Sean Casey, a partner at Walden Macht & Haran and a former assistant U.S. attorney at the Department of Justice, said the 40-lawyer New York City firm has average profits per partner in the Am Law 100 range despite its size.
In addition to all the traditional metrics, its compensation model rewards collaboration and collegiality. Bonuses bring the salaries of the highest-performing associates above New York market rates, he said.
“There is a popular misconception that because we are smaller than most brand-name firms we pay less in compensation. The reality is that we have developed our compensation formula to exceed the New York “market” total compensation for our highly functioning associates,” he said.
The conversation is part of the New York Law Journal’s continuing focus on midsize law firms.
Practice Areas: White-collar defense and investigations; securities and regulatory enforcement; complex commercial litigation; labor and employment litigation; corporate monitorships; good government and civil rights litigation; trusts and estates
Governance structure and compensation model: We have a managing partner and several committees responsible for overseeing various aspects of the firm’s business. We generally compensate our associates at or above total market compensation for the larger NY law firms. We recently launched a new benefits plan for all our employees, which includes a very generous parental leave program and contributions to their 401(k) plans.
Our partner compensation model is designed to reflect our core values of cooperation, sharing and collegiality. We created a complex formula that considers obvious components, such as business generation, billable hours and tenure, while also rewarding the virtues of good citizenship and teamwork. In practice, our partners are generous with each other in sharing credit even when they did not attend the pitch or “originate” the matter. We believe our model rewards all forms of effort leading to the success of our firm. If ranked on the AM Law 100, we would be within the top 60 firms in terms of average profits per partner.
Q: Do you offer alternative fee arrangements?
A: Yes, as a small firm we have great flexibility to tailor our fee arrangements around the needs of the client. We have offered several different forms of fee arrangements depending on the nature of the matter, including working with various forms of flat-fee arrangements, blended rates and success fees in civil cases.
Q: What do you view as the two biggest opportunities for your firm, and what are the two biggest threats?
A: From the positive side, we are witnessing a change in the way clients select legal services. For a variety of reasons, corporate clients appear to be more focused on hiring the right lawyer for the job and breaking away from simply engaging the same “brand name” firm that historically provided all legal services to a client. This is a great opportunity for us. For litigation-based matters, our credentials and experience match and exceed our competitors. Potential clients recognize our success, which has led to a meaningful uptick in both the quality and quantity of matters incoming to our firm.
The second area of opportunity for us is in the acquisition of legal talent. As a rule at WMH, we push responsibility to our younger lawyers who have demonstrated an ability to produce an excellent work product. Regardless of class year, many of our young and talented associates have earned first-chair experience in criminal sentencings, contested hearings and meaningful depositions. Word seems to have spread about our model, resulting in an abundance of high-quality applicants interested in joining our team.
Possibly the single biggest threat to our firm is cybersecurity. Maintaining an absolutely secure environment where our teams can work on privileged documents is more essential now than at any other time in my career. We are laser focused on this challenge and have made heavy investments to mitigate the risk. The sensitive nature of our work and the potential for unauthorized access demands the absolute highest level of cybersecurity. Being proactive about recognizing, and addressing, potential security threats is critical for a law firm of our size and focus.
Q: The legal market is so competitive now—what trends do you see, and has anything, including alternative service providers, altered your approach? Is your chief competition other mid-market firms, or is your firm competing against big firms for the same work?
A: The primary trend we see is that corporate clients crave value for their legal spend. Corporate clients have been challenging big firms to streamline legal budgets and are no longer willing to pay seven lawyers to do the work of three. General counsels are increasingly concerned about what they have paid big firms in the past and are eager to avoid making the same mistake in the future. Client focus on budgets has benefited WMH. We have always staffed our matters to deliver the best possible results within a budget that allows the client to be pleased with both the outcome and the final invoice.
Our competition for cases varies from matter to matter, but the trend is that we are now vying for cases against much larger firms. We have almost 40 lawyers and several non-lawyer professionals on our team. This enables us to compete for any engagement, from discrete investigations to bet-the-company litigation and monitorships. Our growth strategy has mutually benefited our firm and clients. In addition to our traditional litigation matters, we have served in meaningful leadership roles on several court-ordered monitorships and were recently appointed to serve as special counsel to New Jersey Gov. Phil Murphy’s task force examining tax incentive programs offered by the state’s Economic Development Authority.
Q: There is much debate about how law firms can foster the next generation of legal talent. What advantages and disadvantages do midsize firms have in attracting and retaining young lawyers, particularly millennials?
A: We have seen a substantial change in the recruiting environment for new talent over the past few years. This includes a steady stream of exceptional resumes flowing into our firm. We are fortunate to be sought out by several candidates completing multiple federal clerkships or departing larger firms searching for something better for their careers. We think this is because our firm offers something very different than the traditional big firm experience.
We function more like a U.S. Attorney’s Office than a traditional law firm, and we affirmatively seek to secure meaningful experiences for associates that can handle the challenge. We do not subscribe to the model where associates are categorized by their class years like steps on a ladder. We do not have third-years reporting to fifth-years and then up to a senior counsel or partner. Instead, we have assembled a team of lawyers who operate and collaborate together. Our associates expect to be treated as lawyers—not as pure subordinates—and we expect them to create the highest quality work-product regardless of how many years it has been since they graduated law school. We provide substantial real-time training and feedback and find it to be an extremely effective way to develop young talent and deliver great results for our clients.
There is a popular misconception that because we are smaller than most brand-name firms we pay less in compensation. The reality is that we have developed our compensation formula to exceed the New York “market” total compensation for our highly functioning associates. We pay competitive salaries and use our bonuses to bring our top performing associates to a compensation level above market. Most others are paid at or near market. When you combine this compensation model with our best-in-class benefits, such as generous medical and retirement plan contributions, most of our associates exceed market compensation.
Q: Does your firm employ any non-lawyer professionals in high-level positions (e.g. COO, business development officer, chief strategy officer, etc.)? If so, why is it advantageous to have a non-lawyer in that role? If not, have you considered hiring any?
A: We have a number of non-lawyers in leadership roles including recruiting, operations and business development. The responsibility for running the administrative, marketing and business development functions of a firm of our size is several different full-time jobs. These important tasks need to be managed by professionals that have the interest, experience and time to focus on administrative issues every day.
We have been very fortunate to find and retain real talent to fill several important functions at our firm. Early in the firm’s history, we had a paralegal, Aaron Whiteman, who exhibited a genuine interest in the business side of the firm. He was immensely talented and very organized. We offered him the opportunity to run some of the administrative functions of the firm. His role has grown and evolved significantly since that time. Aaron is now our director of operations and plays an indispensable role in the success of WMH.
Q: What would you say is the most innovative thing your firm has done recently, whether it be technology advancements, internal operations, how you work with clients, etc.?
A: We take a very innovative and progressive approach to training, firm management and internal competition that can be directly credited to our growth and efficiency. Our junior associates are trained and mentored in a way that is consistent with how things would work at a US Attorney’s Office. This includes providing associates with opportunities to be on their feet, take depositions and handle oral arguments with appropriate supervision.
From a management standpoint, we reach consensus as a democratic partnership on thorny issues, including the creation of a compensation model that reflects our values. At the same time, we have taken a proactive approach to tamp down internal partner competition with fair rules on sharing originations and making certain that everyone’s voice is heard on the firm’s business. All of this adds up to a structure that is anchored in principles that have been established for the legal professional of tomorrow.
Q: Does your firm have a succession plan in place? If so, what challenges do you face in trying to execute that plan? If you don’t currently have a plan, is it an issue your firm is thinking about?
A: Jim Walden is our managing partner. He is responsible for running the firm, generating work and handling his cases, like the other current partners of the firm. Unfortunately, none of us are going to last forever so we must give thought to what comes next. Our succession plan is based on the collective goal to build a lasting and evolving partnership, rather than a group of lawyers circulating around a subset of important partners that will retire one day.
To build a firm that can last beyond the founders requires a deliberate process. This process starts with having real democracy at the firm where each partner has an equal vote and is required to take various leadership roles to gain experience. It also requires a resource investment to hire the right people and provide them with opportunities to develop in their profession, so that they can take over in the future. This includes development as legal professionals but also as business generators and commercially focused managers.