Tag Archives: Big Law

Navigating Partner Transitions: The Impact of Mandatory Retirement in Law Firms

In the Am Law 200, approximately 16.7% of the nearly 59,000 partners are nearing or have surpassed the typical mandatory retirement age of 65, which poses challenges for these firms as they navigate the transition of experienced leaders to a new generation. With an average of about 34 chairs, executive members, and senior partners whose 35-plus years of experience, client relationships, and leadership must be transferred to the next generation of leadership and rising stars.


The process is hardly ever smooth and sometimes involuntary. While some partners criticize mandatory retirement as ageism or an overly cautious measure, others point to studies linking cognitive decline with age, particularly after 65, the typical retirement age at this time. However, advancements in medical care may render the notion of retiring at 65 outdated. According to the U.S. Bureau of Labor Statistics (BLS) data from 2020, about 10.8% of the workforce aged 65 and older were still employed. This percentage has been increasing over the years and demonstrates a potential change in retirement expectations.


Compared to the general workforce population, BigLaw tends to have a higher percentage of lawyers working beyond 65, signaling the increased number of lawyers who continue to practice beyond a typical retirement age in relation to other areas of the workforce.


Despite the prevalence of mandatory retirement policies in law firms, many firms offer exceptions and flexibility to retain partners beyond the traditional retirement age. For instance, Greenberg Traig represents one of the firms with the largest group of working partners who are older than the age of 65. This data is likely correlated to their retirement plans as they do not have a known mandatory retirement age.


Transitioning leadership roles smoothly to younger lawyers through promotions, incentives, and succession planning is crucial for law firms. However, the trend of lateral movement in the industry has made this process more challenging. Firms often resort to acquiring talent rather than cultivating it internally, leading to potential succession gaps and talent drain. When firms adopted mandatory retirement policies, in some cases several decades ago, the typical partner was a “lifer” who had been at the same firm their entire career. Fast forward to today, most firms have more lateral partners than lifers, and hence mandatory retirement policies will need to adapt to this situation.


Identifying succession challenges is straightforward, but developing and implementing effective succession plans is where many firms struggle. Despite having mandatory retirement policies, not all firms adhere to them strictly, which can deter ambitious lateral hires seeking clear paths to leadership roles. This practice is common among the Am Law 200 firms. When you throw in another curveball with legacy retirement benefits, some firms have to make tough decisions on whether to continue any retirement benefits which will in turn decrease the profits for their then-current partners and thereby make the firm less competitive in attracting new lateral talent.


As the legal profession ages, firms may need to reconsider the strict enforcement of mandatory retirement policies and focus more on individual capabilities rather than arbitrary age limits. Implementing transition periods and mentorship programs for aging lawyers can facilitate smoother leadership transitions, as seen in firms like Winston & Strawn.


Looking at the specific firm of Gibson, Dunn, and Crutcher, we can see the impact of a mandatory retirement age. 46 partners graduated 1984 or earlier, making them beyond the age of 65 out of 1976 partners. The executive committee can vote to allow partners who are approaching their retirement age to remain with the firm. Most likely all of these partners who are beyond the age of 65 were voted on in order to continue with their partnership at the firm.

Upon surveying these partners, around 36% percent of them are predominantly in the litigation practice and some have held a form of leadership within the firm including sitting on the executive committee. Considering that partners beyond 65 are voted on by this same committee, a pattern could potentially emerge based on previous standing in the firm. Additionally, the majority of the remaining partners are “lifers”, and very few are lateral partners. Over the next 10 years, over 120 partners at Gibson Dunn will approach retirement, making a plan for retirement a vital topic for the firm to discuss. As partners continue through their growth at a firm, retirement policies remain on the mind as people look to their future endeavors.


There are plenty of law firms who do not hesitate in hiring partners who are older than 65. These firms typically have less stringent policies including openness to remote work as well. For a law firm partner who mostly services his or her own work along with some service associates or partners and doesn’t require a larger infrastructure and would rather keep a higher percentage of billables, we have very strong options for this segment of the market.


We are available to assist both firms and candidates in addressing succession planning challenges and offer insights on industry best practices. Effective execution of a well-crafted plan is key to resolving leadership transition issues. If firms are interested in evaluating their current standing and learning about successful strategies in the industry, we are here to provide guidance and support in developing a comprehensive game plan.

Sources

The American Lawyer. (2024, May 7). The 2024 Am Law 200 by the numbers. Law.com. Retrieved from https://www.law.com

General Counsel Compensation in Fortune 500 Companies: An Overview

A top executive management function, the General Counsel is in charge of the legal areas and gives strategic advice to ensure conformity and reduce risks. General Counsels for Fortune 500 companies receive very handsome pay because of their knowledge and responsibilities. Let’s analyze the numbers to understand trends and disparities in General Counsel compensation by industry, gender, and geography.

Overall Compensation Overview:

New numbers reveal the average base salary for General Counsels at Fortune 500 companies to be $583,250 and total all-in compensation to average $3,594,449 (the latter figure aggregates base salary, stock options, and bonuses, among others). The median salary and total compensation are slightly lower at $536,923 and $2,532,044 respectively. This shows that executive pay still reflects a market process, even at the highest echelons of our best organizations.

Top Ten:

Fortune Rank (2023)Legal NameGenderCompanyTotal Compensation
707Aparna BawaFemaleZoom Video Communications$28,038,118
4Kate AdamsFemaleApple$27,147,223
767Dana WagnerMaleTwilio$26,161,211
8Kent WalkerMaleAlphabet$24,451,264
444John G. FinleyMaleBlackstone$22,210,851
496Kathryn K. SudolFemaleKKR$18,647,258
2David A. ZapolskyMaleAmazon.com$18,181,043
55Kathryn RuemmlerFemaleGoldman Sachs Group$17,129,562
531Tia SherringhamFemaleDoorDash$15,863,420
48Horacio E. GutierrezMaleWalt Disney$15,198,008

Bottom Ten: 

Fortune Rank (2023)Legal NameGenderCompanyTotal Compensation
389Susan HelfrickFemaleChewy$796,650
883Bo ShiMaleCrescent Energy$793,667
220Sean T. GearyMaleGlobal Partners$562,267
917Wanji WalcottFemalePinterest$553,030
593Laurence J. De RespinoMaleU-Haul Holding Company$541,274
595Michael L. KaplanMaleMDC Holdings$516,455
342Renee L. WilmFemaleQurate Retail$506,241
671Keenan D. LynchMaleCrossAmerica Partners$466,365
914Victoria ValenzuelaFemaleAppLovin$412,289
573Tina V. JohnFemaleRocket Companies$309,621

Gender Disparity:

The gender wage gap exists at the executive level; General Counsels are no exception. Though the average male compensation goes to $2,599,451, for female General Counsels it is still a bit lower, amounting to $2,516,377. An $83,074 gap in average compensation separates men from women in the position of General Counsel, meaning implications regarding gender pay equity at the top of the legal profession. This being said, an interesting observation is that one of the highest-paid General Counsels in total compensation is a female General Counsel at Zoom, Aparna Bawa, who earns $28,030,118. Juxtaposed to one of the lowest-paid General Counsels at Rocket, Tina John, who earns $309,621. This difference is around a 99% lower total compensation from the highest to the lowest, both of whom happen to be female General Counsels. For a position whose job duties are likely very similar, the compensation metrics are a world apart. This in part is possibly due to differences in stock options. For these two individuals, the salary difference of ​​$164,928 is significantly less than a comparison of stock options which amounts to $27,611,195 for Bawa and almost zero for John. These awards signify the importance of a company’s success, and how like shareholders, General Counsels are also gambling on the profitability of their respective companies for compensation.


The distribution of gender represented by the number in an executive position, based on the dataset of 325 males to 175 females, is likely to reflect general trends for gender representation within the industry. This under-representation of women in executive jobs is probably one factor contributing to the gender pay gap seen among General Counsels and in other high-level positions, and work remains to address this gender inequality in the workplace. However, looking at the Top 10 General Counsels, women not only makeup 50% of the representation, but also one of the highest total compensations. This helps to demonstrate that although a gender wage gap is apparent, its relevance in the overall pay structure of General Counsels is of less significance.


Industry Variances:

But there are prominent divergences among industries regarding General Counsel compensation. The Technology sector reports average total compensation at $8,913,681.70, close to the number from Entertainment & Media, at $8,517,531.40, and Transportation at $6,035,452.50. These trends are indicated by the Top 10 compensations which contain majority Technology and Entertainment companies such as Apple, Alphabet, and Walt Disney. In stark contrast with them, the Apparel industry reports an average total compensation of $2,089,583. Such differences only indicate the nature of industries or the effect of market forces on executive pay structures.


Thus, it would be easy for the technology business to justify its higher compensation based on the quick pace of innovation and the critical need for legal professionals to deal with intellectual property rights, data privacy regulations, and cybersecurity issues. Much could be said about the high pay that most people in the Entertainment & Media industry receive based on the complex legal landscape of content licensing, the protection of intellectual property rights, or the stakes at high contract negotiations.


The Transportation sector also commands a high level of compensation due to regulatory complexities, standards concerning safety, and sensitive logistical operations, sensitive to the necessity of experienced legal handling. In-house General Counsel remuneration spikes in such legal-sector jobs, thus calling for top-notch professionals, considering these are fast-evolving environments full of challenging situations that should be highly challenging legally.

Regional Differences:

On a more geographic note, the data points out some noticeable disparities in General Counsel pay by state compared to the average base salary of $583,250.


Washington, D.C. emerges as the highest-paying region, having an average base salary of $1,197,308, which is over twice the average salary. This high compensatory package for General Counsel roles within Washington D.C. is facilitated by the robustness of the legal function within the Capital city of the United States, as it’s home to several federal agencies, regulatory agencies, and law firms, increasing its demand for legal professionals and consequently raising the bar higher for the compensation package of any General Counsel role.


New York ranks very closely after, with an average wage pegged at $747,569, taken out of a sample of 106 wages. This figure is significantly higher than the average salary, reflecting New York’s status as one of the largest financial and commercial centers of the world. It plays host to thousands of multinational companies along with banks and other financial institutions. As such, the large sums that General Counsels in this state take home represent the competitive compensation packages of its finance and commercial industries, as well as their high-volume legal transactions at companies such as Goldman Sachs, which boast some of the highest compensation rates including $1,500,000 for the latter.


California follows third in the list, with an average pay of $722,807 from 219 salaries. This is also substantially above the average salary. Technology and health industries are famously dominant economic activities within California, which demand sophisticated legal services to quickly shift through these industries’ challenging landscapes of regulations and intellectual property. Legal professionals who work with startups and innovative companies based in places such as Silicon Valley and other key California areas often see higher compensation for their in-demand services to such organizations like Apple and Alphabet, including those in the area of General Counsel roles. Individuals like Kate Adams, Apple, and Kent Walker, Alphabet, with $1,000,000 salaries each respectively, fall above this average but indicate the high value of the technological sector on California’s legal professions.


These regional differences underline the impact of location and local market conditions on the levels of executive compensation in the legal sector, reflecting unique economic and industry dynamics that shape the legal landscape across the states.

Conclusion:

Overall, the examination of Fortune 500 General Counsel compensation demonstrates a very complex landscape that is hugely defined by industry dynamics and which becomes more intricate with issues of gender disparity and regional variances. All in all, the general pay is hefty, but then efforts need to be put into closing the gender pay gaps and promoting equity in executive remunerations. With such an understanding of trends and disparities, organizations ought to encourage their General Counsel professionals to construct fair and competitive compensation structures.

Sources:

Compass Survey Detail. (n.d.). Law.com. https://www.law.com/compass/#/surveydetail/16/overview

How to Get on a Recruiter’s Naughty List (and Why it Matters)

When you’ve been in the recruiting business as long as we have, you notice some behavioral patterns. Some of those patterns are a little, let’s say, irritating. As a public service to the legal recruiting industry, we thought we’d put together a list of what not to do as a law firm or candidate engaging with recruiters.

Assuming you are not yourself a recruiter, why should you care about this? (Other than not wanting to be a terrible person!) Whether you are a law firm leader or a potential lateral candidate, it turns out that treating recruiters respectfully has real benefits for you.

From the firm perspective, it’s important to understand that recruiters don’t prioritize firms equally. Our job is to move lawyers from one firm to another. The reality is that if we aren’t making placements with your firm, we’re looking to move your people to firms that work constructively with us. So from a talent retention perspective, it helps to have a solid relationship with the recruiting community. How recruiters perceive your firm also has an effect on your broader reputation in the market. When we are placing at your firm, we talk to hundreds of candidates, encouraging them to consider joining you. This is a marketing function — it builds a positive perception in the industry. Naturally, being on the recruiter naughty list will have the opposite effect.

From a candidate perspective, there is a good chance you’ll be back on the market at some point in the future — or at least that you’ll be open to considering an especially great opportunity. Having a relationship with a recruiter you trust is beneficial both for learning what’s happening in the market generally and for getting early notice of specific opportunities. Burning your recruiter bridges squanders those potential benefits.

So with that in mind, here’s what you shouldn’t do:

  1. Refusing to pay: After hiring a candidate, the firm claims it knew of the candidate before the recruiter introduced her, and therefore it doesn’t owe a fee. This tends not to be mentioned until the end of the process, after the recruiter has already shepherded the candidate through.
  2. Dragging it out: The firm gives the same search to multiple recruiters in succession, without hiring anyone, causing the search to be stale by the time we’re asked to drum up candidates.
  3. Cutting us out: The candidate learns of an opportunity from a recruiter, then reaches out to the firm directly or via a friend who works there.
  4. Gaming the clock: After the recruiter submits a candidate, the firm waits exactly six months (when its obligation to pay a fee expires), then reaches out directly to the candidate.
  5. Below-market fee caps: The firm expresses interest in working with a recruiter but insists on paying only half the market rate.
  6. Window shopping: The firm takes a meeting with any candidate the recruiter submits, but it never hires any of them.
  7. Feigned interest: The candidate uses the recruiter to get a competing offer, with the goal of building leverage against their current firm to gain a promotion, a higher salary, or enhanced remote-work flexibility.
  8. Setting false criteria: The candidate declares they won’t move unless it’s for X amount of money. The recruiter convinces the firm to increase its offer by a six-figure sum, exceeding the candidate’s threshold. The candidate still rejects the offer.
  9. Inconsistent feedback: The firm rejects a candidate as too junior, days after hiring a candidate of the same seniority level.
  10. Radio silence: The firm provides zero feedback on a seemingly strong candidate.
  11. Unrealistic expectations: The firm is exceedingly picky about candidate credentials, despite offering nowhere near market compensation.
  12. Confidentiality fails: After the recruiter submits a candidate on a confidential basis, the firm carelessly asks around about the candidate, causing the news to get back to the candidate’s current firm.
  13. Late conflict discovery: Disregarding the best practice of conducting early conflicts checks, the firm discovers an insurmountable conflict near the end of the process.
  14. Hiding the ball: The candidate fails to tell the recruiter about competing interviews or offers, causing the recruiter not to press the firm to speed up its process, and causing the candidate to miss out on what could have been an offer.
  15. Ghosting: Candidates, this one is pretty self-explanatory. Whether in the dating market or the job market, ghosting people is a bad look!

A Changing London Landscape for U.S. JDs

As a former associate with Cleary Gottlieb’s Paris office and a Senior Director heading up Lateral Link’s London and Paris recruiting practices, I have been working with U.S. lawyers looking to move to Europe for the last 15 years.

In 2014, Above the Law published my series on Planning for a Legal Career Overseas (Part I and Part II) that outlines your best route for moving overseas as a U.S. JD. I stress the importance of working in the capital markets space if you are committed to working overseas. This still holds true for Paris and other European financial centers: Frankfurt and Milan, for example. But over the last few years, we’ve seen a decline in opportunities for U.S. capital markets lawyers in London and an uptick in opportunities for U.S. JDs trained in M&A (on the private equity side) and emerging companies work (venture capital, technology transactions, privacy, etc.)

Why this shift? Ever since Brexit became a certainty, hiring for U.S. capital markets in London has been slow. Firms were still sending their own associates on overseas rotations, but the lateral market all but dried up. But with the boom in private equity and emerging companies work recently, firms are realizing they can use this (U.S.-qualified) expertise in other time zones.

I am currently working with two top international firms, assisting them in finding solid mid-level to senior U.S. JD associates:

  • with M&A, capital markets or venture capital experience for a top emerging companies practice, and
  • for a Chambers Band 1 global M&A (primarily private equity) practice.

Capital markets associates, hang on! There will inevitably be more openings in London soon. Capital markets can only be booming in the U.S. for so long without some of that need crossing the pond. But this new diversity in practice areas in London that U.S. lawyers can aspire to is exciting!

If you are a U.S. JD with a top firm and curious about opportunities in London, Paris or elsewhere in Europe—now or planning for down the road—please reach out to me at agordon@laterallink.com and we’ll discuss!