New England Biz Law Update
It is a fact of life that the legal landscape throughout New England has changed dramatically in just the past few years. The impact of the rise and fall of dot.com businesses, and a fluctuating national economy has in many cases redefined the legal market throughout the region and the nation in both the size and partnership structure of law firms.
These changes are evident to anyone who must regularly interact with law firms, although the precise nature of these seismic shifts within the profession may not be readily apparent.
For in-house counsel considering whether to expand their law departments, or return to private practice, or for those who interact regularly with any number of lawyers, these developments are especially evident, though often unclear.
Balance Is Good
Overall, those firms that are doing well have had balanced practices and did not rely on the dot.com, emerging and high-tech companies for a substantial portion of their business.
For example, Perkins, Smith & Cohen with offices in Boston, Providence and Washington, D.C. grew by 20 percent in 2002 and projects to do the same in 2003, says managing partner Larry Green, adding that although his firm represents some dot.com and e-commerce companies, this is not a substantial part of the practice.
The importance of having a balanced practice is echoed by other managing partners.
“We did not do a hiring frenzy around the dot.com boom, and thus really are not impacted by the bust,” says one. “So for us, it was business as usual, and the dot.com bust did not impact our practices or internal policies on partnership in any way.”
One law firm’s decreasing corporate business, suffering like so many firms from a slowing flow of corporate deals, has been offset by a rise in its bankruptcy practice.
Conversely, a firm with a large technology clientele has realized a decline in its corporate work without any particular practice offsetting that fall — although the firm’s patent practice remains very active.
Survey Results
Lawyers in Boston have faced the weakest legal market in memory, and the prospect of quick re-absorption is not promising, according to a recent survey conducted by Bickerton & Gordon.
Some of the findings in the survey are as follows:
Partnership Track
Many senior lawyers admit that things have changed for the worst and that in many cases the partnership track has slowed, especially in the corporate area. Of course, exceptions and variations exist.
At Hale and Dorr, managing partner Bill Lee recently told this writer that the firm’s superb corporate technology practice was affected by the economy, but that development has had no bearing on partnership decisions. He said that Hale and Dorr views them as them two different issues.
Hale and Dorr made six partners in 2001, 10 in 2002 and four in 2003. The difference, Lee said, was who came up for partnership and not the economy.
What are the partnership requirements in the post dot.com era where lawyers are still making partner?
According to one managing partner, “the track has been seven-to-nine years for some time. To position yourself, an associate needs to hit at least one of the key marks — extraordinary production, proven client development or a specialty that the firm needs.”
At Boston’s Foley Hoag, the track to initial consideration for partnership is typically eight years. Candidates are eligible at that time to be considered for either income or equity partner.
An associate or income partner is elevated to equity partner upon the approval of 75 percent of the (equity) partnership, according to Michele Whitham, one of two co-managing partners at the firm.
Brown Rudnick, Berlack & Israels, which has offices in Boston, Providence and Hartford as well as in New York and abroad, has a two-tiered partnership with non-equity partners considered after seven years and equity partners after nine years.
An official at another very large firm said the reality in its two-tiered partnership is that consideration will be given to making partner in a six-to-twelve year range. Individuals at this firm have become equity partner in as little as seven years, while others have not been elevated to income partner until after eleven or twelve years.
Another said that the track at his firm has been seven-to-nine years for some time.
Typically, non-capital partners have some voting rights. While they vote on associates who are up for non-capital partnership, they do not, of course, vote for non-capital partners who are up for capital partners.
Also, several partners from different firms with one-tier partnerships have said that those partners have one vote and compensation or longevity at the firm do not make them any more equal than any other capital partner. In fact, one partner noted that there are very few situations where the votes are not unanimous.
Having responded to recent market pressures, many law firms are taking a broader view.
Bill Lee of Hale and Dorr says that any occasional downturn in the economy has no bearing on who will make partner, as the lawyers who make partner today are the lawyers his firm wants around 15 years from now.
Although he adds that whatever the economy, “The process [of becoming a partner] moves with inexorable inertia just as before.”
Richards Gordon, Esq. is a principal of Bickerton & Gordon LLC and is a former high school teacher, banker and real estate attorney. Corporate and law firm clients in Boston, New England and nationally engage Bickerton & Gordon LLC to fill permanent and temporary positions for attorneys and contracts and compliance personnel. For more information, visit its web site at www.bickertongordon.com.
