Anne Pitter practiced with the same group of corporate attorneys for 15 years. They stayed together even as the name on the door changed: Baer Marks & Upham merged into Brown Raysman Millstein Felder & Steiner, and Brown Raysman merged into Thelen Reid Brown Raysman & Steiner. But when Thelen fell apart last fall, Pitter was on her own.
In the month after Thelen’s dissolution vote in late October, Pitter met with close to a dozen firms, about half comparable in size to 500-lawyer Thelen. With large firms struggling to drum up enough work to keep their own lawyers busy, Pitter says, most weren’t willing to hire a partner like her who primarily provided service to other partners’ clients. Recruiters told her big firms weren’t interested in anyone with less than $1 million in portable business. When she couldn’t promise those kinds of numbers, some headhunters simply stopped returning her phone calls.
“It was apparent that a bigger firm–which is the environment I was used to practicing in–was not going to be as interested in me as I was in them,” Pitter says.
In a year when some law firms have been paring their ranks and others have dissolved completely, Pitter was part of the glut of talented lawyers looking for a new work home. In May, Sonnenschein Nath & Rosenthal let six partners go as part of larger lawyer and staff cuts. In October, Jenner & Block management told The National Law Journal that the firm had recently cut ten partners. Add to those numbers the partners pushed out less publicly at other firms and the 200-plus equity partners from dissolving firms like Heller Ehrman and Thelen, and it’s clear that not everybody who ended up on the lateral market this year intended to be there. Call them accidental laterals.
With so many lawyers job-hunting–and not by choice–the tenor of their experience was markedly different than that of the typical lateral itching to find a new home. Accidental laterals often crammed searches that typically take months into just weeks. And since it was public knowledge that Heller and Thelen lawyers were looking for a new home, more firms competed for the attention of partners with portable business than would be expected in normal circumstances. To the end, many believed they wouldn’t have to move at all. “We were the guys who stayed on and hoped that we would be able to pull it through,” says former Thelen corporate partner Stanley Bloch, who ultimately moved to Seyfarth Shaw in November.
What can firms and tomorrow’s accidental laterals learn from this past year? On the recruiting side, the advice boils down to a maddening bromide: Move quickly-but not too quickly! Unwieldy recruitment processes have to be expedited to accommodate client and new partner needs, say former Heller and Thelen partners who have just gone through the process. “For the firms that see an opportunity and want to capitalize on it, it’s necessary to put aside all the rules and just be there,” says former Heller IP cochair M. Patricia Thayer, who moved to Orrick, Herrington & Sutcliffe in October.
Yet recruiters and some partners urge firms not to skip “cultural” and practice filtering that occurs during standard lateral courtships. Shotgun lateral acquisitions can lead to failures. “You will find a lot of ex-Brobeckians at their second and third firms now,” says Major, Lindsey & Africa’s Dan Hatch.
For partners who need to move, the primary lesson is to be clear-eyed about what they can bring with them. In a down economy, big-firm partners who don’t have big packets of portable business will need to look at midsize and boutique firms. After a month of searching, former Thelen partner Pitter joined 30-lawyer Hartman & Craven in New York. “For a small firm it has very diverse practice groups. . . . It can offer the tax, the trust and estates, the corporate, the real estate, and the litigation,” she says. There is life outside The Am Law 100.
Undoubtedly, in 2009 more lawyers will end up on the market who had no intention of being there, starting with the 75 Thacher Proffitt & Wood attorneys who didn’t get the life preserver from Sonnenschein. “Let’s be very clear, we are now in a time where the shake-out hasn’t happened yet,” says San Diego-based recruiter Michael Patrick. Echoes Pitter: “It’s going to get harder before it’s going to get easier.”
FOR FIRMS WILLING TO MOVE QUICKLY, many accidental laterals-especially those from dissolving firms-have inherently attractive qualities. For one, there’s no need to play amateur psychotherapist: The motives for moving are clear and compelling. “These are unique opportunities,” says Thomas Fitzgerald, managing partner of Winston & Strawn, a firm that picked up eight partners from Heller and 13 from Thelen. “[These moves] obviously involve very good lawyers who had no interest in looking,” he adds. Says Jones Day partner Joe Sims: “We got some people who we might not have gotten to talk to us but for the fact that they didn’t have a choice. They had to talk to somebody.” Jones Day picked up 20 Heller partners across the firm’s New York, Washington, D.C., and San Francisco offices.
To do so, the firm bent the rules a little: In a couple of cases, since managing partner Stephen Brogan was out of the country at the time, Jones Day made an exception to its long-standing practice of having candidates meet Brogan so that he could make the final decision on their hire.
Jones Day wasn’t the only firm that made accommodations to bring new partners aboard. At Orrick, laterals typically go through a vetting process that culminates in what partners call the “fishbowl,” where a recruit spends time on either coast meeting with upward of 100 partners over a couple of days [ see The Art of Retaining Laterals, February 2008]. Although former Heller chairs Robert Rosenfeld and Barry Levin asked to go through the fishbowl process because they thought it would be a good way to get to know Orrick, most of the 30 Heller partners whom Orrick hired did not.
San Francisco partner Mark Levie helped coordinate the work of 40-plus partners who had a hand in the recruitment process, including a handful of former Heller partners whom Orrick had previously recruited. Although bicoastal interviews were an impossibility, Orrick partners still drafted memos identifying the potential laterals’ strategic fit and projected financial performance at Orrick. “We had a selectively strong appetite,” Levie says. “Still, we couldn’t accommodate everything [the former Heller partners] wanted us to do.” Levie notes that Orrick was cautious about bringing on Heller associates:It hired 27 former Heller associates, slightly fewer than the number of partners it took on.
The opportunity for a mass hire is a warning signal to many firms. These accidental laterals, after all, provide vivid evidence that bad things can happen even to good firms. “There’s no more stark reminder of the dangers of growth than talking to these people and watching them face what they have faced,” says Lorie Almon, co-managing partner of Seyfarth Shaw’s New York office. In the weeks after the Thelen partnership voted in late October to dissolve, Seyfarth partners met with about 35 Thelen lawyers. Seyfarth was an attractive refuge: financially conservative and free of long-term debt. That prudence led Seyfarth to make offers to about half the partners interviewed, says Almon. Eventually 15 Thelen attorneys joined Seyfarth, including eight who came as partners.
Firms that had previously identified needs in a specific practice or location were willing to take on entire groups of lateral hires. At a partner retreat last spring, Howrey partners looked to expected growth in the energy and infrastructure sectors and targeted construction litigation as an area for lateral hiring. When Thelen’s high-profile construction litigation group came onto the market, Howrey acted fast. “We saw, we sought, and everything came together in about 45 days,” says James Martin, Howrey’s chief recruiting officer.
Martin, a former legal recruiter, calls the term “lateral” a misnomer. If someone is on the move, he or she should be looking to move upward instead of sideways, he says. “If they did $30 million in business a year where they were, in 18 months we think they can do $40 million here,” he says of the 43-lawyer Thelen construction group.
ACCIDENTAL LATERALS talk about stability with a zeal that most recruits reserve for profitability. Recruiter Michael Patrick says that, during the recruitment process, many have “an almost fetishistic absorption into really digging deep about management” and firm finances. After the experience of practicing in an atmosphere of swirling rumors and endless headhunter phone calls, these laterals often say they’re looking for a place where they can just focus on providing service to their clients without distraction.
The first time that Daniel Porter and three of his partners changed firms in 2008, there was nothing accidental about their move, and stability was far down their list of priorities. Porter and company, then at Vinson & Elkins, represent foreign importers in tariff and unfair trade disputes in the United States. Looking to move, they focused on how their practice might fit into other firms’ global strategy. After searching about four months, they moved to Heller in April. “We thought we’d found our place. We thought we’d be there forever,” Porter says. Firm finances were a secondary concern, he says: “It never crossed our mind that we’d have to be concerned with a big law firm going under.”
After Heller dissolved, that mind-set changed. Last fall, when Porter and his colleagues started looking for a new home for the second time in a year, they asked new questions, about things like firm finances and long-term debt. “The financial end of things became much more important this time,” Porter says. “You try not to make the same mistake twice.” With a handful of competing offers on the table, Porter and his former V&E partners moved to Winston & Strawn in early November along with lawyers from Heller’s offices in Shanghai, Beijing, and Hong Kong. The fact that Winston & Strawn didn’t have long-term debt was “very important,” Porter says.
Just as some partners are drawn to financial stability, others seek to keep groups of their partners together to preserve their practices. Rather than look for the best deal for herself, Patricia Thayer, Heller’s cohead of IP litigation, led an effort to find a place for her entire group. Although 16 Heller IP partners decamped for Covington & Bur- ling on October 1, prompting banks to call in the firm’s loans, more than 40 IP lawyers remained spread across the firm’s offices in California, New York, Seattle, and Madison, Wisconsin. Thayer and many of her partners at first hoped they could move as a unit. “You can’t practice together in a very, very coordinated and integrated way without forming enormous personal bonds,” Thayer says. Staying together seemed a reasonable goal, especially with the market for IP talent being so competitive.
After the firm’s dissolution vote in late September, Thayer’s phone began to ring almost nonstop. She got a string of calls from recruiters, friends at other firms, and clients-but says she largely ignored the recruiters, because she thought she could manage the move through her own contacts. About a dozen firms expressed serious interest and began initial discussions. But while Thayer looked for a place to land collectively, individual partners and groups also explored their own options.
Within a couple of weeks, it was apparent to the partners that no single firm could take on the geographical spread and technology mix of the entire Heller IP team, let alone deal with the client conflicts. Although the IP lawyers could not stay together, most moved in groups. The Madison office even auctioned itself off to Perkins Coie, office furniture and all [see Going Once, Going Twice . . . , December 2008]. Thayer and a dozen IP partners and associates in the San Francisco, Seattle, and Menlo Park, California, offices ended up at Orrick, while others landed at firms such as Perkins Coie that were part of the initial discussions.
“There’s enormous sadness in having to separate from some of my colleagues,” Thayer says. “I trust that I’ve made a great choice here, but I’ve been here for a [short time]. To say that I’ve lived happily ever after and here’s why would be premature at this point.”
SOME PARTNERS FORCED to make a move are opting out of big-firm life altogether. With rate pressures from clients ratcheting up in the economic downturn, small firms offer a structural advantage for partners who want to grow their business. Former Jenner & Block equity partner Tanya Stanish, like a half-dozen other ex-big firm partners contacted for this story, has found new work–and new contentment–at a smaller firm. Stanish’s move began with a knock on her office door last February.
“There was no prior warning. No signs. No heads-up,” Stanish says. At the door were two members of Jenner & Block’s management, coming to tell Stanish that the firm would not support her family law practice going forward. They said that the firm thought highly of Stanish’s skills and would give her time to find a new position–but that she should start looking.
After about ten years at Jenner providing matrimonial and custodial advice to firm clients and prominent Chicagoans, Stanish says it was tough to think about leaving the firm. “At first when you’re given that kind of news, it seems kind of overwhelming and scary,” she says. Within a few weeks, though, she made contact with a Chicago firm that had a family law practice that she respected. Although a recruiter also got her interviews at another firm, in July she moved to the firm she had contacted on her own, 35-lawyer family law boutique Schiller DuCanto and Fleck.
Stanish’s rates at her new firm are about 20 percent lower than her rates at Jenner, so it’s been easier to pitch for new business. Although she has a lower billable hours requirement, she says her compensation is comparable. Since her new firm focuses on family law, she says, she has more access to paralegals and associates who have training in her practice area. “[Initially] it was rough, but I’m so happy where I am now,” Stanish says. “I’d like people to know what seems at first like an overwhelming situation can work out for the better.”
Stanish isn’t the only former big-firm partner who has gained new perspective after being shown the door. Says one partner who moved from a Chicago-based Am Law 100 firm to a midsize firm: “I’ve found here that people really enjoy practicing law with each other and are less concerned about how their partners are doing financially.” The partner, who asked to remain anonymous, moved last year after being asked to look for a new place to practice. His compensation fell 10-15 percent, but he says he has been able to find a better work/life balance. “This wound up being a blessing in disguise,” he says.
Some members of the Thelen and Heller diaspora also have found new homes at small firms. James Moak, an insurance and employment litigator, had serious discussions with about six firms, including three in The Am Law 200, after Thelen’s dissolution vote. He ended up joining the small Los Angeles firm Meserve, Mumper & Hughes, where he already knew a handful of the partners.
“I’ve been practicing for 30 years, and my kids are educated and married,” says Moak, 55. “I took this as an opportunity to do whatever the hell I wanted to do.” At Meserve Mumper, Moak says he has been able to approach clients he was forced to drop at Thelen because of conflicts and rate pressures. So far, he says, those clients have been receptive to sending work his way at his new firm.
Moak served on the hiring committee at Thelen, so he says he gave the lateral process some thought before his unplanned move. He says questions about compensation structure and strategic fit are easy to ask and answer, but it’s tougher to gauge how a lateral will mesh with the practice and the people at a particular firm. ” ‘Tell me why I’m going to like it here’ is a difficult question to get the straight answer to,” he says. Although Moak says he wishes he’d made the move to a smaller firm years earlier, he sums up a sentiment that many former Heller and Thelen lawyers echoed: “ Even if you’re unhappy in your big-firm environment, it’s painful to have to move on.”
Photograph by Michael Sexton
THE LATERAL REPORT
The Revolving Door: Top Gains
Jumping Ship: Biggest Losses
In-House: The Lateral Report
Personal Touch: Hunton & Williams’s Lateral Growth Spurt