Jeffrey Stone, left, and Peter Sacripanti, right. (Courtesy photos)
A crowded field is vying for the top management spot at McDermott, Will & Emery. Five partners from as many offices are seeking to be the firm’s next chairman in an election scheduled to be held Thursday.
In June, Jeffrey Stone and Peter Sacripanti, who have led McDermott for eight years as co-chairmen, abruptly announced that they would step down at the end of this year. Three months earlier, the two litigation partners had been elected to another one-year term and had unveiled a new five-year strategic plan. “We thought it was an appropriate time to make a transition,” Stone said at the time. “We have a deep bench of people to step up on the leadership ranks.”
The most obvious challenge for the new leader will be improving McDermott’s financial results. Last year, McDermott’s revenue declined by 0.9 percent, to $891.5 million; its revenue still sits significantly below prerecession levels, when it peaked at $978 million in 2007. Revenue per lawyer at the Chicago-based firm inched up 1.1 percent last year, to $910,000, and profits per equity partner rose 3.3 percent, to $1.58 million.
The five candidates have been traveling to nearly all of the firm’s 20 offices, including 10 overseas outposts, to meet with partners and explain their vision for the firm. Thursday’s vote will be cast by the 21 partners who sit on the firm’s management committee, and a majority vote is needed to win. (Technically, the position is chairman of the management committee.) The voting is anonymous, and committee members aren’t told the tallies of each vote, only whether a majority has been reached.
The five partners are:
· Ira Coleman, who runs the firm’s Miami office and heads the corporate and transactional practice group. His practice is focused on health care and private equity.
· Sarah Chapin Columbia, who is based in Boston and heads the firm’s intellectual property practice.
· Lazar Raynal, a Chicago-based partner who took over leadership of the firm’s litigation group from Stone.
· David Rogers, a Washington, D.C., partner who heads the firm’s employee benefits, compensation, labor and employment practice group and recently was co-head of the D.C. office.
· David Taub, a New York partner who heads the financial institutions group in New York.
Other major firms have held contested elections in recent years. Four candidates ran for the top post at Baker & McKenzie this year. Two years ago, three partners competed to succeed Robert Dell, who had served as Latham & Watkins’ chairman for 20 years. At Orrick, Herrington & Sutcliffe, four partners vied to follow longtime chairman Ralph Baxter in a 2012 election.
End of an Era
McDermott has been one of the relatively few big firms to be run by two chairmen. This time around, none of the current candidates is looking to share leadership.
Co-chairs are more common in the wake of firm mergers, such as when Wilmer, Cutler & Pickering combined with Hale and Dorr and the two firm leaders shared the chairman’s post. Consultant Bradford Hildebrandt said that joint leadership can work, but there are pitfalls. “Defining the roles is absolutely essential,” he said, speaking about the topic generally and not specifically about McDermott. “It can be a problem if the roles are not defined or people are elected who have different views or philosophies.”
Another consultant views the sharing of the top job more skeptically. “It’s hard to justify over the long run under almost any circumstances,” said Bruce MacEwen of Adam Smith Esq., who was also speaking generally. “Not only may it imply a lack of cohesiveness and direction within the firm, but it invites partners on the losing side of decisions to try appealing to the [leader] they view as more sympathetic. It’s kind of like kids, where daddy imposes punishment, and they appeal to mommy.”
During Stone and Sacripanti’s tenure, the firm toyed with different compensation models for partners and associates before abandoning the experiments last year. For partners, a portion of compensation was linked to their practice group’s performance, in an effort to get people to work more collaboratively. “We felt it was not changing behavior,” Stone said in June. “We had the courage to back away from it.”
For associates, the firm lowered base compensation below the industry norm for big firms, but committed to pay higher bonuses to top-performing associates. This ended up creating challenges for recruiting, Stone said. “The experiment was not well received,” he said.
Last year the firm also asked for more capital from partners. Stone said the capital call—a 15 percent increase to be paid over three years—was announced after management determined that McDermott was significantly less capitalized than its peers. Stone added that the firm doesn’t borrow money and has no debt.
This year the firm has made a number of significant lateral hires, including private equity partner Robert Goldstein from Schulte, Roth & Zabel; Rebecca Martin, who was co-chief of the civil frauds unit and health care fraud coordinator at the Southern District U.S. attorney’s office; and executive compensation specialist Steven Eckhaus, from Cadwalader, Wickersham & Taft.
An earlier version of this story incorrectly reported that the McDermott election would be held Wednesday. The vote is scheduled for Thursday. We regret the error.