X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In 2000 Schnader Harrison Segal & Lewis sought to reinvent itself. The 250-lawyer Philadelphia firm, known mainly for litigation, wanted to expand its corporate department and its geographical reach. Like so many firms, it wanted to be bigger and better. So in the first half of 2000, Schnader acquired about 100 lawyers, more than 50 of whom were partners. Suddenly, the firm was a player. At least for a few months. What the firm would learn is that it is one thing to hire a bunch of talent, quite another to retain it. By 2003, most of the lawyers Schnader hired in 2000 had fled for greener pastures. Schnader failed miserably in integrating its new lawyers into its particular work culture. Many firms have faced a similar plight. The new era of partner mobility has allowed firms to grow quickly and dramatically. But mobility is a double-edged sword: Partners often leave not long after they arrive. Over the last five years, among The Am Law 200, ten of the 25 firms with the most lateral hires are also among the 25 firms with the most partner departures. Is there a revolving door in the lobby of these ten firms? In short, yes, although it turns at different speeds at each firm. Each of these ten firms have lost at least 18 percent of the partners that they hired between the fall of 1999 and fall of 2003. Some of the partners may have left for health reasons, and a few may have been pushed out. To some, partner churn is inevitable. “The more [lateral partners] you bring in, the more likely it is that a few may not work out,” says New York recruiter Alisa Levin. That is true to a point, but some firms that hire aggressively, such as Hogan & Hartson and Jones Day, have done a particularly good job in recent years of retaining their hires. “Some firms [hire] more slowly and methodically and are more concerned about a good fit,” says Jeffrey Lowe, a former partner with Hogan & Hartson and now a recruiter in the Washington, D.C., offices of Major, Hagen & Africa. And other firms, such as Akin Gump Strauss Hauer & Feld, have shown less hiring dexterity in recent years. Firms spend a fortune interviewing and vetting partner candidates, and another fortune on recruiters’ fees, which average 30 percent of a new partner’s first-year compensation. Much of this investment is lost when a recent hire walks out the door. Firms’ reputations can also take a beating if they consistently disgorge their lateral hires. “At some point, the market sees turnover, and [partners] become wary of pursuing discussions with firms,” says Lowe. Schnader Harrison certainly has a few black marks on its record. In fact, 68 percent of the partners that the firm hired between 1999 and 2003 have since left. Most of the turnover derives from the acquisitions it made in 2000. In January of that year, Schnader brought on 30 partners from Boston’s Goldstein & Manello and, about six months later, it took on another 27 partners from Philadelphia’s Mesirov Gelman Jaffe Cramer & Jamieson. (Schnader’s total haul was about 100 lawyers.) In a word, the two deals were disastrous; all of the Goldstein partners have left Schnader, and 18 of the Mesirov partners (66 percent of those hired) have left ["Gone but Not Forgotten," August 2002]. Schnader chairman Ralph Wellington says that the firm, which had 250 lawyers before the acquisitions, has learned the danger of taking on too much, too quickly. The Mesirov and Goldstein lawyers came from smaller firms with individualistic cultures, says Wellington. It took a lot of work to try to acclimate these lawyers to a larger, more bureaucratic environment, in which lawyers were expected to work more collaboratively, Wellington says. And Schnader’s management was spread too thin to successfully handle the job, he admits. “It is one thing [to integrate] five, six, or seven [new hires]. You can work with them to blend them in and give them personal attention. It is another thing when you have two [large] groups,” says Wellington. Gerard Goldstein of the former Goldstein & Manello firm agrees with Wellington’s assessment. Goldstein says that his old firm came to Schnader, because it wanted to join a bigger firm with more resources. The two sides had disparate cultures, he says. And Schnader’s management, he adds, never worked hard enough to achieve cultural harmony. The Goldstein group finally left en masse at the end of 2002. “They tried to accomplish too much,” says Goldstein of Schnader’s growth in 2000. Schnader has learned not only to go more slowly with future growth but also to pay attention, early in a partner search, to the “softer side” of the practice, such as whether there is a good cultural fit, says Wellington. “We spend more time discussing value-related issues in addition to [asking] how do the economics look,” he notes. “We are [now] filtering out some [candidates] even if they make economic sense.” And the firm is losing fewer partners, according to Wellington. Akin Gump has also learned valuable lessons the hard way. The firm lost 41 percent of the partners it hired between 1999 and 2003. Like Schnader, the firm has been plagued by larger-scale acquisitions. In 2000 the firm hired 11 partners from Green, Stewart, Farber & Anderson, a health care boutique. In 2004 all 11 partners left Akin for Gardner Carton & Douglas. Akin Gump whiffed again with its 2001 hiring of 15 partners from Los Angeles’s Troop Steuber Pasich Reddick & Tobey; only four of the Troop partners remain at the firm. The Green, Stewart acquisition was the victim of a change in strategy. Akin Gump hired the partners to help build a health care practice. But that later conflicted with another of Akin Gump’s strategies: focusing only on high-margin work. The clients that Akin inherited from Green, Stewart weren’t amenable to paying Akin’s increasingly lofty rate structure, says R. Bruce McLean, the chairman of Akin Gump. “[The Green, Stewart lawyers] wanted to keep their clients and move to a firm where the demands for high-value practices were not as high,” McLean says, noting that both sides mutually agreed to part ways. (The senior partners from the departing group did not return requests for comment.) McLean says that the firm has become smarter about hiring laterals that fit more clearly into the firm’s long-range plans. Three or four years ago, he says, the firm was more focused on breaking into new markets and hiring laterals with large and portable books of business. “The very first question would be how big a book of portable business does a lateral candidate have . . . and, secondly, how do they fit into what we are doing,” says McLean. Akin Gump is more attuned to building the practices in which the firm is already strong, and for which its clients are more than willing to pay full freight, according to McLean. “Now,” McLean adds, “the primary question [of a lateral prospect] is how do they fit into [the practices in which] we are already doing well.” With its Troop Steuber haul, Akin Gump learned the dangers of cherry-picking. The firm absorbed about half of Troop Steuber’s 120 lawyers at a time when Troop was falling apart ["Bad Moon Rising," May 2001]. Akin Gump was only interested in some of Troop Steuber’s assets, but it failed to realize that its selective hiring would destroy the cohesiveness of the group it inherited, says McLean. He adds: “You shouldn’t disassemble a firm without a clear eye as to what will happen to the internal synergies of the firm. We are now more sensitive to that.” A former Troop Steuber partner, who had a stopover at Akin Gump before moving to another firm, says that Akin also failed in assessing whether its local Los Angeles lawyers would welcome and work amicably with the new Troop lawyers. In fact, many of Akin Gump’s L.A. lawyers felt perpetually threatened by the prospect that Troop Steuber’s culture would come to dominate the L.A. office, says this lawyer, who spoke on background. “[Akin Gumps's management] forced this down the throat of the local guys and then assumed that everything would be okay after that.” McLean makes no bones about it: The Troop Steuber deal, he concedes, “was a mistake.” Duane Morris, in contrast with Schnader and Akin Gump, has been hurt more by smaller-scale acquisitions than large ones. Led by ambitious chairman Sheldon Bonovitz, Duane Morris has hired relentlessly in recent years, bringing on 138 partners between 1999 and 2003 ["Running in Place," March 2004]. Unfortunately for the firm, 38 percent of these partners are gone. Partner James Kutz, for example, left Duane Morris last year, just three years after he was hired from Eckert Seamans Cherin & Mellott to bolster Duane Morris’s Harrisburg, Pennsylvania, office. In a 2001 press release announcing the hire, Bonovitz said, “The expansion of the Harrisburg office is essential to our national growth.” Now Bonovitz says that Harrisburg is a drag on the firm’s national aspirations. “We have become a more national firm, with a different rate structure and different client base,” says Bonovitz. “Our Harrisburg practice doesn’t fit into that.” (Kutz did not return a call for comment.) With such zigs and zags, it is no wonder that Duane Morris has parted company with many recent hires. Bonovitz concedes that the firm has made some hiring mistakes; he even admits to having a higher tolerance for mistakes than other firm managers. It’s part of the entrepreneurial spirit that has allowed Duane Morris to double its head count and almost quadruple its gross revenue since 1997, Bonovitz proudly explains. “We take more risks in hiring. . . .We have some partners who will come out of industry without a big book of business. . . . We have partners who come in on a contract basis, year to year, to see if they work out.” Edward Dembitz is one of the lateral hires who didn’t work out. He left Dembitz & Associates in 2003 to help Duane Morris solidify its tax consulting practice. “I had thought Duane Morris would give me a broader base of clients,” says Dembitz. But he discovered, he says, that many corporate counsel did not perceive Duane Morris to be a tax power. So last year Dembitz moved to Burt, Maner, Miller & Staples, a Washington, D.C., tax boutique. From his new perch, Dembitz asserts that Duane Morris could have done a better job of bringing him into the firm fold. He likens his old firm to a “flea market where people rent tables. There was not a lot of collegiality going on.” Other lawyers have departed Duane Morris on better terms. Jason Massie, who left in 2004, two years after he was hired, says the firm did a good job of promoting his practice by flying him to Philadelphia at least three times a year to network with fellow partners. Still, Massie says that he decided to form his own Atlanta firm, Lewis & Massie, in part because he felt that he could attract more business if he low- ered his billing rates. “We have had terrific success in integrating [lateral hires] into the firm,” Bonovitz maintains. Still, Bonovitz concedes, the firm can and must do a better job of lateral hiring, especially considering the costs involved. “It takes a lot of time and effort to recruit [lateral partners],” he notes. “We invest $7 million annually on recruiting.” On top of that, he adds, lateral hires are usually unproductive until they learn the ropes of their new firm. “It usually takes four months of cost before a [new hire] makes any contribution,” says Bonovitz. Hogan & Hartson is the anti-Duane Morris. The firm added 139 partners between 1999 and 2003, and only 22 of the partners have moved on. The firm’s churn rate is less than half of Duane Morris’s rate. So what is Hogan doing right? For starters, the firm rigorously screens partner prospects. Each candidate is interviewed by 30-40 partners. (Bonovitz says that Duane Morris averages about 20 interviews.) Hogan prospects interview with practice group leaders, firm chairman J. Warren Gorrell, Jr., members of the firm’s executive committee, and Howard Flack, a corporate partner who spends most of his time overseeing lateral hiring. Says Flack: “Partner candidates . . . can’t believe that we can get so many people, day in and day out, to come to these interviews.” Prior to hiring a partner, the firm also develops a “preintegration” plan, which sets out a strategy as to how the firm and partner prospect can “cross-pollinate” their client lists, Flack notes. After a new hire comes on board, the real work begins. Hogan composes a team of practice group partners, senior management, and marketing staff to work with every hire on certain key objectives, such as adapting to a new culture and integrating clients. “To effectively integrate you need . . . to get [new hires] around to your offices,” says Flack. He notes, for example, that the firm recently flew one of its new German partners to its D.C. office for a week of meeting partners and firm clients. “Most lateral integration takes a year,” says Flack. And at the end of a year, Flack prepares a detailed report discussing whether the firm and its new partner are meeting each other’s expectations. “The firm devotes a lot of resources to this,” says Flack. So does Jones Day, which has lost 16 of the 135 partners it hired between 1999 and 2003. The firm’s 2003 acquisition of more than 20 partners from New York’s Pennie & Edmonds offers a window into why Jones Day has minimal turnover. The firm first made sure that every one of its Pennie hires had complementary, but distinctive, skills from those that the firm already possessed. For example, the firm hired a few Pennie lawyers who specialized in prosecuting patent applications for pharmaceutical and biotechnology firms. Jones Day did not have that sort of talent on staff and, even better, it had clients in need of these services, says Robert Kahrl, who is head of the firm’s intellectual property practice and who helped oversee the integration of Pennie lawyers. After spotting synergies like this, Jones Day did the necessary work of introducing its new Pennie lawyers to its existing clients. That has opened up new avenues of work, Kahrl says, and it also helped stave off a potential stumbling block: conflicts. Jones Day was sensitive to the fact, says Kahrl, that the Pennie lawyers might have to turn away work from their old clients because the work would pose conflicts with Jones Day’s existing clients. To compensate for that loss, he says, the firm has been quick to prove to Pennie lawyers that they will get plenty of work from Jones Day’s long-standing clients. “We try to give laterals confidence that we’ll provide them with a strong client base for their talents,” Kahrl says. The firm also took a less obvious step to help ease integration: It shuffled its New York offices so that the new Pennie lawyers would be interspersed throughout the office, not seated together in one Pennie block. The shuffling was expensive, Kahrl says, but it has promoted collegiality. “You don’t want everyone from Pennie to feel that all of their friends are ex-Pennie types,” he says. James Markey, a patent lawyer who made the move from Pennie to Jones Day, says the transition has been seemless. Most of his clients made the move with him, and he says he is busy now servicing their work. But the flip side, he says, is that he has been so busy on his old docket that he has not capitalized on any new synergies: He hasn’t met any of Jones Day’s clients or worked with any of his new partners. Besides having changed office locations, he says, all is pretty much as it was. And that is not necessarily a bad thing, considering all of the potential difficulties that can accompany a change of firms. With only two of the 26 Pennie hires having departed, Andrew Kramer, Jones Day’s head of business development, declares the acquisition a success. “We have worked very hard at it,” he says. Each law firm screens and integrates its lateral hires in a unique fashion. But the low-churn firms all seem to share a determination to hold on to their recent hires. Janice Hartman, who oversees lateral hiring at Kirkpatrick & Lockhart Nicholson Graham, says that some firms will hire a large practice group with the expectation that many partners in the group will eventually matriculate. “It appears to me that [some firms] don’t care that much whether people drop off,” says Hartman. “That seems crazy to me. Each person and each group is looked at extremely carefully . . . to make sure we don’t lose people.” Kirkpatrick lost 17 of the 90 partners it hired between 1999 and 2003 for a relatively low 18.8 percent churn rate. Partner attrition is not always a bad thing. Firms are sometimes only too happy to lose people. As Cesar Alvarez, the chief executive of Greenberg Traurig, explains, the tough-minded manager must encourage underperforming partners to leave. Presumably, though, no firm wants to lose a partner that the firm has just bent over backward to recruit. It is far better to be tough-minded before hiring a partner in the first place. Churn is not only costly, it is disruptive to staff relations. It becomes hard to cross-sell when you are not sure if your new partner will remain at the firm long-term, says Hartman. “What is the purpose of being a firm with a national platform,” she asks, “if you see people leaving as quickly as they are coming in?” E-mail: [email protected] . ARRIVALS/DEPARTURES: THE CHARTS Methodology The 2005 American Lawyer Lateral Report covers partner moves in and out of The Am Law 200 from October 1, 2003, to September 30, 2004. We tracked a total of 2,081 moves this year. We count firm-to-firm moves if a lawyer was a partner in both the old and new positions. We also count moves in and out of The Am Law 200 if a partner left for a legal job in business, government, or academia, or joined as a partner from one of those fields. Lateral moves are counted when one firm acquires another, but not when two firms merge and combine their names. Where a name change did occur during the survey period, all the moves not resulting from the merger are combined on our charts under the new firm name. Moves will only be counted once, so if a partner initiated a move in September 2004 but did not start the new position until October, the move will be counted in this year’s data but not next year’s.Submit lateral partner moves to [email protected]. -Research by Chlo� Gladstone and Tom Broucksou Top Gainers Firms that attracted the most laterals in the year ending Sept. 30, 2004. Biggest Losses Firms that lost the most partners. Serial Movers Partners who have moved at least three times in the past five years. Practice Areas When They Moved

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.