for its acquisition, but patents certainly played a role. As Bloomberg noted, when companies spend that much money on patents, smart law firms spend big bucks on patent lawyers.

Unfortunately, these firms must also compete with the technology giants' inhouse legal departments, which can offer options, better working conditions, and the opportunity to boss around former colleagues. Apple recently created a position for a head of IP litigation, which it filled with a former Sun lawyer. Apple also hired a new chief patent counsel from HP.

The Ghost of Ma Bell

Getting closed out of deals has always been a compelling reason to change firms — or, as David Boies most notably did, start your own. Rather than share fat telecom-deal fees, Carl Northrop decided to hang his own shingle, along with some of his former Paul Hastings partners, creating Telecommunications Law Professionals.

Much like Boies' frustration with Time Warner keeping him out of doing a deal for the Yankees, Northrop and company were none too happy about not being able to go up against the $39 billion AT&T/T-Mobile merger, which is spewing off tons of antitrust work now that it's been opposed (the FCC hired Renata Hesse from Wilson Sonsini in May to oversee the matter).

Low Margin Practice Areas and the Super-Boutique

On the flip side, once in a while a firm decides that it has a practice area it no longer wants to support. Not surprisingly, it's never M&A, IP, regulatory, or the like. It's always something far more plebeian and lower margin. CMS Cameron McKenna is exiting the immigration business, jettisoning 15 lawyers to Fragomen "an international firm specializing in immigration law." If you missed the link in BlawgWorld, read Jordan Furlong's take on this move, which he dubs the "rise of the super-boutique."

We've always felt that large firms only maintained immigration and similar practices as favors for high-net-worth individuals and major international corporate clients. These folks have finally realized that the help they need shouldn't be at the rates they're forced to pay.

Conclusion

Large firm moves aren't always about interpersonal relationships. They're often about the same economic drivers that motivate the business world — seeking out untapped markets, be it geographic or new services. This profit-driven model of law firms is also driving similar attitudes in partners, as they're constantly on the prowl for the BBD (Bigger, Better, Deal). This business first mindset results in a lot of churn as firms and partners try to maximize their profits with little long-term commitment.

Written by Law Shucks, which curates and analyzes data on large law firm lateral hiring.

How to Receive BigLaw
Many large firms have good reputations for their work and bad reputations as places to work. Why? Answering this question requires digging up some dirt, but we do with the best of intentions. Published first via email newsletter and later here on our blog, BigLaw analyzes the business practices, marketing strategies, and technologies used by the country's biggest law firms in an effort to unearth best and worst practices. The BigLaw newsletter is free so don't miss the next issue. Please subscribe now.

Originally published on August 23, 2011 in our free BigLaw newsletter. Instead of reading BigLaw here after the fact, sign up now to receive future issues in realtime.

Two major stories rocked the large firm lateral market in July — O'Melveny & Myers, and layoffs related to rainmaker departures. It's always interesting to see how the mainstream media explains our world to the outside world. Peter Lattman wrote in the New York Times' Deal Book about the increasing activity and high stakes involved, placing a spotlight on the machinations behind Irving Picard's almost-move from Baker Hostetler.

O'Melveny & Myers: Bump in the Road or Road to Ruin?

Above the Law put it simply enough, "What's Going on at O'Melveny & Myers?" At the beginning of June, the firm had lost at least 22 partners, and then a handful more in July. Not surprisingly, these departures were attributed to a host of innocuous factors — high-profile jobs at clients, which could lead to future work; government service, which would promote the firm's brand; or a polished spin on sour grapes — that the departures were not undesirable thanks to a bad fit or low productivity.

However, observers felt something nefarious was afoot. When Bradley Butwin was appointed chair to succeed A.B. Culvahouse, AmLaw Daily reported that the firm's revenues had dropped last year, although profits per partner were up — due in no small part to reductions in the equity ranks.

There was also speculation of a rift between, depending on whom you asked, the firm's litigation and transactional departments or the legacy OMM partners (mostly litigation) and the lawyers acquired from the O'Sullivan Graev & Karabell merger (mostly corporate) a decade ago. Butwin's appointment should alleviate both of these fears. He's a litigator from OGK.

The real question is whether OMM's departures (around 60 over the past two years, according to one Above the Law commenter) represent the first sign of a troubled firm — another Howrey.

We're not convinced. These shifts seem more in line with Cadwalader in 2009 and White & Case in 2010, both of which suffered massive defections, some more intentional than others.

In 2009, Cadwalader's year got off to a horrible start. Profits per partner fell, the firm basically kicked off the layoff trend, and lots of notable partners left, including Bruce Zirinsky and John Bae for Greenberg Traurig, and John Busillo and Alan Lawrence for Arnold & Porter. But within a year, the ship had been righted and the money train was back on track.

Last year, Latham & Watkins raided White & Case for more than a dozen partners, and many more than that left over the year. Latham was specifically targeting the firm's #2 client, Saudi Aramco, but White & Case has held on after promoting a number of associates, flying in partners from other offices, and slowly rebuilding its ranks.

Similarly, keep an eye on where the Apollo work ends up. Seven of the OMM partners who serviced that huge client decamped to Paul Weiss with two others landing at Weil Gotshal.

Unlike Howrey, where it was clear early on that partners were jumping off a sinking ship (even though the firm, in an utterly classless move, tried to claim many had been pushed overboard), we would bet that OMM is just experiencing a bump in the road. The firm is much bigger and more diversified, geographically and by practice area. We don't anticipate adding it to the Dead Pool anytime soon.

Layoffs and Laterals

Layoffs and laterals sometimes go hand-in-hand — yet another underreported source of layoffs.

When partners leave, they may take a few key associates with them, but certainly not all. Those left behind find themselves in a difficult position, depending on how much work they did for the folks who left, or how niche their practice area was and whether it is something their firms will continue to support.

For example, Hunton & Williams laid off three lawyers and six staffers in London as a direct result of losing corporate partner Paul Tetlow to K&L Gates and energy partners Matthew Williams and John Deacon to Hogan Lovells.

Rara Aves: Cravath's Laterals, and Skadden's Ex-Retiree

They say three's a trend, so what else can we say but that there is a trend of lateral hiring at Cravath? The firm went 62 years without a lateral, but then brought in tax lawyer Andrew Needham from Willkie in 2005, and Richard Levin from Skadden in 2007 to start a bankruptcy practice. We liken these two Cravath laterals to the Yangtze River Dolphin — a species on the verge of extinction but at least with the possibility of reproducing in the future, unlike poor Lonesome George, the last of the Pinta Island tortoises.

Now there's a third Cravath lateral hire, with Christine Varney joining from the Department of Justice. She previously worked at Hogan & Hartson before she joined the DOJ, and was one of the people we thought was notably absent from the National Law Journal's list of the decade's most-influential antitrust lawyers. We suspect she'll make it the next time around.

Less rare, Skadden lured Sheli Rosenberg out of retirement. This was an interesting play for client development, diversity (age and gender), and mentoring.

Conclusion

As Lattman pointed out in Deal Book, lateral activity is on the rise, and the stakes are growing astronomical with $5 million+ signing bonuses becoming increasingly common. Stay ahead of the information curve with the Law Shucks Lateral Tracker.

Written by Law Shucks, which curates and analyzes data on large law firm lateral hiring.

How to Receive BigLaw
Many large firms have good reputations for their work and bad reputations as places to work. Why? Answering this question requires digging up some dirt, but we do with the best of intentions. Published first via email newsletter and later here on our blog, BigLaw analyzes the business practices, marketing strategies, and technologies used by the country's biggest law firms in an effort to unearth best and worst practices. The BigLaw newsletter is free so don't miss the next issue. Please subscribe now.

Originally published on July 26, 2011 in our free BigLaw newsletter. Instead of reading BigLaw here after the fact, sign up now to receive future issues in realtime.

For most, June in the large law firm world means the arrival and settling in of summer associates. But for partners, it is often the culmination of a quarter taken exploring opportunities and finalizing plans to move on. Client work tends to slow down slightly, partnership distribution checks have cleared, business plans for the year are finalized (and ready to be slapped into a headhunter's marketing package), so thoughts turn to moving on. Let's see who couldn't resist the spring wanderlust.

Staying in the Family

In our view, some of the most interesting moves are those within the large firm ambit. Two of June's finest intra-moves were Michael Fitzgerald bringing about a dozen corporate and securities lawyers from Milbank to Dewey & LeBoeuf, immediately providing the firm with the Latin America presence it has lacked. Dewey is about twice as big as Milbank, but Milbank had comparable profit-per-partner and probably a broader international footprint, albeit without the depth.

Of course, these moves don't always come down to money. Personal relationships are, in part, responsible for Fitzgerald's move to Dewey. The firm's former chairman, 92-year-old Leonard Joseph, is his father-in-law. Also, Fitzgerald's son, Reid, spent three years as a college intern at Dewey, and will attend Columbia Law School in the fall.

At the end of June in a trend that continued in July, O'Melveny lost three regulatory partners in DC to Allen & Overy, which was quite a surprise because Magic Circle firms have never been known for strong DC presences. The halls of power in our nation's capitol have traditionally been trod only by the whitest of shoes, so the addition of Charles Borden, Chris Salter, and Barbara Stettner shows some groundbreaking expansion.

Feeding Frenzy

When the large firm belly can't get fed by its own denizens, it goes searching farther afield for choice fare. Boutiques are plum targets these days for two types of acquirors — large firms looking to snag talent on the cheap or to shore up an underserved market (geographic location or a practice area), and small- to mid-sized firms trying to find safety in numbers.

Cozen O'Connor gutted IP litigation boutique Cohen Pontani Lieberman & Pavane, taking 19 of the NY firm's 27 lawyers. Five former Cohen Pontani lawyers came aboard as partners: Thomas Langer, Lance Lieberman, Martin Pavane, Thomas Pontani, and Edward Weisz. No word on what happened to the eight men out, although the firm was expected to dissolve, and its Web site now redirects to Cozen O'Connor.

Saul Ewing is also in "go big or go home" mode. It acquired five partners and one associate from Boston's Dionne & Gass. Dana Lanzillo, Don Lussier, Sally Michael, Richard Gass and Joanne Robbins joined as partners. Even for a boutique, that seems unbelievably highly leveraged, so we'll keep an eye out for word of associates not included in the deal. The fate of those left behind is another trend that we'll hit next month for its tragic repercussions.

Greener Pastures

For some, a large firm is no longer the right fit. The classic move out is the Jump In(House). At partner levels it's either a top legal job or out of law entirely to the coveted investment-banking world, as Cleary's former managing partner, Mark Walker did last month, when he joined Lazard in Paris.

The newest trend shows that lawyers may not be as risk-averse as believed. Weil Gotshal IP studs Matthew Powers (despite some recent rough patches) and Steven Cherensky have decided to blaze their own path, leaving the security of the GM Building (yes, we know they didn't sit in NYC) for their own startup practice, Tensegrity Law Group. They'll focus on contingent-fee plaintiff work, although at some point they may go fully over to the dark side, a la John Desmarais, the former Kirkland & Ellis partner who last year founded his very own patent troll by buying a bloc of patents and selling covenants not to sue.

The Revolving Door of Government Work

Another macro trend to keep an eye on this quadrennium is the inflow/outflow of our brothers and sisters in public service. We're about a year out from another election cycle, so quite a few people will be leaving who don't plan to stick around for the next term. Six lawyers left government in June for partnerships at major firms, but we expect that number, and their profiles, to rise in coming months. And, of course, there are some earlybirds. Kathryn Ruemmler will join the administration from Latham & Watkins to serve as White House Counsel.

Another large firm alum who could have a significant impact on that election cycle is Anthony Herman, the Covington partner who was recently named GC of the Federal Election Commission.

Conclusion

As alluded to above, July has some alarming trends, which I'll report on soon here in BigLaw.

Written by Law Shucks, which curates and analyzes data on large law firm lateral hiring.

How to Receive BigLaw
Many large firms have good reputations for their work and bad reputations as places to work. Why? Answering this question requires digging up some dirt, but we do with the best of intentions. Published first via email newsletter and later here on our blog, BigLaw analyzes the business practices, marketing strategies, and technologies used by the country's biggest law firms in an effort to unearth best and worst practices. The BigLaw newsletter is free so don't miss the next issue. Please subscribe now.