Tag Archives: Biglaw

Featured, Partner Market

Biglaw Partners: Are You Capturing A Fair Share Of Your Revenue?

If you are a Biglaw partner, you may have heard this compensation rule of thumb: you should be taking home a third of the revenue you generate for the firm. The 33% rule has the advantage of being simple, and it makes for a reasonable starting point. But to really know whether you are capturing a fair share of the value you create, it’s important to consider some other factors.

Your hours vs. your team’s hours

The first distinction you’ll want to make is between the hours you bill and those billed by the people working for you, such as associates and service partners. The 33% rule is supposed to apply to all revenue for which you are responsible. But we can make things more precise by breaking that revenue into two segments.

As a general rule, you should make about 40% of revenue from hours you billed personally. As for the hours billed by members of your team, it depends how profitable those lawyers are for the firm. Associates at some firms are substantially more profitable than others. The more profitable your associates, and the more leverage your book has, the greater the share of your team’s revenue you can expect to take home.

RPL and leverage are the key metrics

To understand what share of team revenue should accrue to you, consider how your firm stacks up on two key metrics: revenue per lawyer (RPL) and leverage.

RPL is critical because it is so poorly correlated with associate salaries. You could imagine a different compensation model in which firms paid associates a standard share of the revenue they generated, either individually or on average across the firm. But as we know, that isn’t how this industry works. Instead, all top-tier firms pay associates more or less the same salaries based on class year. As a result, partners at firms with relatively high RPL get to divide a much larger profit pool than partners at “top” firms with low RPL.

Within the Am Law 100, the spread between high and low RPL is striking. Firms at the low end have RPL of around $500,000. For example, Lewis Brisbois is the lowest of the Am Law 100, at $434,000. Firms at the high end have RPL close to 4X that of the low-end firms. Sullivan & Cromwell, for example, clocks in above $1.9 million. (Wachtell is in a league of its own, with RPL in excess of $3.6 million.) Granted, a Sullivan & Cromwell associate earns higher total compensation than a Lewis Brisbois lawyer in the same class year, but that multiple is nowhere near 4X.

Now, RPL isn’t everything. We also have to consider leverage. If a partner’s book can feed a relatively large number of associates, the proportion of the team’s revenue that should accrue to the rainmaking partner will be higher. And to be fair to Lewis Brisbois, their partnership is doing well on that dimension, with leverage of 9.99 (second-highest among the Am Law 100).

How does your practice compare to the firm average?

Your firm’s overall RPL and leverage are important considerations, but unless the partnership has a pure lockstep compensation model, the performance of your practice relative to the firm average is also critical. A good starting point for thinking about this dimension is to compare the firm’s profit margin to the share of your revenue that you are taking home. For example, let’s say your firm’s profit margin is 45%. Are you being paid 45% of the revenue you are generating?

If not, consider how your practice may differ from others in the firm. Does it have lower leverage than the firm average? Are you personally billing fewer hours than your peers in the partnership? If the answer to both of these questions is no, then your compensation should reflect the firm profit margin. If it doesn’t, you are likely underpaid, and you may want to consider your options.

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Why Leave Biglaw To Form A Boutique?

If law practice were a normal business, this would make little sense. In theory, larger firms should be more profitable per partner than smaller firms because a large firm can spread its fixed costs of operation over a larger pool of lawyers, lowering per-lawyer cost. The move to form boutiques seems to violate the basic principle of economies of scale.

But law is not a normal business. As we have previously explored, the legal profession is remarkably fragmented relative to other professional services fields. It is clear that standard economies of scale logic does not explain law firm industry structure.

We see four central factors driving the boutique boom: founder autonomy to chart strategy, avoidance of client conflicts, the opportunity to limit overhead investment, and freedom from ongoing obligations to retired partners.

Strategic autonomy

Boutique founders value the ability to chart their own strategy and run the show. A rainmaker in a typical Biglaw firm can be expected to have a more influential voice than the average partner, but the fact remains that major decisions require some degree of consensus, and the status quo tends to prevail.

Take alternative fee arrangements, for example. Boutiques generally have embraced flat-fee or other alternative structures much more readily than their Biglaw peers. That shift is a lot easier to execute when a firm is controlled by a small group of partners who work in the same practice area and are operating on a relatively long time horizon.

Boutiques can also more easily limit themselves to competing only for higher-margin work. When you make no pretense of being a full-service firm, and you have no legacy low-margin practices encumbering you, there is little reason to bring on equity partners whose revenue contribution would reduce the average.

Conflict avoidance

In their public statements, boutique founders tend to highlight the appeal of escaping the conflicts entanglements of Biglaw. It sounds more noble than “I’m expecting to make way more money.” But in all seriousness, freedom from conflicts can be important. It is a frustrating experience to be in line to represent a client in a significant matter, only to find out that your firm has a conflict that seems entirely tangential but nevertheless requires you to decline the work.

No bloated overhead

If law firms were managed to maximize profits, overhead considerations would counsel against forming a boutique. All law firms must incur some level of fixed cost in order to operate. Consider IT costs. Properly managed, the amount spent on IT per lawyer should be materially smaller at a 1000-lawyer Biglaw firm than at a 10-lawyer boutique. Similar economies of scale should exist for real estate expenses.

And yet, boutique founders routinely cite reduced overhead as an advantage of the boutique model. This is an indictment of large firms’ spending decisions. Historically, there has been a cultural assumption among the Biglaw elite that fancy offices on the highest floors of the most prestigious towers are a necessary expense, both as a status symbol for clients and as a recruiting tool for attorney talent. Boutiques have illustrated that there is reason to doubt this assumption. Even before the pandemic made every law firm question its real estate needs, boutique founders realized that they could operate successfully with a considerably smaller office footprint.

Here we again see the value of the autonomy discussed above. It is easier for a small group of founding partners to agree to dispense with some of the traditional trappings of Biglaw office space than to drive consensus among a large partnership to make substantial cost cuts.

No retirement payments

The final factor is likely the least intuitive, especially for lawyers who are not yet partners: the burden of payments to a firm’s retired partnership. Biglaw firms vary in the generosity of annuities offered to retirees, but it is common for a retired partner to be paid in perpetuity something like one-third of the partner’s average compensation in the final five years of service.

As life expectancy has increased, these generous payouts have become an ever-growing drag on Biglaw profits. Imagine you are a relatively young and successful partner. You could spend the next two decades dutifully contributing to the pockets of your retired forebears and hoping that you will receive a similar deal in your old age. Or you could leave now, found your own boutique, and keep that portion of your billings for yourself. In a world in which even partners who stay in Biglaw are likely to make multiple lateral moves over the course of their careers, it is increasingly difficult to convince current partners that bearing the costs of retirement payments is a worthy investment.

Conclusion: Biglaw must reform its cost structure

Unless Biglaw firms take seriously the signals that the boutique boom is sending, they can expect escalating losses of their most productive partner talent. There is of course a limit to the reforms that Biglaw firms can undertake: the autonomy and conflicts factors are particularly hard to counter. But on cost control, the ball is in Biglaw’s court. And in the wake of the pandemic, the largest firms have a golden opportunity to reimagine their business models in fundamental ways.

Biglaw firms need to take a hard look at all elements of their cost structure, with real estate and retired partner compensation at the top of the list. To that end, now would be a great time to shift to more professional administration by trained management professionals, rather than untrained lawyers engaging in administration as a part-time, supplemental duty.

Biglaw firms have advantages that boutiques cannot easily match, including strong brands and the ability to cross-sell work among multiple practices. But without significant reform on the cost side, Biglaw will continue to lose ground to boutiques.

Featured, In-House Market, Partner Market

Who Is Better Compensated: Elite Biglaw Partners Or Top General Counsel?

If you’ve paid any attention to the ballooning compensation figures of Biglaw partners in recent years, you already know that it pays to be an equity partner at a large firm. Meanwhile, as average partner compensation escalates, top in-house lawyers are being left behind.   

In 2020, a Major Lindsey & Africa survey of partners in “Am Law 200 size firms” found average compensation of above $1 million. The ALM Intelligence 2020 Law Department Compensation Benchmarking Survey found general counsel and chief legal officers earned average total compensation of $573,000. So, as a general rule, it’s more lucrative to be a Biglaw partner than a general counsel.

But what about at the very top end of the profession? In this article, we take a look at the pay packages of the top 100 highest-paid general counsels, in comparison to partners of top Biglaw firms (as measured by profits per equity partner). We find that on a cash compensation basis, equity partnership is more lucrative than being a general counsel. But the story is more complicated when taking stock options into account.

A quick note on sources. For general counsel compensation data, we look at the top 100 highest-paid GCs as listed in the 2020 ALM Intelligence GC Compensation Survey. This data set is not comprehensive. For one thing, ALM compiles its data from proxy statements filed with the SEC, so only public companies are included. Our source for Biglaw partner compensation is the 2020 edition of the Am Law 200 ranking.

It’s hard to outearn a top Biglaw partner

The General Counsel Compensation Survey ranks general counsels based on total cash compensation. The top 100 highest-paid GCs earned total cash compensation of $2.42 million on average. We don’t know how much the 100 best-paid Biglaw partners earned in the comparable period, but we can say that the top firm in the Am Law ranking — Wachtell — had 85 equity partners and profits per partner of $6.33 million.

Just two general counsels took home cash compensation higher than $6.33 million: Alan Braverman of Disney ($8 million) and Eric Grossman of Morgan Stanley ($6.94 million). Meanwhile, 38 Am Law firms had profits per equity partner in excess of the $2.42 million average general counsel cash compensation.

How does this compare to the situation a decade earlier? Analyzing the 2010 editions of the same surveys, we find that not much has changed. Based on the 2010 General Counsel Compensation Survey, the top 100 general counsels took home average total cash compensation of $1.56 million. Wachtell’s profits per partner were $4.3 million, a figure exceeded by just one general counsel. 28 Am Law firms had higher profits per equity partner than the $1.56 million general counsel average.

What about compensation growth over that ten-year period? From a growth perspective, who did better: the top 100 general counsels or the partnership of the top Am Law firms? The table below shows the results, ranked by growth rate. The law firms in the table were the top 10 firms in the 2010 Am Law 200. We see that general counsels fall in the middle of the pack, outpacing some partnerships and trailing others.

Group (equity partnership or GCs)10-year compensation growth
Kirkland & Ellis108%
Simpson Thacher83%
Paul, Weiss75%
Cravath63%
Sullivan & Cromwell57%
Top 100 GCs55%
Cahill Gordon51%
Wachtell47%
Quinn Emanuel46%
Boies, Schiller17%
Irell & Manella8%

But stock options can make a big difference

The comparisons above obscure some important factors. On the in-house side, it is critical to note that the very highest-earning general counsels receive a substantial portion of their compensation in the form of equity. Taking stock options into account, some general counsel roles start to look considerably more attractive. For example, revisiting the 2020 surveys, when accounting for equity compensation, the number of general counsels topping Wachtell’s profits per partner rises from two to 41. And some of the general counsels have total compensation that would exceed that of even the highest-paid Biglaw rainmaker. For example, Chewy GC Susan Helfrick had total compensation of $30.3 million (of which less than $1 million was in cash). Apple GC Kate Adams had cash compensation of $3.56 million, but her total compensation was $25.2 million.

On the law firm side, profits per equity partner gives little indication of the rewards that flow to top rainmakers. Firms vary widely in their compensation ranges. At the most traditional end of the spectrum, a firm’s highest-paid partner might take home 4x the pay of the lowest-paid partner. In contrast, at a firm with a strong eat-what-you-kill culture, that ratio may be 10x or higher. A 2018 New York Times article about the lateral talent wars reported on eight-figure pay packages for star hires at firms like Kirkland & Ellis and Paul, Weiss. It’s impossible to know how many Biglaw attorneys have breached $10 million, but the lateral market for partners with a strong book of business remains red hot.

Conclusion

There are a lot of reasons why an attorney might prefer to be a general counsel than a law firm partner. But viewed strictly through the lens of compensation, high-performing lawyers are typically better off staying on the law firm track. Of course, that doesn’t necessarily mean they should stick with their current firm. With Biglaw partnerships increasingly diverging in their approaches to compensation, it’s a mistake to assume that a partner with a given book of business will be paid similarly at any comparably prestigious firm. Productive partners have a variety of options — and it pays to know about them.

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Law Firm Consolidation — Perpetually Out Of Reach?

The coming wave of consolidation among law firms is a perpetual topic of discussion and speculation. The basic narrative is that the richest, most successful firms are pulling away from the rest of the industry, and firms below the top tier will be forced to merge in order to grow and remain competitive.

The notion that consolidation could be the panacea for challenges facing less profitable firms has always been questionable. But whether you buy into that particular narrative or not, it is incontrovertible that the legal industry remains remarkably fragmented in comparison to other professional services sectors.

So what are the barriers to a wave of mergers? And if the barriers were removed, would significant consolidation actually happen?

Big 4, Little 200?

Let’s consider the Big 4 accounting firms as an example of a relatively consolidated sector of professional services. In 2020, the Big 4 (Deloitte, PwC, EY, KPMG) generated combined revenue of $157 billion.

As recently as 1989, there were eight major U.S. accounting firms (then called the “Big 8”). Mergers in that year created Ernst & Young and Deloitte & Touche, reducing the group to the Big 6. In 1998, an additional merger formed PricewaterhouseCoopers, thereby transforming the Big 6 into the Big 5. Consolidation into the Big 4 occurred not through merger, but through the insolvency of Arthur Andersen in the wake of the 2001 Enron Scandal.

No parallel wave of consolidation has occurred at the top of the legal industry. In 2020, the four largest law firms by gross revenue (Kirkland, Latham, DLA Piper, Baker McKenzie) brought in less than a tenth as much as the Big 4: $15 billion. The entire Am Law 200 achieved gross revenue of around $125 billion.

A Client’s Right to Choose is Paramount

How can it be that the legal industry remains so fragmented in relation to peers in fields like accounting and management consulting? Ethics rules are a big part of the story.

In many industries, the product is tied tightly to the company that produces it. Individual executives come and go, but contracts between the firm and its customers remain relatively stable.

Not so in legal services. When clients engage a law firm, they engage not just the firm as an entity but the individual lawyers leading the matter. If the lead lawyer on a case decides the grass is greener at a new firm, there is little the old firm can do to prevent the client from following the lawyer. And indeed, lawyers are very mobile. Over the past 12 months alone, Am Law 200 law firms have made 7,385 lateral hires: 4,635 associates, 1,685 partners, and 1,065 counsel. Almost all of these lateral moves involved a departure from another Am Law 200 firm. A carousel of attorneys move from Am Law firm to Am Law firm, churning winners and losers on a quarterly basis. To take one example, Reed Smith saw 159 attorneys lateral out of the firm while 55 laterals joined. A net loss of laterals could be good or bad, depending on the respective profit margins of those coming and going, and the corresponding effect on overall firm profitability. Reed Smith’s profit margin is around 30%, so if the firm is losing partners with 20% profit margins and hiring replacements with 40% profit margins on their practices, then we should see the firm’s profits per partner move in a positive direction in the coming years.

The bottom line is that law firms contemplating a merger can’t be confident the new entity’s revenue will match or exceed the sum of the two firms’ most recent revenue figures. When the merger is announced, some partners will surely decide to leave, taking clients with them. If the departing lawyers happen to be rainmakers, the strength of the combined entity may be considerably less than a simple A + B calculation would suggest.

Conflicts Matter

Even if partner departures were not a concern, potential law firm mergers can also be disrupted by client conflicts. For some comparative perspective on conflicts, consider the management consulting firm McKinsey & Company. McKinsey, as a firm, routinely serves competing clients in the same industry. It navigates conflicts by ensuring that individual consultants do not serve competitors and by safeguarding confidential information internally, such that McKinsey teams serving competitors do not share with each other the details of their work. In this way, the firm manages to sell its services to multiple competitors in a given sector.

Legal ethics constraints make it impossible to apply the McKinsey model in a law firm context. For conflicts purposes, a client of an individual lawyer is a client of every lawyer in the firm, albeit there are ways to wall off attorneys and use client waivers to navigate conflicts. Imagine if Quinn Emanuel sought to merge with a comparably profitable firm. Quinn’s profits per equity partner in 2020 were just shy of $4.7 million. On a PEP basis, the most compatible merger partners would be Cravath or Cahill. But either of those combinations would be a nonstarter from a conflicts perspective. Quinn is well known for its strategic decision to represent plaintiffs against banks; Cravath and Cahill represent many of the financial institutions that Quinn has sued. Quinn may be a particularly extreme example, but conflicts among firms abound. Some firms represent insurance carriers; others represent policy holders. Even representing superficially similar companies brings the potential for conflict: think of the high profile litigation between Apple and Samsung.

Is Consolidation Desirable?

Let’s imagine that these ethical barriers were suddenly removed, making consolidation more viable. What would happen?

The basic logic undergirding consolidation in any industry is economies of scale: if two companies can operate more efficiently as a combined entity, a merger will create value. Does law practice exhibit economies of scale? Hugh A. Simons and Nicholas Bruch believe it does not:

Markets, where rivals focus on specific segments or seek to compete through differentiation rather than on cost, tend to remain fragmented. Haute couture is an example of such a market. Law is less like commodity chemicals and more like haute couture. It’s an amalgam of distinct services offered by very different providers in settings that have widely varying balances of power between buyers and sellers. Law exhibits no economies of scale. The notion that law must consolidate is simplistic and misleading.

Others commentators take a different view, arguing that law practice is suboptimally fragmented, and that the industry’s fragmentation prevents it from matching the innovation seen in other sectors. As Dan Packel recently put it:

That fragmentation matters when we get to the question of why law firms are behind the curve on innovation. No one has market share anywhere comparable to the Big Four accounting firms, who collectively audit more than 80% of U.S. publicly traded companies. And it’s no coincidence that these businesses are far ahead of law firms when it comes to improvements in process management. Their revenues give them the capacities to invest, and the lack of fragmentation makes it easier to discern what works and what doesn’t.

Even if Simons and Bruch are right that firms have traditionally chosen to compete on differentiation, and not on cost, that doesn’t mean there are no economies of scale to be found. The most obvious low-hanging fruit is in support functions and real estate. That suggests the most plausible form of consolidation in the legal sector might be an intermediate one: roll-ups. In this model, law firms would maintain their distinct brands but combine their back office operations and share a common real estate footprint. In a rolled-up legal world, firms would still be a long way from the degree of consolidation in other professional services sectors, but it would be a start.

Let’s end by putting aside the inevitable conflicts and other obstacles and imagining a hyper-consolidated legal market with a closer resemblance to accounting’s Big 4. In this world, the current Am Law 100 would have merged into four megafirms based on broadly similar profits per equity partner. What would the combinations look like?

The most elite of the legal Big 4 would have been formed through a merger of firms with 2020 PEP of more than $5 million. It would have just six legacy members: Wachtell, Davis Polk, Kirkland, Paul Weiss, Simpson Thatcher, and Sullivan & Cromwell.

The second Big 4 legal megafirm would range from Quinn Emanuel ($4.7 million) to Dechert ($2.8 million). It would have resulted from the consolidation of 27 firms.

The third megafirm would have 31 legacy members, ranging from Cadwalader ($2.6 million) to Reed Smith ($1.5 million).

The remaining 36 Am Law 100 firms would comprise the fourth and final Big 4 legal megafirm. Their 2020 PEP ranges from Perkins Coie on the high end ($1.4 million) to Littler on the low end ($570k).

Will this happen anytime soon? Definitely not. But it’s a fun thought exercise.

Featured, homepage, Market News

A Deep Dive Into The 2021 Am Law 100 Rankings

Last year was a difficult year for so many industries but a shockingly good one for Biglaw, at least in terms of metrics like gross revenue, revenue per lawyer, and profits per partner.

“Lawyers are terrible businesspeople.” You’ve surely heard this before. But is it true?

If lawyers are so bad at business, then why did the Am Law 100, the nation’s 100 largest law firms ranked by revenue, have such a banner year in 2020? In the midst of a global pandemic and economic downturn — one that hammered so many industries, from airlines to hospitality to commercial real estate– Biglaw firms flourished.

Last week, the American Lawyer issued its eagerly anticipated Am Law 100 rankings for 2021. As a group, here’s how the Am Law 100 fared in 2020 (as noted by Dan Packel in his excellent analysis of the data):

  • Total revenue: $111 billion, up by 6.6 percent.
  • Average revenue per lawyer: $1.05 million, up by 5 percent.
  • Profits per equity partner: $2.23 million, up by 13.4 percent.

Who are you calling a terrible businessperson now? These growth rates exceeded those posted by the Am Law 100 in the far more normal year of 2019 (which were 5 percent, 3 percent, and 5 percent, respectively, for total revenue, RPL, and PPEP).

What drove the dramatic increase in profitability? Yes, cost-cutting did play a role; firms used the pandemic as an opportunity to make themselves more efficient, eliminating or reducing various expenses that they were already planning to cut (e.g., certain administrative roles, real estate costs, etc.).

But, at least collectively, the Am Law 100 didn’t juice their profits by slashing lawyer or even equity-partner headcount. Total attorney headcount actually grew slightly, rising by 1.7 percent to 105,718, and the number of equity partners remained flat (down by just 12 partners, to a new total of 21,258).

Let’s now take a closer look at the three key metrics — gross revenue, revenue per lawyer, and profits per partner — and the top 10 firms in each category.

Gross Revenue

Here are the top 10 firms in the 2021 Am Law 100 rankings, ranked by their gross revenue in 2020. You can access the full list here.

Kudos to Kirkland & Ellis and Latham & Watkins, once again the two top-grossing firms, which both grew their total revenue by double digits. All of the other top-ten firms also increased their revenue, except for Baker McKenzie, which saw a slight dip (perhaps due to the global nature of the firm; the U.S. legal market generally performed better than overseas markets last year).

As you can see, there wasn’t much change in terms of the rank order of the firms. Everyone kept their 2020 spots except for White & Case and Hogan Lovells, who swapped places; now White & Case is #8 and Hogan Lovells is #9.

In 2020, 42 firms enjoyed gross revenue in excess of $1 billion, one more than the 41 firms in 2019. Almost three-quarters of the Am Law 100 — 74 firms, to be precise — grew their gross revenue. On the strength of its capital markets practice, Davis Polk had the biggest gain, a whopping 22.6 percent. (For more on how Davis Polk pulled off such a great financial performance, see this Bloomberg Law piece by Roy Strom.)

Revenue Per Lawyer

Here are the top 10 firms in the 2021 Am Law rankings based on revenue per lawyer. You can access the full list here.

As you can see, revenue per lawyer grew quite nicely among the top ten, with four firms posting double-digit growth. Once again, Wachtell Lipton and Sullivan & Cromwell took the top two spots — but Davis Polk zoomed up from #10 to #3. Two other firms known for strong capital markets practices, Cahill Gordon and Debevoise & Plimpton, also posted strong gains, breaking into the top 10.

Profits Per Equity Partner

And now, everyone’s favorite ranking: the top 10 firms by profits per equity partner. You can access the full list here.

As usual, Wachtell Lipton took the #1 spot, with an incredible $7.5 million in PPEP. But Kirkland & Ellis, in recent years the #2 firm, got bumped out of second place by Davis Polk, with $6.35 million. If 2021 turns out to be like 2020, it’s conceivable that Davis Polk could displace Wachtell as #1 in next year’s rankings (but based on the strong year that M&A is having so far, I wouldn’t necessarily count on that). As for the rest of the top ten, there wasn’t that much movement, except for the ascension of Cahill and Debevoise (which the revenue per lawyer rankings hinted at).

Taken collectively, the Am Law 100 performed well in terms of profitability. As the American Lawyer reports, average PPEP increased by 13 percent in 2020, and 56 firms enjoyed growth rates of at least 10 percent, compared to just 23 in last year’s rankings. So congratulations to Biglaw on its big success in 2020 — a year that was, to put it mildly, extremely challenging for so many of us.

Moving on from the rankings, I’d like to close with a personal announcement. As mentioned in passing in this New York Times piece by media columnist Ben Smith, I’m returning to full-time writing as of next week. I’ve enjoyed recruiting, but one thing I’ve learned about myself over this crazy past year, including my near-death experience with Covid-19, is that writing is what I truly love.

Back in December, I launched a new publication about legal affairs called Original Jurisdiction. I started off doing it for fun on the side, but I’ve realized after five months or so that I want to do it full-time and try to make a living out of it.

Original Jurisdiction comes out as both a newsletter and a blog; please feel free to sign up if interested. Right now it’s free, as it has been for the past five months. Next week, I will add paid subscriptions — which is how writers on the Substack platform earn a living — but there will always be lots of free content.

I have greatly enjoyed my two years at Lateral Link, in large part because of my amazing colleagues, and I wouldn’t have wanted to work at any other recruiting firm. I don’t think there’s another legal search firm out there that has such talented recruiters and does such an excellent job of encouraging and incentivizing them to work together as a team.

If you’re interested in working with Lateral Link as either a law firm or a candidate, please feel free to reach out to me. Although I’m finishing up my work here, I’d be happy to connect you with an appropriate colleague.  Thank you, and please do stay in touch!

Featured, Tips

8 Time Management Tips for Young Lawyers

As an associate, you often have limited control over your own schedule — but there are still some actions you can take to improve your use of time and cut out unnecessary stress.

If you’re an associate, you’re probably thinking, “What?! As if I have any control over my own schedule!” And you’re right, your ability to manage your time will never be perfect.

I understand. I was an associate myself for seven-plus years. But there are still some actions you can take to improve your use of time and cut out some of the unnecessary stress.

I understand. I was an associate myself for seven-plus years. But there are still some actions you can take to improve your use of time and cut out some of the unnecessary stress.

  1. When you are given a new assignment, always ask right away what the deadline is. I can’t tell you how many times as an associate I failed to ask this important question because I said to myself, “This will take no time at all, I can do it right away,” only to have a more urgent task land on my desk — and I wished I’d asked upfront instead of begging for more time later on.
  2. Many of us lawyers are Type A personalities, and we love that feeling of completing a task and checking it off the “to do” list. But I find the easiest way to prevent procrastinating about the next task is to start it right away. Just get three minutes in, then you can take that coffee or bathroom break. When I’m jumping back into an established rhythm instead of getting my mind around a new project, it’s much easier to get back to work.
  3. Believe that there is no such thing as a huge, daunting project. Everything can be broken down into smaller, bite-sized morsels. Take on one mini-project at a time.
  4. Put everything on your calendar. I assume I won’t remember anything. I include project deadlines and my to-do list items as 30-minute calendar entries. I have repeating calendar reminders to pay my credit card bills, renew my dog’s license annually… there is nothing in my life not on my calendar because the last thing I want to be stressed about is that I may have forgotten something I need to be stressed about!
  5. I also block time for work (and personal) projects on my calendar. Even if I end up changing the start and end times multiple times, it helps me to be able to eyeball my projects for the day, estimate how long they will take, and plan accordingly.
  6. Find ways to use your down time productively. What down time? Even law firm associates have down time. Mine often came at 1 a.m. as I was waiting on a senior lawyer to send me the next mark-up. But I was determined to reclaim this time for myself. So what did I do? I started a travel blog. It was a creative outlet I could turn to even at my desk in the middle of the night. So those late nights in the office were not a complete waste in terms of my personal life. I also made a point of having dinner with a work friend almost every night, even if it was for 10 minutes at their desk or mine. If you’re not inclined to start a blog or write a novel or screenplay, use your scarce breaks to update your resume and deal sheet, work on a business plan, keep in touch with contacts (build relationships!). Or research for your next vacation! Have a plan for how you’ll use your free time so it doesn’t go to waste.
  7. Whatever your goal may be — hitting the gym a few times a week, putting together a business plan, catching up with one law school classmate each day — establish an accountability partner. It could be a friend, a colleague or even a journal. Keeping track will help keep you honest!
  8. If you’re truly feeling underwater, ask for help. Firms are investing more and more into associate life and associate development resources. Even if you’re not comfortable talking with a partner, there is likely someone you can talk with. And you can always reach out to a trusted recruiter to learn what your realistic options might be for a new job offering a better work-life balance.

Making small changes to your daily routines may buy you only a few extra minutes each day at this stage in your career, but these actions will help you build good habits for when you do gradually take on more control of your schedule. I’d love to hear what time management tricks have worked for you!

Featured, Market News

How Did Biglaw Firms Fare Financially In 2020?

Pretty, pretty well, in terms of both revenue and profit.

Color me surprised — or even shocked. I’ve been following the American Lawyer’s early reporting on Am Law 200 law firm financials for 2020, and the numbers so far are good, even great.

Despite the coronavirus pandemic and recession that made life so miserable for millions last year, law firms did very well for themselves. Check out this table, showing the firms that Am Law has covered so far and the year-over-year change in their revenue per lawyer (RPL) and profit per equity partner (PPEP):

(If you like, you can access this spreadsheet as a Google Doc here, which also allows you to sort the firms by the change in their RPL and PPEP.)

Of the 29 firms listed above, all posted increases in profit per partner, many of them well into the double digits. The highest figure so far, a 46.6 percent increase, was reported by Crowell & Moring (which led me to declare Crowell my Law Firm of the Week last week). But the firm had plenty of company, with eight other firms posting PPEP increases of 20 percent or more.

Now, the increases in profit per partner might be somewhat understandable, given how the pandemic and working remotely led to dramatic drops in many firms’ expenses, such as rent (in some cases), utilities, travel, and entertainment. And yes, some firms did engage in layoffs last year as well.

But revenue per lawyer, which industry observers generally regard as the better metric of law firm financial health (since it’s less subject to manipulation than PPEP), also increased for almost all firms — not as dramatically as PPEP, but still significantly. In recent years, RPL growth in the low single digits has been quite common in Biglaw; but last year, if these early numbers are representative of the whole, perhaps half of Am Law 200 firms enjoyed RPL growth of 5 percent or more in 2020.

In light of these robust revenues and profits, one can understand why law firms paid out “COVID bonuses.” Take Cooley, which kicked off the trend by announcing “appreciation bonuses” in September 2020. The firm posted PPEP growth of a whopping 25.4 percent in 2020. Had Cooley not paid out special bonuses, then reported PPEP growth in excess of 25 percent, it would have had a lot of unhappy campers among its associates and staff.

Congratulations to these firms on their strong performances in 2020. People like to say that lawyers are not good businesspeople, but clearly lawyers are doing something right. The ability of the legal sector to do so well during a period of great difficulty for many other industries is a testament not just to the talent and hard work of Biglaw lawyers and staff, but also to firm leadership. So the next time you encounter one of your firm’s leaders, perhaps in a Zoom town hall rather than in a hallway or conference room, thank them for successfully shepherding your firm through some very dark days.

What do these strong numbers mean for lawyers interested in lateral moves? They indicate that now is a safe time to transition to a new opportunity. Last spring, when the pandemic was at its peak, the economy was in a recession, and law firms were very worried about how they’d fare, it was a risky time to move; candidates feared moving to firms that might hit rough patches after their arrival, threatening their job security as associates or their practices as partners. But now that the economy is on the mend and law firms are not just surviving but thriving, it’s a good time to move to a firm where you’d be more fulfilled.

If you’re thinking about a possible move, please feel free to reach out to me or any of my colleagues to discuss possible opportunities. We look forward to hearing from you.

Associate Tips, Featured, Tips

To Clerk, Or Not To Clerk?

Whether you should do a clerkship depends on a number of factors, as this handy flowchart by Abby Gordon explains.

An important question for law students and recently barred lawyers is whether or not to apply for a clerkship. My advice? It depends. Here are some questions you can answer to help you decide.

If you’d like to discuss your specific circumstances and whether or not it makes sense for you to apply to or accept an offer to clerk, feel free to reach out to me or any of my Lateral Link colleagues.