Citigroup Private Bank, one of the country’s leading law firm lenders, used to pay close attention to a metric that it called “partner defections.” Stability in a firm’s partnership was considered a hallmark of success, says Danilo DiPietro, client head of the bank’s law firm group. High rates of partner departures, he adds, were “an absolute red flag.”
That is no longer the case. Partnership in The Am Law 100 has become a fluid concept, with such firms as Cadwalader, Wickersham & Taft; Mayer, Brown, Rowe & Maw; and Sonnenschein Nath & Rosenthal unabashedly pursuing growth strategies that entail orchestrated exits of partners who are deemed to be underperformers. Conventional wisdom has changed so much that almost without exception, legal consultants encourage their clients to prune partners who don’t fit the firm’s market segment. Firms can make good money doing work at either end of the spectrum, they say, but not at both. And because different kinds of work demand different cost structures and leverage, it doesn’t make sense for a firm that bears the expense of high-end capabilities to waste those resources on low-revenue projects. The new paradigm calls for firms to build core practice areas and shed those with low margins; to monitor partner productivity; and to achieve a single rate structure. The inevitable consequence is partner departures — whether firms explicitly ask lawyers to leave or partners simply decide to go where they are more highly valued. Three years ago, Citigroup even changed its terminology. The bank now makes note of “partner departures,” not “defections.” Says DiPietro: “It [is] still something to track, but it [isn't] immediately seen as a bad thing.”
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