Paul Pearlman, managing partner of Kramer Levin Naftalis & Frankel. Credit: David Beyda. Courtesy of Kramer Levin.

Paul Pearlman, 65, who has led Kramer Levin Naftalis & Frankel since 2000 as managing partner, will retire at the end of this year, with partners Paul Schoeman and Howard Spilko set to take his place.

Schoeman, 49, and Spilko, 51, are slated to take the reins on Jan. 1, 2020.

Both plan to keep lawyering while serving as co-managing partners. Schoeman, who has done stints as a federal prosecutor in Brooklyn, practices white-collar criminal defense, and Spilko advises private equity firms, hedge funds and other clients on mergers, acquisitions and other transactions.

The leadership transition for the 333-lawyer firm comes after several strong years for Kramer Levin's business. Following strong growth in 2016 and 2017, the firm's gross revenue rose 9% to $423 million in 2018, while total net income and profits per equity partner each rose about 8.3% last year, hitting $165 million and $2.33 million, respectively. Revenue per lawyer grew about 7% last year.

“A lot of the pundits felt that a firm like ours, a full-service firm, with our size … could not survive and thrive in this environment,” Pearlman said in an interview in the firm's office. “We've proved them wrong.”

The new bosses say they plan to keep the firm on its current course. While they can't be as hands-on as Pearlman has been with matters such as finance, billing and accounting due to their active practices, Schoeman said they want to keep the firm on its upward trajectory.

Paul Schoeman, left, and Howard Spilko of Kramer Levin Naftalis & Frankel. Credit: David Beyda. Courtesy of Kramer Levin.

“[Pearlman] is a little bit like Sandy Koufax,” said Schoeman, referring to the famed pitcher who retired from Major League Baseball after several strong seasons. “Not everybody steps away after so many great and successful years in a row. But as a result of that, the firm really has a strong foundation. It's got really high morale. We have excellent support and administrative staff, so all the ingredients are there for success.”

“The No. 1 thing is we intend to maintain our independence,” Spilko added. He said he and Schoeman aren't interested in merging or acquiring their way to megafirm status, and the duo will focus on promoting the firm's “entrepreneurial” culture and encouraging collaboration.

“Maybe we'll have some incremental growth,” he said, along the lines of how Kramer Levin's outposts in Paris and Silicon Valley joined the firm from other Big Law shops, “but the idea is we won't make huge acquisitions.”

Kramer Levin is one of several big firms in the New York market whose staffing numbers are overwhelmingly weighted toward New York. As of the end of last year, 279 of the firm's 333 lawyers and all but 16 of its 111 partners were based in the Big Apple.

Pearlman's leadership

Pearlman, looking back to 2000, said he became managing partner after a somewhat troubling period at the firm. “There were some silos at the firm. There was a little bit of turmoil,” he said.

Back then, Pearlman said, he had mixed feelings about giving up his corporate practice to devote himself full time to running the firm as managing partner, and his first term as managing partner was just a year and a half.

He took over as managing partner from Scott Rosenblum in August 2000, and became, in his words, “very hands-on,” getting personally involved with billing, collections, profitability, financial analysis and tax matters. 

Nick Tortorella, 67, who was installed as the firm's executive director shortly after Pearlman was made managing partner, will also be retiring at the end of the year. Spilko said a search is ongoing for his successor and said it was anticipated that the next person to bear the title — or chief operating officer, as some firms refer to it — would shoulder some of the responsibilities that Pearlman has handled.

“Hopefully, with a strong COO in place, it will allow us to focus on strategy, tactics, partner relationships, and keeping the firm independent and profitable,” Spilko said.

Succession planning

Pearlman decided last year he would step down at the end of 2019.

A committee of about six or seven younger partners that was formed after an off-site retreat in 2017 began to discuss succession planning, and by last summer or early fall, a sort of consensus emerged around two of its members taking the reins of the firm, he said. The committee elevated that idea to the firm's executive committee, and it was the subject of discussions among the partnership last fall.

Earlier this year, Pearlman said, the full partnership voted for Schoeman and Spilko to be his successors. Both men have managing experience, Schoeman as co-chairman of the white-collar defense practice and as chief assistant U.S. attorney in the Eastern District of New York from 2007 to 2009, and Spilko as co-chairman of the firm's corporate practice.

Schoeman is known for having successfully represented Clarence Norman, a former high-ranking New York assemblyman who beat grand larceny charges. Spilko's work includes advising private equity firm Stone Point Capital in numerous transactions over the years, a relationship he hopes to continue.

The transition comes at a time when Kramer Levin has been in national headlines. Barry Berke, one of its top white-collar criminal defense lawyers, took a leave of absence to advise the Democratic leadership of the House Judiciary Committee in Washington. The Trump Organization claimed that Kramer Levin's past work for it meant that Berke had a conflict of interest, but the firm has called those allegations “baseless.”

Pearlman said Berke's leave is unpaid with no end date. It was hard to say what the impact of his leave on the firm's business would be, he said, but added, “We're fortunate that we've been able to retain all of the clients and matters that he was working on before he left.”

Correction: An earlier version of this article originally reported that Pearlman took over from three co-managing partners in 2000. He took over from one managing partner, Scott Rosenblum.