“It’s going to be death by a thousand cuts if people keep leaving at this rate.”
One former Ropes & Gray partner does not mince his words when reflecting on the rate of departures the Boston-headquartered firm has seen so far this year.
During the past two months, eight partners have left the firm across five offices worldwide, with a total of 22 heading for the exit door since January; 23 if you count London co-founder Maurice Allen, who stepped down from the partnership last year but only left at the end of February.
In addition to Allen, seven of the departures have been in London, with investment funds partner Monica Gogna this month joining those heading for the exit with a move to Dechert. Two of her fellow London partners are now at Kirkland, with another two at King & Spalding, as well as one apiece at White & Case and Linklaters. Allen is now a consultant at DLA Piper, and Ropes’ London office now consists of 27 partners.
As with most partner exits, the departing partners fall into two camps – those the firm is not that sorry to see go, and those it would much rather have kept.
While partners inside Ropes suggest that none of those leaving were actively asked to leave, its infamous ‘black box’ partner remuneration system – which means that in theory no one knows what anyone else is being paid – makes it relatively easy for management to encourage people towards the door by docking pay in their annual review.
Partners who were disappointed with their remuneration this year “got the message they were meant to get”, according to one current London partner.
He adds: “A couple of people were surprises to lose. For the most part though, they came to a decision based on the message from the firm. Some people aren’t making enough money.”
Some exits, however, are more likely to cause pain; such as the mass defections to US rival Kirkland, which has been the biggest beneficiary of the departures after picking up six partners in one month, including an enforcement team of five across offices in Hong Kong, London and the US in August.
It got to the point where I got frustrated about what the London plan was
The Chicago firm returned to Ropes the following month for City funds partner Anand Damodaran, who is described by one former Ropes partner as “a big loss”.
A current Ropes partner concedes that Damodaran’s exit is “difficult from a business perspective”.
But what is driving exits such as these?
Former partners argue that regardless of office, there is an issue around communication and sometimes implementation of strategy at the firm.
One former London partner says: “The firm is managed pretty opaquely. It was hard to figure how decisions were being made and how you got heard. It got to the point where I got frustrated about what the London plan was; what the strategy was.”
Another former London partner adds: “There was an issue around communication and this left some disillusioned with management. If you don’t feel appreciated it doesn’t help.”
The only thing we are not transparent about is partner compensation
A third ex-Ropes partner adds: “The firm is famous because it’s got a black box compensation system. I think a number of people found that opaque aspect extended further than compensation. It’s hard to figure out how decisions were made and how you get heard.”
Ropes’ management, however, refutes claims that it is dictatorial. Managing partner David Chapin says: “We’re designed to not be autocratic and dictatorial. If a partner at Ropes doesn’t think they have the opportunity to discuss topics, then they’re either not accepting the invite or not paying attention. We are constantly looking for ways to do things better and open up more lines of communication.”
The firm’s opaque compensation system, similarly blamed at US rival Jones Day for a spate of exits, also comes in for criticism for its polarising effect on partners.
Described by a former London partner as “the worst thing about the firm”, the compensation system is something Chapin argues is up to individual partners to find peace with, or move on from.
“The only thing we are not transparent about is partner compensation,” he says. “Some partners in some law firms, including Ropes, can’t live in a world where they don’t know what the person next door is making. If that’s the determining factor, then Ropes isn’t the right place for them.”
Others point to a poorly implemented strategy in London as part of the problem. Says one former partner: “Verbalising a strategy is easy, but the implementation differed from the narrative. If you position yourself as a leading private equity firm, you don’t achieve that aim in London by hiring some mid-market private equity people.”
London head Mike Goetz argues that the City practice is far from mid-market. He stresses: “We’ve led some of our largest deals from London, so we’re not just focused on mid-market practice. Larger private equity transactions take a little longer to move into, and the volume that was there seven or eight years ago isn’t now. The mid-market has been active, so it’s a valid strategy to get that flow of business – but we’re not resigned to just having a mid-market focus in any of our businesses.”
If I wasn’t having my partners recruited I’d be worried about the kind of partners we had
He points to the addition of four new PE clients in the last few months as signs the firm is going in the right direction under the leadership of former Travers Smith private equity head Phil Sanderson.
The City office has added Exponent Private Equity, Pulsant, Oakley Capital and Intermediate Capital Group to its roster, and earlier this year London PE partner Will Rosen led the firm’s team advising shareholders on the $1.8bn (£1.4bn) sale of Weetabix Limited to US cereal firm Post Holdings.
While those outside the firm suggest there are likely to be more exits in the coming months, Chapin claims not to be concerned about any longer-term impact on the firm.
He says: “We have lost some people we’d rather not have lost – but that’s the nature of business. We have really good partners that other firms want – if I wasn’t having my partners recruited I’d be worried about the kind of partners we had. We don’t get too hung up on short-term fluctuations.”
Those planning to remain with the firm will be hoping he’s right.
Ropes & Gray partner departures in 2017
London investment funds partner Monica Gogna – Dechert
Washington DC corporate partner Paul Rubin - Debevoise & Plimpton
Chicago managing partner and global anti-corruption and international risks co-chair Asheesh Goel – Kirkland & Ellis
New York securities and futures enforcement co-head Zachary Brez – Kirkland & Ellis
Chicago government enforcement partner Kim Nemirow – Kirkland & Ellis
London government enforcement partner Marcus Thompson – Kirkland & Ellis
Hong Kong government enforcement partner Cori Lable – Kirkland & Ellis
London investment funds partner Anand Damodaran – Kirkland & Ellis
London finance partner Mark Wesseldine – King & Spalding
London finance partner Fergus Wheeler – King & Spalding
Boston private equity partner Jason Serlenga – Kirkland & Ellis
Boston real estate investments and transactions co-head Marc Lazar – Goodwin Procter
London restructuring partner James Douglas – Linklaters
Hong Kong managing partner Paul Boltz – Gibson Dunn & Crutcher
Hong Kong corporate partner Brian Schwarzwalder – Gibson Dunn & Crutcher
Hong Kong corporate partner Michael Nicklin – Gibson Dunn & Crutcher
Hong Kong private equity partner Scott Jalowayski – Gibson Dunn & Crutcher
London structured finance partner Chris McGarry – White & Case
Hong Kong litigation partner Patrick Sinclair – Davis Polk & Wardwell
Former London senior partner Maurice Allen – DLA Piper
Asia private investment funds head Geoffrey Chan – Skadden Arps Slate Meagher & Flom
Washington DC intellectual property partner Nicole Jantzi – McDermott Will & Emery
Washington DC intellectual property partner Paul Schoenhard - McDermott Will & Emery