Mayer Brown has lost at least 15 partners since August, including the co-head of its global restructuring, bankruptcy and insolvency group, as the firm prepares to report a double-digit percentage drop in 2008 profits.
Significant partners have been leaving the Chicago firm since 2007, when new management took the helm. But the recent departures come as the firm ended merger talks with now-defunct Heller Ehrman and laid off 33 U.S. lawyers.
Several former partners said general worsening economic conditions and a lack of communication between management and other partners led to the recent departures. Some partners, speaking on condition of anonymity, said Mayer Brown’s 2008 profits are anticipated to be down by 25%, but firm Chairman Jim Holzhauer said that he expected profits would slide only by 12%. “Being down 12% in this economy is something that isn’t that hard to take,” he said.
Since 2007, when Holzhauer took over management of the firm, along with Vice Chairman Kenneth Geller and partner Paul Maher, dozens of partners have left. In recent months, the departures have become more systematic, said one former partner, who spoke on condition of anonymity.
In August, Raniero D’Aversa Jr., co-chairman of Mayer Brown’s global restructuring, bankruptcy and insolvency group, joined Orrick, Herrington & Sutcliffe in Orrick’s New York office. D’Aversa declined to comment. That same month, two other partners left in Chicago and Palo Alto, Calif.
In September and October, two partners in New York and one in Chicago left.
Kathleen Walsh and Andrea Schwartzman, former partners specializing in private investment funds, joined the New York office of Latham & Watkins in November. A third partner, Alan Van Dyke, joined Latham’s Chicago office.
None returned calls.
Last month, two partners in Washington left. And this month, three partners specializing in white-collar criminal defense — Bryan Daly, Charles Kreindler and Peter Morris, all of whom joined Mayer Brown’s Los Angeles office at the start of last year — left for Los Angeles-based Sheppard, Mullin, Richter & Hampton. Daly said their departures had to do with client conflicts.
Michael Molano, an intellectual property partner who left the Palo Alto office this month, said he joined Sheppard Mullin because Mayer Brown’s intellectual property practice struggled to grow. “After five years there, in my view, it just hadn’t gotten to a critical mass that could support continued growth in IP,” he said.
Holzhauer attributed the recent departures to partners being asked to leave, retirements and normal attrition.
But financial uncertainties played a role in some departures, said former partners who spoke on condition of anonymity.
In 2007, the firm reported profits of $1.24 million per partner, up from $1.14 million the prior year. But last November, the firm laid off 33 lawyers in the United States and 11 lawyers in London, plus an unspecified number of staff members.
Profit declines in 2008 are to be expected at firms like Mayer Brown, which has a structured finance practice. This month, Cadwalader, Wickersham & Taft of New York reported that its profits per partner fell by 30%, and Orrick revealed a 21% drop.
Failure to communicate?
But some partners said people have lost confidence in Mayer Brown’s management, which also includes a policy and planning committee. For instance, merger talks with Heller and the layoffs came as a bit of a surprise to those outside management, one former partner said, and “there are some reactions and consequences of not communicating well internally.”
Holzhauer said merger talks with Heller and the layoffs had to remain confidential, but he admitted that the geographic spread of the firm’s offices has raised some communication challenges.