Triple Issue: How you must perform law firm research (1 of 3)
Don't place bids or attend events without doing this.
We asked you what law firms you’d like us to do research on. We received more responses than we expected but were also surprised because many of you asked us to look into the same law firm (one of them is Debevoise, the firm we decided to cover today). Since most of our readers are at the top law schools in the country, it’s natural that there’s some overlap, but this still comes as a surprise. So before we dive into the research let us ask you a very important question:
Don’t you think you’re exceptional?
Almost every law student thinks they are exceptional.
We tend to agree. Each of us has a unique background that is different from every other person on this planet, and that makes each of us truly exceptional. And while sometimes we appear to be chasing the same thing, when it comes down to it, each person’s definition of a life well-lived is vastly different.
The systematic process of crushing the egos of some of the brightest students in the country through insanely silly law school exams creates a dynamic where exceptional students stop listening to their true selves. So regardless of your grades, we you to remember this:
The first rule of law firm research is to avoid the herd mentality.
We’re not saying you should completely ignore what the herd thinks. Sometimes perception matters and we’re only human. When a 3L has so many good things to say about their law firm, it’s hard to question whether what they know and experienced - as summer associates being courted by law firms - comprises the entirety of what you should be considering. We’re here to tell you that there is much more to law firms that the pictures painted by the most well-intentioned colleagues of yours.
One of the most important events of your career will be joining your first employer out of law school. Staring your career at the wrong law firm can be immensely costly. It may be financially costly because the wrong fit may very well make you quit law altogether without a backup plan. It could be emotionally taxing because you just can’t stand the people you have to work with. It could also create serious fractures in the relationships you hold dear because the work-life balance is not what you expected. The most alarming thing? It’s going to be very hard for a law student to actually come across someone who’s experienced any of the above and have an honest conversation with them.
You must be informed by an accurate understanding of reality and how things work in the corporate world. Before it’s too late, do your research. And do it from a top-down perspective based on numbers and high-level facts. Do not fall into the trap of relying on anecdotal evidence and stories from a handful of people. Stories are what you should utilize to persuade law firms to hire you; it shouldn’t be what you rely on to select the law firms you want to bid on and the bidding preferences between those law firms.
Because if you don’t even bid for the right law firms, you’re not even giving yourself the chance to join the right one. And bidding comes very soon - for many schools, they will start the process within a few weeks. Don’t set yourself up for misery and do the research.
Ok, here we go. As mentioned, Debevoise is our law firm of choice for today.
First, look at the numbers.
You can begin with the surveys done by American Lawyer. Much of AmLaw is locked under a paywall, but most of what we need isn’t. Let’s begin.
Find the law firm’s American Lawyer preview profile
Start by googling “amlaw debevoise”. Usually it’s one of the first search results - Debevoise not being an exception:
This will take you to the law firm’s Amlaw profile page, where you’ll see the following:
Note that the above is a screenshot. If you’re on a desktop, we suggest that you open the website on the side and follow along. There’s lots there - let’s hone in what matters and ignore the rest.
Revenue and headcount trend
Why this is important: These numbers are indicative of how well the firm been doing from the financial perspective and also will shed some light on job security and work-life balance.
Analysis: Under “Changes in Headcount” on the right, you will see that the firm’s revenue and headcount trend is shown (see red box on right). We observe that the firm’s Revenue (the blue bars) has been going up in the last few years while its headcount (the curvy black line) actually dipped for a couple of years with a very slight uptick in recent years. The headcount still seems to be quite low compared to the revenue growth.
This means that the Revenue Per Lawyer (the figure on the left table) has been increasing over the years. The latest Revenue Per Lawyer number (see above red box on the left) is $1,419,000, which is a relatively high number, almost two times that of behemoth DLA Piper’s $766,000 (DLA Piper’s Amlaw Profile is here).
So what should we make from all of this?
Higher, increasing Revenue Per Lawyer numbers often translate into job security. If your value as a lawyer has been increasing from the firm’s perspective, it’s likely that in the absence of a financial crisis or some other job-destroying event, your job is quite secure for the first few years. And given Debevoise’s experience of having to shed its associate ranks during the Great Recession (as you see by the decreases starting from 2009 with the largest drop from 2010 to 2011), it seems to have learned that hiring slowly is better than hiring fast and letting people go. However, an important caveat to this is that if there is a high Revenue Per Lawyer number but a low Profits Per Equity Partner number, then this can be a red flag that the firm has high expenses, which may include unsustainable debt. (Not too long ago, there was a firm called Dewey LeBeouf that ended up collapsing under its own debt. While most firms will probably not have as much debt as Dewey did (and even if they do, will they report it honestly?), it’s worth remembering this point. Debt is good when things are on the uptick, but can be very bad when things turn south.)
There is sometimes a negative correlation between job security and work-life balance, especially in this context. Since the amount of revenue tied to a lawyer comes from hourly billable work and the billable rates between large law firms are relatively similar, large increases in Revenue Per Lawyer often translate into much longer hours and more stressed-out colleagues.
Offices and headcount
Why this is important: The number of offices, where they are located, the number of attorneys and what offices they are located in provide insight into the following:
the general geographic distribution of its clients, which impacts work-life balance and career trajectory
its overall potential susceptibility to negative changes in local economic climates (as opposed to global downturns, when virtually all law firms will be impacted), which impacts job security and culture
organizational coherence and cultural heterogeneity
Analysis: On the left, under Overview, it says Debevoise has 9 offices with 655 attorneys. Ok, this is not a huge number compared to DLA Piper’s 90+ offices, but it’s not just one office, like Wachtell. At this point you would want to figure out:
where its offices are located
how concentrated they are in terms of the number of attorneys working in each of them
The firm’s website is actually the best resource to figure out these hard facts and numbers (as opposed to, qualitative things like culture or expertise) but you need to do some work.
You would eventually find that the number of attorneys in each office (as of the week of March 2, 2020) are as follows: New York - 598, DC - 41, London - 138, Paris - 20, Frankfurt - 17, Moscow - 22, Hong Kong - 32, Shanghai - 3, Tokyo - 2. To see the relative size of the absolute numbers, we can visualize this into a graph chart:
You can see all of their other offices outside of the US and London are quite small. And to check out the relative proportions of the number of Debevoise’s attorneys in each office, a pie chart might be helpful:
As you see above, Debevoise is without a doubt a New York-based, US law firm. Over two-thirds of the firm is based in New York. That’s a very high level of concentration in a single office. Let’s briefly compare this with another great law firm, Cleary Gottlieb:
Law firms are client-facing, service businesses. In the vast majority of cases, the number of attorneys in an office correlates highly with the geographic distribution of the clients. Most of Debevoise’s clients are based in New York and are likely primarily domestic clients, some of whom probably do a little bit of business outside the US in jurisdictions Debevoise has offices in. Their second-largest chunk of clients are probably based in London. It’s not clear whether Debevoise’s other overseas offices are just satellite offices that only do outbound work for its US clients or whether those offices actually generate their own substantial roster of clients. If we had to bet, it’s likely the former, though there are always exceptions. However, in Cleary’s case, it’s probably a better bet to assume that its client base is more diversified and for all intents and purposes, Cleary is a more “international” law firm.
The geographic distribution of your clients impacts the regularity of your workday, because business usually happens on the client’s schedule, not yours.
Conference calls with clients will be held at times more convenient for the client. If it’s 9 am in Hong Kong, the client might be just starting their workday, while you in New York would probably want to be doing anything other than work. The deadlines will often be fixed to the time zone of where the client is located. From this perspective, if you’re at Debevoise’s New York office, while you may work longer hours, they may tend to be more regular than your colleague at a different firm’s New York office, where they not only deal with some US clients, but also with many clients based in Europe. But the regularity of hours might not be the only consideration here.
There is another reason why geographic concentration matters. Sometimes it can be indicative of the firm’s concentration or diversification in terms of industry sectors, which impacts the volatility of the firm’s financial health.
With finance being the most important economic sector of both New York and London, the two cities with more than 80% of Debevoise’s lawyers, it’s highly likely that Debevoise has a high concentration of clients in finance. Of course, finance is a large sector that spans publicly traded investment banks like Goldman Sachs to private equity firms like Apollo and these client groups are not going to behave the same way to economic events. But by and large, when the stock market tanks, like it did in the Great Recession, law firms that are finance-heavy often experience drastic downturns in their businesses. Debevoise seems to be no exception, based on the revenue and headcount trend above where you see dips from 2009.
In the past few days, the stock market has certainly been going a bit bonkers and there is carnage on Wall Street. Is this the beginning of a recession? Only time will tell. In the meantime, your research will prepare you well.
Are there any instances when geographic spread could be a good thing? Ofcourse. Perhaps because of your background, linguistic capabilities or family reasons, you’d like to have the option to work outside of the US at some point. In that case, you would want to see if that firm has a strong presence in the region(s) you are interested in.
Firms sometimes like to hire a mix of associates that somewhat match their own office distribution, as it is still better to have your own employees switch offices than to hire laterals from other firms. So it may even enhance your chances of securing a summer associate position at a given firm if you have some sort of connection to one of their strong offices.
However, note that it is generally a very bad idea to reveal, for instance, that you want to join a firm’s New York office so you can, later on, move to their London office. This is something you keep to yourself. We’ve seen it done many times, but remember that firms typically will hire you for their New York office on the expectation that you will join and work at their New York office for at least several years. If something about your background or what you tell them or your visa status indicates otherwise, you should think about emphasizing your commitment to the city where the office is located.
Next, we look at the partnership dynamics, culture and more.
The second part of this week’s triple issue will hit your inbox in the next few minutes!
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