Triple Issue: How you must perform law firm research (2 of 3)
Figuring out partnership dynamics, culture and practice group strengths
(Continued from the previous one)
Next, we will look into some of the partnership dynamics important for you to know.
Are there nonequity partners?
Why this is important: Established equity partners and nonequity partners (who are essentially high level attorneys that are partners only in title) occupy very different places in the law firm hierarchy. Equity partners are the ones who bear ultimate responsibility for the firm as a group and also benefit directly from positive financial performance. Nonequity partners, on the other hand, are more akin to salaried senior associates or counsel that may be up to partnership consideration soon. Firms that have a nonequity partner tier should be approached with a bit more consideration in terms of interviews or networking for this reason.
As you may already have noticed, the Amlaw profile provides a straightforward category for this:
Analysis: Debevoise doesn’t have non-equity partners. So you can be assured that when you meet someone who has a partner title, they are an equity partner.
On the other hand, take a look at a firm like Kirkland, another excellent law firm with some of the highest Profit Per Equity Partner numbers in the world (about $5 million in their latest Amlaw profile). They have more nonequity partners than equity partners (566 v. 433). When you have an interview with a partner at such firms or attend one of their networking receptions, just don’t assume he or she has an ownership stake in the firm.
Note that the existence of a nonequity partnership tier in and of itself should not be seen as a bad thing. Instead of using the partner title, some firms will call just their high-level salaried attorneys “counsel” or something else just to distinguish them from the associate ranks. Journalists have sensationalized the fact that firms like Kirkland & Ellis have nonequity partners but you should be more intelligent than focusing on just this factor. It’s the potential for confusion that a nonequity partner tier poses to you that we want you to avoid. After all, you should be optimizing your strategy and tactics based on who you meet at these firms.
On the other hand, the next one we cover is much more important.
Lockstep versus performance-based
Why this is important: More than the mere existence of a nonequity partner tier, how a law firm determines a partner’s compensation level makes a tremendous difference in terms of the culture. Generally speaking, people think firms are divided into two camps - lockstep partnerships and performance-based partnerships (the lockstep partnerships will call these “eat what you kill” partnerships). For purposes of analyzing let’s go with that framework for now.
The Amlaw profiles don’t contain this information and it’s generally hard to figure this out except for some of the top firms that are widely known to be lockstep. Here’s a preliminary list of lockstep law firms, just off the top of our heads:
Cravath
Cleary
Davis Polk
Debevoise
Paul Weiss
Simpson Thacher
Skadden
Wachtell
WilmerHale
Let’s take a look at some common assumptions, probably valid in most situations, about the differences between lockstep versus performance-based models:
It is important to note that most firms are a combination of the two. After some Googling, if you can’t figure out a law firm’s partner compensation model, it’s likely that it’s a combination.
The relative strength of each practice group
Why this is important: Law firms don’t randomly hire people and allow them to choose whatever practice area suits them. They hire based on how much revenue is expected to be generated. So the number of lawyers in a given practice group reveals how strong or not such practice group is within the firm. All things being otherwise equal, you should probably prefer a law firm that is stronger in practice groups you’re interested in at the specific office you want to join.
The best easily-available way to figure out the numbers is the NALP Directory. Debevoise New York’s NALP Practice Area profile looks like this:
Debevoise has decided to show their attorney numbers only at a high level, between Corporate and Litigation. You see the difference in the number of partners; there are 50% more partners in Corporate than the number of partners in Litigation. Guess what practice group brings in more money for the firm? Corporate is probably the better bet.
But what if you’re not interested in New York, but Debevoise’s DC office but are still interested in being a hotshot M&A associate? Take a look below.
It doesn’t look very promising to us. Firms’ DC practices tend to be heavily associated with regulatory work and Debevoise appears to be no exception. Your M&A aspirations would be better served elsewhere, but if you’re interested in Antitrust work, you may find a home in Debevoise’s DC office.
When you’re doing this exercise, realize that there are specialty practice groups that are almost always subordinate to the bigger practice groups by virtue of just how the business works. For example, corporate tax is a practice group that provides guidance on the tax side of corporate transactions. All corporate tax groups will be much smaller in size than the M&A groups or investment fund groups that send them the work. If your interest is tied to one of these specialty practice groups, you should rely on the relative size of the practice groups upon which your group would be dependent on to assess the specialty group’s strength.
It’s also important to note that Debevoise doesn’t break it down at a granular level, like some other law firms. For instance, if you take a look at Shearman & Sterling’s NALP form, you see a whole different level of granularity that is much more helpful.
Practice group rankings
To take this a step further, look at the Chambers & Partners rankings. You can find Debevoise’s here. Here’s a partial screenshot of what this shows:
This can be quite confusing but a few general rules might be helpful:
The fact that a practice group at a law firm is ranked by Chambers at all indicates that it is well-known and well-regarded
The difference between Band 1 and Band 2, for instance, may not be as great as they might seem
Certain practice areas just have a huge market, such as M&A. Chambers has a separate system for these instances - there are the Corporate/M&A Elite, and there are the Corporate/M&A: Highly Regarded. A Band 3 in the Elite is probably better regarded than a Band 1 in the Highly Regarded.
Next, we talk about some things that almost nobody around you - whether that be law firms or your school professors and administrators - will freely talk about with you in the context of strategizing for law firm bidding and interviews.
The third part of this week’s triple issue will hit your inbox in the next few minutes!
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