Dewey & LeBoeuf may be gone, but in the lateral market, its legacy lives on. In the 12-month period ending September 30, 2012, 280 Dewey partners flooded the market, helping drive the total number of Am Law 200 lateral partner moves to its highest point in three years.
The American Lawyer‘s latest lateral survey found that 2,691 partners left or joined Am Law 200 firms during the 12-month period. That was a 9.7 percent increase from the previous year, when 2,454 partners switched firms, and a 33.6 percent increase from 2010. (The numbers for 2011 were boosted in part by another big-firm failure, Howrey, which sent 208 partners into the lateral market.) All told, 2012 marks the highest number of moves since the 12-month period ending September 2009, when a record 2,775 partners changed jobs, largely because of the failure of four big firms: Thacher Proffitt & Wood, Heller Ehrman, Thelen, and WolfBlock.
According to our latest survey, the vast majority of Dewey’s refugees found new homes at Am Law 100 firms, with only 12 going to Second Hundred firms and 18 going to non–Am Law 200 firms. The largest group of partners went to Winston & Strawn, which brought in 23 partners in May. Other firms that helped themselves to large chunks of Dewey’s disintegrating partnership were DLA Piper, which hired 21 partners from the dying firm; Morgan, Lewis & Bockius, with 20; and Proskauer Rose, which added 13.
But even leaving the Dewey exodus aside, the lateral market showed plenty of activity in 2012. Excluding the Dewey departures, there were still 2,411 moves in 2012—only a bit lower than in 2011 and consistent with the annual average of 2,458 partner moves from 2005 to 2009.
The market’s robustness demonstrates how firms continue to rely on lateral hiring to fuel revenue growth, build practice areas, and broaden their geographic reach. "Everyone is doing it, and reasons number one, two, and three are to buy business," says Altman Weil Inc. consultant Thomas Clay. "Laterals with books of business are in demand, and it’s not going to go away."
In a survey of leaders of large firms released in October by LexisNexis and ALM Legal Intelligence, the research arm of The American Lawyer ‘s parent company, 96 percent of respondents said their firms plan to pursue lateral partners over the next two years, and nearly three out of four respondents expect their firms to increase lateral hiring over the next five years. In The American Lawyer ‘s annual Law Firm Leaders survey ["Vote of Confidence," December 2012], more than 60 percent of respondents said they spend 11–50 percent of their time hiring laterals. Respondents listed corporate, litigation, and intellectual property as areas where lateral partners should be in demand in 2013.
For the third year in a row, DLA heads our list of the most acquisitive Am Law 200 firms. In our latest survey the firm added 97 partners and lost 34, for a net gain of 63. DLA Piper United States cochair Roger Meltzer says the hiring is driven by "general practice sector and geographic needs." DLA brought in securities, energy, IP, and real estate partners in countries including the U.S., Italy, Mexico, Australia, and Russia. (Meltzer is a board member of The American Lawyer ‘s corporate parent.) Other firms with large international presences that were among the survey’s most acquisitive were Jones Day, which had a net gain of 40 partners, and Baker & McKenzie, which had a net gain of 30.
Leaving aside Dewey, the biggest net loss of partners, 35, was at SNR Denton, and it attributed the loss to strategic reasons. The verein announced in November that it would create a 2,500-lawyer entity by combining with Salans in Europe and Fraser Milner Casgrain in Canada. "In a larger, broader firm, clients will turn to us for an increasing number of substantive specialties and knowledge," says global chief executive Elliott Portnoy. "Some of our individual partners just [didn't] have the right practice, energy, or performance criteria necessary to thrive within our new firm."
Other firms that showed sizable net losses include Vinson & Elkins, with 26, and Chadbourne & Parke, with 23. Both firms say they are refocusing their partnerships. Says Vinson managing partner Scott Wulfe: "We want to focus on areas where we can successfully compete with the best firms in the world and where we have competitive advantages, such as in energy-related matters."
Similarly, Chadbourne managing partner Andrew Giaccia said in an emailed statement that the firm is bolstering its project finance, Latin America, bankruptcy, and international arbitration practices. The statement said that the process "has included making some difficult decisions involving our partnership, but has also involved making smart, forward-looking investments and maintaining a strong balance sheet."
For the third consecutive year, Kansas City, Missouri’s Polsinelli Shughart was among the ten biggest gainers, taking on 34 partners while losing eight. (That was an increase over the previous year, when the firm’s net gain was 21.) Firm CEO and chairman Russell Welsh says the Second Hundred firm continued its strategy of acquiring talent from Am Law 100 firms and building up selected practice areas, such as health care ["A Rebuilding Year," June 2011]. In our latest survey, the firm picked up seven health care partners, including four from Bryan Cave and one from Mayer Brown, two real estate partners from Greenberg Traurig, and a trusts and estates partner from Winston & Strawn, among others.
But it was the Dewey hires that stole the show at several Am Law 100 firms last year. To expand its global presence, Morgan Lewis took on 20 Dewey partners based in Asia, Europe, and the United States. "We’re relatively small outside the U.S., and we had an opportunity to grow that pretty dramatically," says chairman Francis Milone. The new recruits included corporate partner Aset Shyngyssov, who heads the firm’s new office in Almaty, Kazakhstan, and Brian Zimbler, who opened an office for the firm in Moscow.
McDermott Will & Emery also turned to Dewey departees to fill gaps overseas. Although McDermott has had offices in Munich and Düsseldorf for 10 years, it was looking to expand into Frankfurt. When Philipp von Ilberg, the head of Dewey’s Frankfurt office, left the failing firm, McDermott jumped. "Every expansion has to be both strategic and opportunistic. If you can’t find the right people, then you can’t execute the strategy, and vice versa," says cochair Jeffrey Stone. McDermott, which was among the firms with the most departures in 2011, rebounded in 2012, adding 42 partners and losing 20, according to our research.
Winston & Strawn, meanwhile, turned to former Dewey partners to fill a void domestically. "I’ve wanted to beef up our New York litigation presence for a long time," says chairman Dan Webb. "We’d spoken to a lot of [potential] laterals and had spent a lot of time talking with firms going out of business like Heller and Howrey to try and pick up their partners." Webb moved quickly when a Dewey litigation team headed by sports partner Jeffrey Kessler became available. "I was on trial in Atlanta on a big case when it came along," says Webb. "I was amazed that we got the deal done within seven to 10 days." Ultimately, Winston hired more than 70 Dewey attorneys in May, including 22 litigation partners, 17 of whom are based in New York. Winston New York managing partner Michael Elkin says the Dewey lawyers addressed specific needs for talent, mainly in the firm’s securities, antitrust, and white-collar practices.
Proskauer Rose also looked to Dewey veterans to build up its securities practice, as well as securities litigation and bankruptcy. "Because we already were interested in those areas, Martin [Bienenstock] and his group and Ralph [Ferrara] and his group were at the very top of the list," says chairman Joseph Leccese. According to Leccese, the process of bringing in Bienenstock’s group took about six days, while Ferrara’s group took a little longer. "The timing was very compressed," says Leccese. "But many of the lawyers that comprised the group that we brought in were familiar to a number of our partners. This was not a situation where we had no prior knowledge of the people we were recruiting."
Familiarity with Dewey lawyers also played a role in Willkie Farr & Gallagher’s decision to bring on Dewey insurance partners Alexander Dye, Michael Groll, and John Schwolsky. "We already had a pretty sizable insurance and financial services practice, so we’ve known them for a long time, having worked with and against them," says Willkie cochairman Steven Gartner. But, he adds, "they brought some dimensions we didn’t have. For instance, they’re much stronger on the life insurance and regulatory sides."
Venable chair James Shea says that a mutual client suggested the firm hire a group of three real estate partners led by Peter Britell, former chair of Dewey’s global real estate and construction practice. The firm brought in the group in May.
Now that Dewey’s refugees have largely been dispersed throughout The Am Law 200, integration begins in earnest. "It would be a smashing success if, in two to three years, everyone forgot who are the laterals and who are the homegrown partners," says Willkie’s Gartner. When that happens, Dewey truly will belong to the history books.