Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. This week, we look at why younger partners may be particularly vulnerable to rival firms’ recruiting efforts this year. Sign up to receive this column in your inbox on Thursday mornings.
Law firm leaders are preparing for an active lateral hiring season, as the coronavirus pandemic has created a buyer’s market in some recruiting circles.
The widening gap between large, high-performing firms and everyone else means rich firms now more than ever have the financial firepower to make disruptive, splashy hires.
This week the industry saw an example of a lateral hiring strategy that some expect will ramp up in the current environment: a large firm hiring a young star from a rival’s top-performing practice group.
Latham & Watkins hired Frank Saviano from Proskauer Rose, where the young partner had worked closely with one of the biggest names in sports law, Joe Leccese, Proskauer’s former firm chair.
Saviano made partner in Proskauer’s sports group in 2017, well before the age of 40. He and Leccese led big deals together, including advising on the 2018 sale of the NFL’s Carolina Panthers. Saviano won industry awards and garnered high praise from Leccese, who called his younger colleague one of the leading partners at the firm in his generation.
Proskauer fits in the AmLaw 50 group that Citi Private Bank said strongly outperformed smaller firms during the first half of the year. Its $2.75 million in profits per equity partner last year put it among the 30 richest firms.
Latham, meanwhile, is the second largest firm in the country and its $3.8 million in PPP last year, according to AmLaw, was the 14th highest.
All of which is to say: When the richest firms set their sights on a talented young partner, it’s difficult for even high-caliber firms with their own strong 2020 lateral track records to hold onto next-generation stars.
“It is a clear example of a very important pattern in lateral hiring right now,” Kay Hoppe, a veteran law firm recruiter in Chicago, said of Latham hiring Saviano. “Go in and scoop up the No. 2 person who has experience, relationships, and great training. If you have a platform that you believe you can expand, those people are very lucky to be included. And the firm is lucky to have them.”
To be sure, top firms have sought out promising young partners for years now.
It’s a strategy Kirkland & Ellis has used to muscle its way into the top-tier of public company M&A work. The firm has hired stars like Daniel Wolf, who made partner at Skadden at age 30, and Wachtell’s Edward Lee, who Kirkland Chairman Jon Ballis called one of the “top young” M&A lawyers in the country when he was hired in May.
The ongoing move away from lockstep compensation, highlighted by recent changes at Davis Polk and reportedly Allen & Overy, is in large part driven by the difficulty firms that base pay largely on seniority have retaining young partners.
Up and coming attorneys could be even more in demand than ever on the lateral market in the era of Covid-19.
Kent Zimmermann, a principal at law firm consultancy Zeughauser Group, said some next generation stars are poised to leave their firms due to the financial uncertainty the coronavirus pandemic caused. Firms that are undersized, less profitable, or less willing to pay young talent, are in most danger, he said.
“It’s an especially good time to pursue this strategy now because the early days of Covid-19 were like a near-death experience for some lower-performing but high-quality firms,” Zimmermann said. “That caused uncertainty about the future in the minds of some very high quality teams of lawyers. Some left. Others are still thinking about it. And more will likely leave.”
Fielding an offer from a rival firm as a less senior lawyer comes with some risks, said Larry Watanabe, a prominent West Coast recruiter for law firm partners.
Partners who entertain offers from larger firms should be prepared to act on them, Watanabe said. Using those offers as leverage to get the respect or compensation partners feel they are owed by their firm can lead to trouble down the road.
“You’re posing a threat,” Watanabe said. “If you pose a threat to leave, and they can convince you to stay financially, the moment you slip up for a second there will be nobody there to pick you up.”
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That’s it for this week and next week! Thanks for reading and please send me your thoughts, critiques, and tips.