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Large Texas firms made fewer new partners this year, but more of them are women and more are minorities than in years past. Considering the uncertainty in the nation’s economy and the turmoil in Texas’ bedrock energy industry in the wake of Enron Corp.’s bankruptcy, it’s probably not too surprising that large Texas firms made fewer new partners as a whole in 2002 than in 2001. The decline isn’t major, about 9.8 percent, but it’s the second year in a row for the trend line to head down instead of up. This year, 120 lawyers at 18 of the largest firms in Texas made the jump from associate to partner or shareholder with the dawning of the new year. More than one in four of them are women and more than one in 10 are ethnic minorities. Last year, the same group of firms made 133 new partners. The new partners work at 18 of the 25 firms on Texas Lawyer‘s 2001 report on firm finance, which includes the 25 firms that grossed the most in 2000. Six of the firms hadn’t selected their new partners by press time on Jan. 24, and two of the firms, Andrews & Kurth and Mayor, Day, Caldwell & Keeton, merged in October 2001. Houston firm consultant William C. Cobb says he expects partner promotions to be flat this year as firms balance the affects the economy has had on the bottom line with the need to maintain a valuable associate workforce. “Senior associates are so darn important to the revenues and to many of the clients of the firm,” Cobb says. “If I were a managing partner and I had 30 people out there who should be made partner, I’m kind of afraid to play the game of ‘I’m going to pick 20 and tell 10 they have to wait another year.’” Cobb says that strategy creates tension within the firm. It also could make those senior associates look elsewhere for employment. Cobb says that even if firm management is thinking about downsizing through layoffs or attrition, it doesn’t necessarily follow that the firm would put a crimp on partner promotions. He says partners may feel a need to retain lawyers who have put a lot of “sweat equity” into the firm. Plus, he suggests the senior associates and junior partners tend to be the lawyers contributing the most relative profit to the firm. While those factors may have been in the thought processes of the internal committees that make new partner recommendations, lawyers in management at four firms say their new partner classes are simply a direct reflection of the size of the candidate classes. “There’s nothing magical to it. We don’t do things around here based on numbers, or statistics, or leverage or things like that. We do things on merit — whether somebody meets the qualifications,” says Thomas Helfand, chief operations officer at Winstead Sechrest & Minick. ELIGIBILITY AN ISSUE There’s no dramatic trend to the partnership promotions, with seven of the 18 firms making more partners than in the previous year, nine of the firms making fewer new partners and two firms making the same number. Some of the year-to-year fluctuations are large, though, with Dallas-based firms Strasburger & Price and Winstead Sechrest & Minick, along with Weil, Gotshal & Manges, which has offices in Houston and Dallas, making many more partners in 2002 than in 2001. On the flip side, Kelly, Hart & Hallman of Fort Worth and Locke Liddell & Sapp, which is based in Dallas and Houston, promoted many fewer associates to partner. Howrey Simon Arnold & White didn’t make any new partners in its Houston office in 2002, compared to five the previous year. The economy may be less of a factor in the numbers of new partners than the specific needs of practice groups within the firm and the size of the eligible pool of associates. “We just had more eligible this year, more new candidates, and this was really an exceptional class,” says Kirk Sniff, managing partner of Strasburger & Price. The firm made 10 new partners in 2002, compared to four in 2001. But Sniff says the firm also grew in 2001 by about 50 lawyers, with three of the new partners coming from the associate ranks of Griggs & Harrison, which combined with Strasburger in 2001. Locke Liddell made four new partners in 2002, compared to 14 in 2001. Bryan Goolsby, the firm’s managing partner, says the decline was simply a reflection of the group of lawyers up for partner. “We had the same percentage of the class make it this year as last year. It was just a smaller class. We [will] have a bigger class next year,” Goolsby says. He adds that the firm typically promotes 75 to 80 percent of the associates up for partner each year. Goolsby says the class was much smaller this time around because a number of senior-level associates left for dot-com and in-house opportunities during the late 1990s. Thomas Miller, the partner in charge in Houston for Howrey Simon, says the firm made no new partners in Houston in 2002 because no associates were up for partner. The firm’s track is 7.5 years long; no associates in the office met that seniority requirement. But the firm made five new partners in Houston in 2001, including one who was promoted a year early. And Miller says one of the firm’s new partners in 2002 started out in the Houston office but moved to the Menlo Park, Calif., office. Women, who make up more than half of law school graduates, are making more inroads into the partnership ranks of the large Texas firms. The new partners at the 18 firms — which include 15 Texas firms and the Texas offices of Brobeck, Phleger & Harrison, Jones, Day, Reavis & Pogue and Weil Gotshal — include 31 women. That’s 25.8 percent of the 120 new partners and shareholders, an impressive improvement over the 20.3 percent of the total promoted in 2001. The partnership ranks also are slowly becoming more diverse. In 2002, 13 of 120 (10.8 percent) of the new partners are members of ethnic minorities, according to statistics reported by the firms. In 2001, it was 10 of 128 new partners, or 7.8 percent of the total, and in 2002, it was only three of 117 partners, 2.6 percent of the total. WHAT ABOUT RAINMAKERS? So what do firms look for in deciding which associates to promote to partner? “It may be like the old statement, ‘You know it when you see it,’ ” Sniff says. “ It’s just people who are high-quality lawyers and high-quality people.” Sniff says rainmaking potential is certainly one factor but not the only factor. Helfand says rainmaking isn’t a factor when associates are up for promotion to income shareholder at Winstead, but it is a factor when they are considered for promotion to equity shareholder. And he says the firm considers rainmaking broadly; it’s not only the ability to bring in business but also the ability to nurture and develop good relationships with clients. Some of the lawyers promoted to income shareholder at Winstead never may do well at rainmaking, Helfand says, but that doesn’t harm their prospects for becoming an income shareholder. Goolsby says new partners at Locke Liddell need to have the potential to make rain, but he suggests that’s nothing new. “It’s a people business at the end of the day. You want people in the partnership who have a rapport not only with the colleagues but clients,” he says. Litigation was the single biggest route to partnership at the 18 firms. Of the 120 new partners, 49 of them do litigation or appellate work, 40.8 percent of the total. That’s up significantly from the 35 percent of the total in 2001. In 2002, 16 of the new partners do corporate and securities work, for 13.3 percent of the total. In 2001, transactional lawyers comprised 21.8 percent of the new partners, according to statistics Texas Lawyer compiled a year ago. The shift to relatively more litigation partners at the apparent expense of transactional lawyers could be a reflection of the business cycle, which values trial lawyers in a downtime and transactional lawyers when the economy is booming. Other relatively hot practice areas for new partners in 2002 include labor, tax and real estate, along with intellectual property, international and environmental. Four of the group of 2002 partners do bankruptcy and restructuring work, for 3.3 percent of the total. But the prospects of that area providing a greater share of new partners in 2003 is a distinct possibility since Enron’s bankruptcy, the largest ever in U.S. history, is providing work for many Texas firms. Related charts: Texas New Partners 2002 Texas New Partners’ Practice Areas

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