“It’s going to be death by a thousand cuts if people keep leaving at this rate.”
One former Ropes & Gray partner does not mince his words when reflecting on the rate of departures that the Boston-based Am Law 100 firm has seen so far this year.
Over the last two months, seven partners have left the firm across four offices worldwide, with a total of 18 heading for the exit door since January; 19 if you count London co-founder Maurice Allen, who stepped down from the partnership last year but only left the firm at the end of February.
In addition to Allen, seven of the departures have been in London, with investment funds partner Monica Gogna joining Dechert this month. Two of her former fellow London partners are now at Kirkland & Ellis, with another two at King & Spalding, as well as one a piece at Linklaters and White & Case. Allen is now a consultant at DLA Piper, and Ropes & Gray’s London office now consists of 27 partners.
As with most partner exits, the departing partners fall into two camps—those the firm is not that sorry to see go, and those it would much rather have kept.
While partners inside Ropes & Gray suggest none of those leaving were actively asked to leave, its infamous “black box” partner compensation system—which means that in theory no one knows what anyone else is being paid—makes it relatively easy for management to encourage people toward the door by docking pay in their annual review.
Partners who were disappointed with their compensation this year “got the message they were meant to get,” said one current London partner at the firm.
He added: “A couple of people were surprises to lose. For the most part though, they came to a decision based on the message from the firm. Some people aren’t making enough money.”
Some exits, however, are more likely to cause pain; such as the mass defections to U.S. rival Kirkland, which has been the biggest beneficiary of the departures after picking up six partners in one month, including a five-partner enforcement team that left last month from its offices in Chicago, Hong Kong, London and New York.
Kirkland returned to Ropes & Gray two weeks ago for London funds partner Anand Damodaran, who is described by one former Ropes & Gray partner as “a big loss.”
A current Ropes & Gray partner concedes that Damodaran’s exit is “difficult from a business perspective.”
But what is driving exits such as these?
Former partners argue that regardless of office, there is an issue around communication and sometimes the implementation of strategy at Ropes & Gray.
“The firm is managed pretty opaquely,” said one former London partner. “It was hard to figure how decisions were being made and how you got heard. It got to the point where I got frustrated about what the London plan was; what the strategy was.”
Another former London partner added: “There was an issue around communication and this left some disillusioned with management. If you don’t feel appreciated it doesn’t help.”
“The firm is famous because it’s got a black box compensation system,” noted a third former Ropes & Gray partner. “I think a number of people found that opaque aspect extended further than compensation. It’s hard to figure out how decisions were made and how you get heard.”
Ropes & Gray management, however, refutes claims that it is dictatorial.
“We’re designed to not be autocratic and dictatorial,” said managing partner David Chapin. “If a partner at [Ropes & Gray] doesn’t think they have the opportunity to discuss topics, then they’re either not accepting the invite or not paying attention. We are constantly looking for ways to do things better and open up more lines of communication.”
The firm’s opaque compensation system, similarly blamed at Jones Day for a spate of partner exits, also comes in for criticism for its polarizing effect on partners.
Described by a former London partner as “the worst thing about the firm,” the compensation system is something that Chapin claims is up to individual partners to find peace with or move on from.
“The only thing we are not transparent about is partner compensation,” he said. “Some partners in some law firms, including Ropes, can’t live in a world where they don’t know what the person next door is making. If that’s the determining factor, then Ropes isn’t the right place for them.”
Others point to a poorly implemented strategy in London as part of the problem.
Said one former partner: “Verbalizing a strategy is easy, but the implementation differed from the narrative. If you position yourself as a leading private equity firm, you don’t achieve that aim in London by hiring some mid-market private equity people.”
London office head Mike Goetz, who joined Ropes & Gray in 2009 after leaving Freshfields Bruckhaus Deringer, argues that the London practice is far from mid-market.
“We’ve led some of our largest deals from London, so we’re not just focused on a mid-market practice,” he said. “Larger private equity transactions take a little longer to move into, and the volume that was there seven or eight years ago isn’t now. The mid-market has been active, so it’s a valid strategy to get that flow of business—but we’re not resigned to just having a mid-market focus in any of our businesses.”
Goetz pointed to the addition of four new private equity clients in the last few months as signs that Ropes & Gray is going in the right direction under the leadership of former Travers Smith private equity head Phil Sanderson, who joined the firm in 2014.
The London office has added Exponent Private Equity, Intermediate Capital Group plc, Oakley Capital Management Ltd. and Pulsant Ltd. to its client roster, and earlier this year London priviate equity partner Will Rosen led a Ropes & Gray team advising shareholders on the $1.8 billion saleof Weetabix Ltd. to St. Louis-based cereal giant Post Holdings Inc.
While those outside the firm suggest there are likely to be more exits in the coming months, Chapin claims not to be concerned about any longer-term impact on Ropes & Gray, which also shed its patent prosecution practice this year as part of a practice reorganization plan.
“We have lost some people we’d rather not have lost—but that’s the nature of business,” Chapin said. “We have really good partners that other firms want—if I wasn’t having my partners recruited I’d be worried about the kind of partners we had. We don’t get too hung up on short-term fluctuations.”
Those planning to remain with the firm will be hoping he’s right.
A list of Ropes & Gray’s partner departures during 2017:
London investment funds partner Monica Gogna – Dechert
Chicago managing partner and global anti-corruption and international risks co-chair Asheesh Goel – Kirkland & Ellis
New York securities and futures enforcement co-head Zachary Brez – Kirkland & Ellis
Chicago government enforcement partner Kim Nemirow – Kirkland & Ellis
London government enforcement partner Marcus Thompson – Kirkland & Ellis
Hong Kong government enforcement partner Cori Lable – Kirkland & Ellis
London investment funds partner Anand Damodaran – Kirkland & Ellis
London finance partner Mark Wesseldine – King & Spalding
London finance partner Fergus Wheeler – King & Spalding
Boston private equity partner Jason Serlenga – Kirkland & Ellis
Boston real estate investments and transactions co-head Marc Lazar – Goodwin Procter
London restructuring partner James Douglas – Linklaters
Hong Kong managing partner Paul Boltz – Gibson Dunn & Crutcher
Hong Kong corporate partner Brian Schwarzwalder – Gibson Dunn & Crutcher
Hong Kong corporate partner Michael Nicklin – Gibson Dunn & Crutcher
Hong Kong private equity partner Scott Jalowayski – Gibson Dunn & Crutcher
London structured finance partner Chris McGarry – White & Case
Former London senior partner Maurice Allen – DLA Piper
Asia private investment funds head Geoffrey Chan – Skadden, Arps, Slate, Meagher & Flom.