In a provocative new white paper, consultants Bruce MacEwen and Janet Stanton imagined the yearnings of “any large random number” of out-of-town managing partners trying to break into the lucrative New York law firm market:
“What we really need is a top drawer, high-end corporate and litigation practice in New York,” those too-numerous-to-count lawyers have concluded, according to MacEwen and Stanton, who work at Adam Smith Esq. in New York.
But for firms that follow those aspirations, the failure rate is “astronomical,” the two consultants write.
So why do so many keep trying?
“Just what exactly is it about the elite New York City legal market that makes it both so attractive and so tough to crack for non-indigenous firms?” Stanton and MacEwen ask.
The consultants present American Lawyer statistics showing that in the most recent Am Law 100 rankings, New York-based firms’ profits per partner were on average 192 percent higher than PPP for non-New York firms.
The names of those high-flying Wall Street firms have remained notably consistent during the past five decades, when the vast majority of Manhattan streets changed commercial occupants multiple times over. The consultants cite “a remarkable piece of cultural anthropology”: a 1957 ranking of New York law firms based on numbers of lawyers employed. Firms No. 1, 2 and 3 on the list? Shearman & Sterling, Cravath, Swaine & Moore, and White & Case.
Other industries would not produce an “elite pecking order” as stable, the consultants write. Only Latham & Watkins, Kirkland & Ellis, and Gibson, Dunn & Crutcher qualify as outsiders that meaningfully cracked the code of success in New York, they add.
Having established the city’s allure, the consultants’ main focus is warning aspirants what they should avoid in attempting to break into the New York market.
Firms shouldn’t assume they can buy dependable revenue sources by recruiting laterals from the elite New York firms, the consultants write, since clients of those firms have an institutional commitment to them and the lawyers at those firms don’t necessarily know how to develop new clients.
Of course, if you ask the non-New York law firm leaders themselves, they are quick to point to their own firms as proof that success in the city is possible.
Neal Manne, a co-managing partner of Houston’s Susman Godfrey, knows something about the challenge. His firm opened a New York office a decade ago—albeit focused on litigation, not the kinds of corporate work mainly fueling the consultants’ examples.
The consultants’ warnings have “little or no application to Susman Godfrey,” he wrote in an email after reading their piece.
“Their chart doesn’t even list us, and yet our New York office is wildly successful,” Manne wrote, adding that the office “is growing faster than any of our others, is making bundles of money, is (like our firm as a whole) doing more alternative fee work than ever before.”
But the firm is aligned with MacEwen and Stanton’s advice in at least one way: Susman “doesn’t hire laterals,” Manne wrote, instead opting to build up talent from within.
“We fill a niche there—perhaps precisely because all the other non-NYC firms there are trying to be Cravath,” Manne wrote. “We don’t want to be Cravath; we want to earn big fees by winning cases against Cravath’s clients.”