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SEIZE THE PAY Law firms’ increasingly tight grip on the equity means that the chances of being picked for partnership are slimmer than ever. The challenge is to retain your talented assistants and your profitability. Some new approaches are needed VANESSA PAWSEY ‘DON’T EXPECT PARTNERSHIP, IT’S full,’ complains one assistant at Herbert Smith, expressing a common theme to come out of the 2004 Legal Business Assistant Survey. At Freshfields Bruckhaus Deringer, another states: ‘Currently the firm’s strategy is not to make up partners in order to boost profitability.’ While over at Ashurst, one responds regretfully: ‘If you are between six and eight years’ qualified, you will be shown the door – politely – as there are no partnership prospects.’ The message is loud and clear. Hundreds of other voices in our survey are struggling with a simple commercial reality: the equity of a law firm is jealously guarded, and at a point like this in the commercial cycle, even fewer will get a chance to share in it. It is no secret that the best and the brightest lawyers are attracted by the
56 Legal Business November 2004
prospects of partnership. Firms are still making up partners, albeit fewer. However, the perception that partnerships are closed is extremely worrying. In the worst-case scenario it could lead to the early departure of valued lawyers, while at best it means low morale and a disillusioned workforce. Either way firms can expect a negative impact on the bottom line. The challenge is to find new ways of incentivising hard work and commitment. The strongest views are coming from the UK global elite law firms, and in particular from corporate departments where the slowdown has hit
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‘This is one of the few all-equity partnerships left, so it has to be tough. In this market there’s a lot of uncertainty, and associates are looking for comfort and security.’ Hugh Crisp, Freshfields Bruckhaus Deringer > hardest. Associates at US firms express
partner promotions to increase when the M&A market returns, they agree that the benchmark and expectations of partners has changed for good. Allen & Overy managing partner David Morley says that the skill set for partner promotion is much broader than it used to be. ‘Business-winning skills are now a necessary prerequisite. We have reached a more mature stage of the legal market and we will have to work harder to grow than we have in the past,’ he explains. But despite these changes, Morley believes that the associates’ concerns are cyclical. He says it is common that, at a low point in the economic cycle, junior people feel that the senior people have sucked everything out of the partnership. For now A&O isn’t worried because it hasn’t seen evidence of people leaving to go to competitors. Morley agrees, though, that this would change if the firm started to struggle to recruit the best people at a junior level. ‘If someone devised a way of managing associates that was more attractive to them, then we would have to change our model,’ he acknowledges.
structured rivals may find themsimilar concerns. However, the fact that selves with a motivation issue they operate on a lower leverage is apprecion their hands. Solutions are ated in such times. They are also at an available. earlier development stage in London, and therefore have more opportunities for What management says dynamic growth. The Magic Circle takes a hard But it’s not to say they don’t have their line. ‘This is one of the few allproblems. One six-year qualified associate equity partnerships left, so it who joined a US firm on the basis that he has to be tough,’ says Freshwas on the track to partnership, but has fields’ chief executive, Hugh more recently realised that he’s not, told Crisp. ‘Associates are concerned Legal Business: ‘If US firms were more because, in this economic honest, they would say that there’s an uplift market, there’s a lot of uncerin salary for associates moving to these tainty, and they are looking for firms and therefore they are going to get as comfort and security.’ Associate demands much out of them as possible.’ Firms concede that the boom Most associates recognise that market condiAcross the board, respondents focused on period of the late ’80s and early tions play a large part in the growth of firms. the need for firms to develop credible career ’90s is well and truly over, and But they want partners to recognise their paths other than partnership. that therefore making partnerpredicament and offer them an alternative. This year, Freshfields Bruckhaus Deringer ship is more difficult. While ‘[Management should] acknowledge that the is ranked as the most prestigious firm in they expect the number of current partnership route, both in terms of the UK. With a score of 8.58, it nudges Slaughter and May LATHAM & WATKINS: CLEAR THINKING into second place by 1/100th of a point. But it’s the partners who are Such a move would be unthinkable in most UK When it comes to transparency, Latham & Watkins is enjoying the prestige. One firms. But according to Lucy Martin, the London-based one step ahead of the game. The US firm has an assoeight-year PQE Freshfields member of the committee, it works. ciates’ committee that is responsible for partnership assistant writes ruefully: ‘In a ‘The partnership process here is very transparent and promotions. There are 41 lawyers on the committee, few years Freshfields will have people have a clear idea of how they are doing in relation half of whom are associates. Their role is to provide almost no junior corporate to their peers,’ she says. ‘It’s a hard committee to sit on feedback on the attitudes of the rank and file. The partners.’ He adds: ‘Associates at but it’s very open and everyone’s opinion is accorded the committee meets face to face three times a year and all levels understand this and same weight. It’s very encouraging for associates.’ there is a conference call once a month. are increasingly unwilling to For Sherrell the committee is indispensable. ‘I reject According to the chairman of the committee, John give that little bit extra. And that you motivate people by paying them more money,’ Sherrell, the most pressing issue is transparency. ‘We with no chance of partnership, he says. ‘It’s people’s sense of wanting to be part of think our lawyers have more confidence in the system why should they?’ something that is valuable long term.’ knowing that there are associates involved right in the If his views are widespread, Last year Latham made up 15 equity partners. mix on all matters concerning them,’ he says. then Freshfields and similarly
58 Legal Business November 2004
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> length of pre-equity service and qualities necessary, is one that the current partnership did not have to endure,’ says a one-year qualified lawyer at Clifford Chance. Removing the climate of fear by increasing job security and the development of an alternative career path besides the one to partnership are widely cited demands. ‘[Firms should] give some thought to creating different career paths – not all leading to partnership but designed to maintain motivation at all career levels,’ suggests an eight-year qualified at Allen & Overy. These go hand in hand with calls for greater transparency. ‘[Firms should] make it clearer to people, earlier on in their careers, whether they have the “right stuff”. For those that don’t, give them options so they can depart with dignity,’ writes a seven-year PQE at Allen & Overy. At Ashurst, a three-year PQE suggests: ‘The process needs to be started earlier on to avoid a road block situation and mass departures across mid-senior assistants.’ Lawyers feel that the lack of transparency is deliberate and that firms hold back negative feedback to incentivise hard work and keep them believing that there is a chance of partnership. Broken promises are not welcome. ‘Here, many people get told they will be made up but when the crucial decision time comes, there is never enough room,’ complains a nine-year PQE at Denton Wilde Sapte. It’s a common problem. But not one that firms are willing to admit to.
The HR perspective All the firms Legal Business spoke to for this feature insist that they have improved the transparency of associate career progression. The prevalent view is that any shortcomings in the effectiveness of the process are either a result of miscommunication or of an inherent inability to predict early on whether an associate has what it takes to become a partner.
partnership prospects as they get closer to the ‘You can always improve selection process. At the same time, telling transparency, but the process valuable associates that they won’t make here is clear and in place,’ says partner too early on risks haemorrhaging Freshfields’ HR director, Tim talent. Fifty-two per cent of respondents in Cole. ‘As soon as we realise our global elite category and 65% of responsomeone won’t make partner, dents at US firms in London said that they we support them in their would look for another job if they thought next move.’ they weren’t on the track to partnership. Are firms spinning a line? Do they really believe the process they have put in An alternative model place is the best it In the traditional law firm can be or are they model, everyone gets sucked trying to meet the into the partnership game. The demands for transcareer track is the same whether parency while or not you want to be a partner playing partnership – the only difference is that prospect cards close those who make partner stay on to their chest? longer and are rewarded with A&O’s HR equity and a permanent director, Patrick position in the firm. Daley, explains that Kevin Evans, who is a senior there is a conflict associate at Paul Hastings and between the old and has written an MBA thesis cricurrent way of tiquing the partnership track, thinking, which he believes that firms are currently acknowledges damaging themselves. He says Morley: associates’ concerns are cyclical doesn’t sit naturally that career development only with all the partners. ‘The old caters for a minority of assistants. For those method of managing is to keep who want to make partner, the chances are associates running for as long as hit and miss and often depend on whether possible,’ he says. ‘But we know they find a mentor who is willing to invest this is no longer tenable.’ the time and energy in introducing them to ‘We need to get partners to clients and teaching them the necessary recognise that fact,’ Daley adds. business development skills. While, for ‘Partners have their own experithose that don’t want to become a partner, ence that informs their own the options are usually limited to an inviews. However, associates have house role. There are exceptions, but only greater expectations for clear, for people that firms deem worthy of honest feedback and a fair bending the rules for. At the UK and US’s process for partnership selection.’ most profitable firms, the ‘up-or-out’ rule In reality it’s a balancing act. continues to prevail. To get it right, firms need to According to Evans, the solution is to keep associates happy by giving implement a much more structured them honest feedback on their approach. ‘I would give people three years progress within the firm and an of being a lawyer after qualifying. Then I accurate prediction of their would ask them whether they want to continue in law and if so what career path they would like to follow. At that point the firm would tell them whether their expectations are realistic. If they are, then the assistant would move on to the next stage, and if not then between them they Julie Walker, PricewaterhouseCoopers would agree an alternative.’ At each stage the associate would
‘Up until now, equity has been the be-all and end-all, but if the goalposts start to move, then how do you incentivise?’ 60 Legal Business November 2004
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Expertly placed. US FIRMS – LONDON Tax 1-5 years’ pqe
London To US$205,000
General Banking 2-5 years’ pqe
City To £140,000
High quality work in one of the most effective US offices in London. This firm has shown time and time again why it is a market leader. The practice is expanding and now in need of an outstanding UK qualified tax lawyer. This move could take you into the big time. Interested? marcushandley@chadwicknott.co.uk
Jump to the front of the queue. Fantastic career step at this leading European practice that continues to take on the world. Working closely with the European head of finance, you will be in an excellent position to further your career. Unrivalled leveraged finance, restructuring, project finance and structured finance transactions on offer. gregmeadowcroft@chadwicknott.co.uk
Finance 1-3 years’ pqe
Employment Lawyer 0-2 years’ pqe
City To $170,000
City To £95,000
This is a dream opportunity for any talented junior finance lawyer hoping to make the move to a leading US firm in London. In addition to excellent work, training and support, the atmosphere here is second-to-none and all four lawyers we have previously placed here report good things. marcushandley@chadwicknott.co.uk
The number one employment role in the City currently. Mainly non-contentious with mix of corporate support and ’stand-alone’ work, this position will provide you with top quality work and excellent training within a happy practice with one of the best retention rates in the market. annaleensharkey@chadwicknott.co.uk
Commercial Property 1-3 years’ pqe
Litigation/Arbitration 2-4 years’ pqe
City To £Excellent
City To £95,000
Certainly a unique opportunity but nevertheless a real winner if you want regular client contact, a fantastic career development programme and top quality work. Much of the focus is investment work involving complex financial and tax driven structures. This office has something to be very proud of and has a real buzz and feel-good factor within it. charleselderton@chadwicknott.co.uk
This role involves a mixed bag of litigation and international arbitration. Joining a small but growing team you will have the immediate support of two partners well-known on the international stage. You will have a top-tier training and background and possess the ambition to succeed in a fast-paced environment. annaleensharkey@chadwicknott.co.uk
Project Finance 2-4 years’ pqe
Outsourcing Lawyer 3-5 years’ pqe
City To £100,000
Try something new. Exciting, challenging and full of career potential. Do you want to join a leading global practice where you will not be part of an army of assistants but will have significant client and deal responsibility? If you have the ability and the character this firm can give you the future. gregmeadowcroft@chadwicknott.co.uk
City To £115,000
If you are seeking stability and a defined career path in a relaxed collegiate environment, look no further. This is a one-off opportunity for an ambitious solicitor to join a top firm with an outsourcing team which is second-to-none in the market. annaleensharkey@chadwicknott.co.uk
UK FIRMS – LONDON Pensions 2-4 years’ pqe
City To £70,000
Corporate 4-6 years’ pqe
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The excellent pensions team at this Top 10 City firm seeks junior assistants to complement the department and help push the practice forward. Very highly regarded Head of Department together with a team of lawyers cut from the same high quality cloth. Workload straight out of the top drawer. marcushandley@chadwicknott.co.uk
If you want to be on the international stage, there are no opportunities to outrank this. The team handles transactions from Houston and South America to Asia and London. This integrated UK/US team of securities lawyers is after a hungry associate with no time to lose. Career advancement prospects are excellent. gregmeadowcroft@chadwicknott.co.uk
IT 2-4 years’ pqe
Banking Partner Designate
City To £65,000
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Take your career somewhere serious with this exciting Top 10 firm. A major force in the City, offering recognised expertise, its qualities set it apart from competitors. Offers a range of non-contentious work, managing both an unsupervised caseload and proactively supporting partners on more complex matters. marcushandley@chadwicknott.co.uk
Join this rapidly growing London team and position yourself for partnership in the short term. They have been extremely successful in attracting private and public sector work and an additional partner is needed to lead new projects, be they in PFI, acquisition finance or capital markets. You will get all the support you need. gregmeadowcroft@chadwicknott.co.uk
Commercial Property 1-3 years’ pqe
Private Company Corporate 3-5 years’ pqe
Lincoln’s Inn To £58,000
City To £70,000
Young, focussed, professional – all associated with this niche firm. Young partnership of ex-City lawyers, it has the best of both worlds. Develop your talents further in this hands-on role, working with exceptional clients. Growing rapidly, there are fantastic opportunities for progression, guaranteed to be a fulfilling career. You won’t look back. abbielarman@chadwicknott.co.uk
Private company work has proved counter-cyclical and highly profitable at this mediumsized firm. Hence the need for an additional ambitious corporate lawyer wishing to retain a broad range of experience in M&A and private equity. Immediate responsibility and scope to advance guaranteed. annaleensharkey@chadwicknott.co.uk
Corporate 2-5 years’ pqe
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City To £70,000
Be noticed. A chance to make a name for yourself. Fed up with little client contact, just another cog in the wheel? In this smallish team you will work on a good range of MBOs, mergers, joint ventures and SPVs. You will be able to influence the further development of the team. The perfect move if you wish to move away from factory life! charleselderton@chadwicknott.co.uk
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Magic Circle To £85,000
A rare chance to join the highly-rated team of a this Magic Circle firm at a senior level. The role will involve both UK and EU competition law and the new recruit will be expected to operate at the highest level with UK and international clients. annaleensharkey@chadwicknott.co.uk
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> get a new title and a new role as recognition of their development. The other strand of Evans’ argument is that ‘associate lockstep’, where associates are rewarded on a time-served basis, leads to a lack of engagement within the firm. He says that it takes becoming a partner to feel collective responsibility, and believes that associates having a more open relationship with partners could help to change this. ‘Here the office took a look at where it wanted to go and the people it wanted to use to get there. Usually this is done by the partners, but because the office is small I was brought on board and told what I needed to do,’ he says. ‘Now I feel much more on the inside and I would not leave so readily.’ So how do you address the change? Evans believes you need a crisis. He argues that, at some point in time, profitability will stop increasing. ‘You can’t charge clients more, you can’t bill more hours and you can’t reduce the overheads,’ he says. ‘The pyramid structure works in a boom time when firms are growing and becoming more profitable, but it can’t work long term. Now there isn’t enough work to sustain the pyramid, and natural wastage of associates doesn’t leave just those that will make partner.’ In other words, the onset of a crisis has begun.
How are firms responding Magic Circle management – those who not only achieved partnership, but then achieved pre-eminence within it – unsurprisingly have a different take on things. David Morley believes that expansion is key. ‘I don’t think there’s a mindset at A&O that there’s an absolute size above which we can’t grow,’ he says. ‘That kind of thinking is very restraining. We can grow by providing new products and new services. I think it’s a huge mistake to think there’s a finite amount of work for lawyers.’
Halton: not everyone wants to be a partner
Hugh Crisp also dismisses the idea that Freshfields’ partnership needs to adapt. His firm believes that it will continue to attract the best lawyers because it can offer people career opportunities rather than career paths. It plans to rely on the quality of its work and the unique experience it can offer its associates. ‘What scores highly at Freshfields is the interesting work. These kinds of opportunities would not be available in a system with more layers,’ Crisp says. Magic Circle firms, bar Slaughter and May, have grown so big that associates joining them have high expectations for partnership. Ambitious lawyers usually join the Magic Circle in the hope that they will become an equity partner. However, the high leverage at UK firms accentuates the problems they face. In our survey, 67% of respondents at the UK global elite between zero and two-years’ qualified said
that they expected to become an equity partner at some point in their career. That figure drops to 49% for lawyers three to sixyears’ qualified and then drops again to 46% for those that were six to nine-years’ qualified. At nine years’ PQE, a significant number must leave because, for respondents qualified for nine years and over, the percentage rises again to 50%. Interestingly, Clifford Chance is more open to change. Chief executive Peter Cornell points out that the partnership model may need to adapt going forward. ‘We might well see something similar to other professional service sectors,’ he admits. Accountancy firms, for example, have fewer partners but instead offer several other layers of management that provide long-term roles. Unlike A&O, Freshfields and Linklaters, CC doesn’t operate a formal up-or-out policy, and there are a substantial number of long-term roles for long-serving assistants.
The mezzanine layer Freshfields has introduced a senior associate title and Linklaters a managing associate title at five and four years’ PQE respectively. Promotion gives an indication to assistants that they are doing well, particularly at Linklaters, where associates need to get an assessment mark above a certain level, but are then given new responsibilities including managing jobs and mentoring more junior people. At Freshfields the promotion isn’t automatic but, according to Crisp, it’s rare that people don’t make it. At both firms associates are expected to move on if they don’t achieve partnership. Clifford Chance and Allen & Overy have both rejected implementing the so-called mezzanine layer in London. Cornell says that he isn’t hearing associates asking for it (most likely because there are already longterm roles there for assistants), while Morley says it is a common request. One partner at A&O says: ‘We have resisted making a senior associate level because we
‘Firms should make it clearer to people, earlier on in their careers, whether they have the “right stuff”. For those that don’t, give them options so they can depart with dignity.’ A seven-year PQE at Allen & Overy 62 Legal Business November 2004
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CLARKE WILLMOTT: A PROGRESSIVE FIRM Is Clarke Willmott the Latham & Watkins of the South West? Managing partner David Sedgwick has spent his five and a half years at the helm trying to get rid of the time-serving culture prevalent at most firms. He says that Clarke Willmott is much more respectful of how the job is done than for how long someone has done it. You can apply to be a senior associate at any time, but currently four years’ PQE is the youngest. The firm abandoned lockstep entirely in 2000 and, more recently, has set up a training programme for senior associates, which has become known as the ‘fame academy’. The idea is to provide a common framework for those who are selected for the training, and to equip them with the necessary skills to manage client relationships. Three out of the 12 that took part in the training last year became partners. ‘Associates want to be part of a dynamic, successful business where they can see their career path and where they can see themselves progressing,’ says Sedgwick. ‘We are looking for people who can manage client relationships and manage people within the firm, rather than people who are just good technically.’
have never managed to reach a consensus. Associates want it but partners are not convinced. Discussions always get bogged down in concerns that it will become an elephants’ grave yard.’ This, he says, could be disadvantageous for associates who could be palmed off with the senior associate role when they are coming up to partnership or have their partnership opportunities crystallised too early in their career. Morley is only too aware that one of the biggest challenges for A&O is responding to associates who say they don’t want to be a partner but would like to stay in the firm. ‘This presents an issue concerning associate motivation because there’s a limit to how long we can keep associates at the top and continue to recruit at the bottom,’ he notes.
the best will finally reach full equity status. Halton rejects the idea that creating permanent roles below equity prevents the junior talent from coming through. ‘For our model to work we need to keep growing and to continue creating new opportunities for people,’ he acknowledges. ‘And this means that management needs to make the firm better today than it was yesterday.’ That’s a tall order going forward, although DLA shows
A different view Not according to HR director at DLA, Robert Halton. He says that his firm realised a long time ago that not everyone wanted to be a partner. Like CC, DLA doesn’t operate a formal up-or-out policy and, like the accountancy firms, it offers long-term roles at all levels. There is a career grade for solicitors at four to five years’ PQE, when the successful lawyers become associates. They can then move up to become junior fixed-share partners and then up again to senior fixed-share partners, and
Walker: flexible rewards will be a focus in the future
no signs of abating growth in the next year or so. That said, the traditional partnership model at UK firms also relies on continual expansion. Managing partner Nigel Knowles claims that DLA has a clear and transparent model for reaching equity that puts the onus for the promotion on the individual rather than the firm. The model’s financial provision stipulates that the partner must bring in high enough fees to create a business case for the promotion, period. In a more traditional model, departments need to demonstrate a business case for making a promotion into the group, before a candidate is considered. Knowles inverts this logic, and insists that, as a result, DLA has never failed to make up an equity partner who satisfied this criterion. The Magic Circle firms argue that electing salaried partners, particularly as a long-term role, dilutes the quality of partnership. However, Halton says that such an elitist attitude means that very few people succeed. He asks whether such a strategy is a viable option for large firms that expect to continue growing. ‘We don’t discard people who aren’t ready to make partner,’ he says. ‘We invest in them. For example we have a development package for people who are put in the frame for partnership but who don’t make it. Often they make the transi> tion the following year.’
November 2004 Legal Business 63
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For Partners
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progress If you have a head for heights, talk to EJ Legal about taking your career to its next level. We understand the dynamics of the market, whether you’re a senior partner, junior partner, or an assistant who’s looking to make that all important step.
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A gem of a career opportunity – the kudos of a strong City name but the prospects of a younger operation. This small team, respected by its colleagues and handling almost all stand-alone (non-corporate support) work, has an opening for a strong junior partner (or a senior associate on the edge) for both succession and expansion reasons. Good culture, excellent profitability, and an opening that won’t be around for long. 17255
If you’re looking for a refreshing change from the City, you really must consider this leading West End full service firm. Circa 30 partners, it has a tremendous property reputation, which it is looking to further strengthen. You’ll need to be an extremely ambitious, young, bright and client friendly junior partner with strong marketing and particular strength on the development side. Without doubt this is an opportunity that shouldn’t be missed! 15242
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Employment
A player in the South East, this strong ‘City type’ firm is very keen to get noncontentious construction expertise on board, to capitalise on excellent client relationships and opportunities that are currently passing them by. A positive, proactive attitude is the first criterion here – the rest will fall into line. If you have the necessary skills and a burning desire to make things happen, this is something you should consider. 16714
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Private Equity
The opportunity of a lifetime exists for a motivated and charismatic employment law specialist to head up an employment unit in this circa 25-partner, collegiate firm. With total partnership support, you’ll be taking on all the firm’s employment law instructions and developing your own client base, providing an excellent platform to build your own team. A demanding role for a senior associate or junior partner with excellent rewards on offer. 16188
To £400,000
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This highly organised, focused and successful, medium-sized City practice is increasingly prominent in the private equity sector. With a booming corporate business stream, everything is in place for spectacular and continued growth: the corporate finance/M&A/banking expertise, the institutional clients operating in cash hungry business sectors and the strong corporate client base. The partnership seeks a top-flight, ambitious partner to play a leading role in the existing group, continue its investment, and build it to a dominant position in this field. 17108
£105,000 - £250,000
Outsourcing
This circa 20 partner, profitable, full service practice with a strong quality focus and a real collegiate feel, acts for a great client base including a range of international and domestic companies and entrepreneurs. City based, with a sense of humour, this firm knows where it’s going and wants to further develop its company commercial department with an ambitious senior associate or junior partner with strong client development skills. An exceptional opportunity! 5830
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A flourishing, substantial and first-rate IT practice supports our client’s reputation as one of the City’s most successful and well-focused medium-sized law firms. Highly active and successful in the banking sector the firm also acts, unusually, for several of the largest outsourcing providers and is presently instructed on a number of the major outsourcing projects as well as by leading IT industry names. The team seeks a partner to develop the outsourcing practice to ensure it remains at the cutting edge of this burgeoning sector. This is a superb opportunity for an ambitious partner or very strong assistant. 15148
From £100,000 This unique, 8 partner City practice has a real entrepreneurial focus and is looking to significantly bolster its commercial litigation capability by taking on a similarly minded, entrepreneurial partner. Highly profitable and with a surprisingly high quality client base, this is a firm that puts much larger outfits to shame. A unique opportunity awaits! 16344
Insurance / Reinsurance From £140,000
IP From £110,000 This fired-up, entrepreneurial, very profitable niche corporate firm acts for clients from international and domestic plc’s to cutting-edge, high technology businesses. With a strong collegiate culture, it’s a place you can’t fail to thrive in. The firm is looking to bring on board a partner with strong client relationships to help build its IP capability. If you feel like you need a change, you can’t afford to miss this. 15202
This highly regarded, full service practice is looking to further strengthen its already strong insurance / reinsurance team with a heavyweight insurance / reinsurance partner. With a strong collegiate culture and a blue-chip client base, it already acts for a range of national and international insurers and reinsurers. This is a wonderful opportunity to make your mark in a very profitable, friendly and successful firm. 16342
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and to pay less toward their pension at the beginning of their career, have an interval where they work flexible hours and then start paying more toward their pension in their more senior years. At the moment we are on the cusp of change. In a maturing market place, motivation and dynamism will become the buzz words for a productive set of professionals. When the upturn in the market comes, everyone will be hard at work. People will want the top salaries, but also the most energetic – and meritocratic – environment. Firms have the chance to get it right, now. A careful study of the assistants’ main worries that follow may not be a bad place to start. LB vanessa.pawsey@legalease.co.uk
‘Associates are increasingly unwilling to give that little bit extra. And with no chance of partnership, why should they?’ An eight-year PQE Freshfields Bruckhaus Deringer assistant >
then how do you incentivise?’ Knowles is equally critical of the she asks. Her words echo the lockstep model. He thinks that lockstep concerns coming out of our allows people to coast at the wrong time in Assistant Survey. their career. ‘Partners at the top of lockstep Her own belief is that the earn significant amounts of money that motivation will have to come should be paid to younger lawyers who are from other incentives and she making a more significant contribution,’ expects to see more focus on he says. ‘Our model is far more fluid.’ flexible rewards and flexible DLA’s system, which is based entirely on working that reflect age and life merit, allows lawyers to move down as well stage. For example, people as up the pecking order, and therefore might want to earn more cash equity partners who want to make a reduced contribution can move back to being fixed-share EQUITY PARTNER PROMOTIONS IN LONDON partners. Knowles says that this kind of flexibility makes it The number of equity partners made up at London’s Magic Circle firms over the past five years. much easier for the partnership to be replenished. 2000 2001 2002 2003 2004 Allen & Overy Getting it right One of the most immediate 5 17 concerns for firms is preventing 15 13 14 their partnership from becoming too old. Even if an Clifford Chance upturn in the corporate market 9 7 8 sees them able to increase the 5 3 numbers of equity promotions in a year or two, there could Freshfields already be succession issues. Bruckhaus Deringer 8 9 9 7 According to Julie Walker, a 12 member of the professional advisory group at PricewaterHerbert Smith houseCoopers, which has just 9 6 6 written a report called ‘Financial 4 12 Management in Law Firms 2004’, the trend for making Linklaters 23 fewer equity partners is a long6 15 term fact. She believes that we 12 9 might see some middle ground coming back but that the equity will be held much more tightly in the future. She says that the PwC survey raises questions about whether equity is the be-all-and-end-all. ‘Up until now, it has been, but if the goalposts start to move,
Slaughter and May 10
Total
66 Legal Business November 2004
63
7
5
3
75
45
47
4
42 Source: Legal Business
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How does your firm do? LEGAL BUSINESS LOOKS AT HOW firms can get the most out of their assistants. The aim of this year’s Assistant Survey is to find out what motivates lawyers, what incentivises hard work and what generates people’s loyalty. At the same time it exposes lawyers’ greatest fears and concerns, and points to the common changes they would like to see. The findings give some insight into how firms make associates feel insecure or misled in respect to their career aspirations, and the commentary suggests what they can do to get them working less in their own interests and more for the bottom line. This year the Legal Business Assistant Survey was sent to the top 100 UK firms and the top 50 US firms in London. The response was a massive success, with over 1,000 returned questionnaires. Only a handful of top City firms declined to take part – out of the top 20 firms, just Slaughter and May, CMS Cameron McKenna and Clyde & Co refused to co-operate. Firms were asked to send the survey to all UKbased associates in order to maximise the number of responses and ensure the results are as accurate and representative as possible. For the purposes of the survey, we have divided firms into four categories based on the groups we devised for the Legal Business 100. These are the UK global elite, other London firms, which include all firms with a significant London presence, regional firms and US firms. Moving the focus away from individual firms prevents those with a high response rate from getting a disproportionate amount of analysis. It also means that those with a lower response rate get a more comprehensive critique. The survey also asked respondents to give scores out of ten to a list of the 150 firms we sent the survey to, according to the prestige each one has in the market. The results form the most authoritative assistant feedback to that all important ‘X’ factor: the prestige in which you are held by your peers. LB
THE RESPONDENTS GENDER SPLIT
female 45% male 55%
WORKPLACE SPLIT
Regional 18%
US firms 13%
UK global elite* 14% London 55%
* See p70 for the list of UK global elite firms
SENIORITY SPLIT Unknown 5% >10yrs 5%
0-3yrs 42%
4-10yrs 48%
Source: Legal Business
November 2004 Legal Business 67
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PRESTIGE TOP 100 UK FIRMS AS RATED BY ALL RESPONDENTS (MEAN SCORE OUT OF 10, WITH 10 BEING THE ULTIMATE MARK FOR THE UK’S MOST PRESTIGIOUS FIRM) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23= 23= 25 26 27 28 29 30 31 32 33 34= 34= 36 37 38 39 40 41 42= 42= 44 45 46 47 48 49 50
Freshfields Bruckhaus Deringer Slaughter and May Clifford Chance Allen & Overy Linklaters Herbert Smith Lovells Macfarlanes Norton Rose CMS Cameron McKenna Ashurst Simmons & Simmons DLA SJ Berwin Denton Wilde Sapte Eversheds Olswang Clyde & Co Nabarro Nathanson Wragge & Co Berwin Leighton Paisner Travers Smith Hammonds Osborne Clarke Pinsents Addleshaw Goddard Richards Butler Masons Bird & Bird Farrer & Co Mishcon de Reya Taylor Wessing Barlow Lyde & Gilbert Burges Salmon Stephenson Harwood Field Fisher Waterhouse Lawrence Graham Halliwells Dickinson Dees Trowers & Hamlins Ince & Co Irwin Mitchell Nicholson Graham & Jones Walker Morris Dickson Minto Charles Russell Beachcroft Wansbroughs Shoosmiths Lewis Silkin Bevan Ashford
8.58 8.57 8.54 8.45 8.34 7.87 7.71 7.06 7.02 6.93 6.78 6.71 6.56 6.49 6.45 6.41 6.37 6.15 6.07 6.04 5.93 5.89 5.84 5.84 5.82 5.71 5.69 5.56 5.54 5.49 5.43 5.41 5.40 5.28 5.28 5.24 5.18 5.13 5.11 4.95 4.94 4.92 4.92 4.90 4.87 4.86 4.85 4.84 4.82 4.76
51 52 53 54= 54= 56= 56= 58 59 60 61 62 63 64 65 66= 66= 66= 69 70 71 72= 72= 74= 74= 76 77 78 79 80 81 82 83 84= 84= 86 87 88 89 90 91 92= 93= 94 95 96 97 98 99 100
Pannone & Partners Manches Reynolds Porter Chamberlain Speechly Bircham Withers Russell Jones & Walker Watson, Farley & Williams Mills & Reeve McGrigors Dundas & Wilson Maclay Murray & Spens Davies Arnold Cooper Finers Stephens Innocent Bond Pearce Martineau Johnson Berrymans Lace Mawer Cobbetts Hill Dickinson Freethcartwright RadcliffesLeBrasseur Morgan Cole Holman Fenwick & Willan Penningtons Browne Jacobson Kennedys Bristows Fladgate Fielder Weightmans Clarke Wilmott Ward Hadaway Blake Lapthorn Linnell Wedlake Bell Cripps Harries Hall Edwards Geldard Thompsons Shepherd+ Wedderburn Bircham Dyson Bell DWF Hewitsons Kendall Freeman Brodies Howard Kennedy Howes Percival Keoghs Thomas Eggar Tods Murray ASB Law TLT Solicitors DMH Hugh James
4.75 4.74 4.73 4.70 4.70 4.66 4.66 4.65 4.63 4.62 4.61 4.60 4.55 4.48 4.45 4.40 4.40 4.40 4.31 4.29 4.27 4.20 4.20 4.15 4.15 4.14 4.12 4.01 3.89 3.83 3.80 3.70 3.67 3.63 3.63 3.60 3.51 3.45 3.36 3.35 3.28 3.25 3.25 3.21 3.16 3.04 3.00 2.93 2.75 2.74 Source: Legal Business
68 Legal Business November 2004
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PRESTIGE – US FIRMS IN LONDON
This year, Freshfields Bruckhaus Deringer pips Slaughter and May to the post by 1/100th of a point to become the UK’s most prestigious law firm. The top six firms unsurprisingly comprise the UK global elite, with Lovells following closely behind. The next six firms, in terms of mean rating, are the London offices of US firms, with New York colossus Skadden, Arps, Slate, Meagher & Flom attracting the most respect. White & Case, which has seen a massive growth spurt this year, is also held in high esteem along with Shearman & Sterling, Baker & McKenzie, Weil, Gotshal & Manges and Cleary Gottlieb Steen & Hamilton. Also rated with a mean score of over seven are Macfarlanes and Norton Rose – ranking them above the likes of Ashurst, Simmons & Simmons, CMS Cameron McKenna and DLA.
TOP 50 US FIRMS AS RATED BY ALL RESPONDENTS (MEAN SCORE OUT OF 10) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40= 40= 42 43 44 45= 45= 47 48 49 50
Skadden, Arps, Slate, Meagher & Flom White & Case Shearman & Sterling Baker & McKenzie Weil, Gotshal & Manges Cleary Gottlieb Steen & Hamilton Mayer, Brown, Rowe & Maw Sullivan & Cromwell Sidley Austin Brown & Wood Cravath, Swaine & Moore Latham & Watkins Cadwalader, Wickersham & Taft Simpson Thacher & Bartlett Jones Day Davis Polk & Wardwell McDermott, Will & Emery Milbank, Tweed, Hadley & McCloy Dechert Debevoise & Plimpton Coudert Brothers LeBoeuf, Lamb, Greene & MacRae Kirkland & Ellis Fried, Frank, Harris, Shriver & Jacobson Dewey Ballantine Wilmer Cutler Pickering Hale and Dorr Covington & Burling Arnold & Porter Morgan, Lewis & Bockius Gibson, Dunn & Crutcher Orrick, Herrington & Sutcliffe Chadbourne & Parke Akin Gump Strauss Hauer & Feld Baker Botts Reed Smith Dorsey & Whitney Vinson & Elkins Morrison & Foerster Bingham McCutchen Bryan Cave Hogan & Hartson Paul, Hastings, Janofsky & Walker Squire, Sanders & Dempsey Kilpatrick Stockton Steptoe & Johnson Shook, Hardy & Bacon Faegre Benson Hobson Audley Howrey Simon Arnold & White Hunton & Williams Crowell & Moring Sedgwick, Detert, Moran & Arnold
7.67 7.48 7.35 7.20 7.13 7.08 6.97 6.91 6.71 6.66 6.51 6.50 6.42 6.40 6.33 6.25 6.16 6.06 5.88 5.83 5.76 5.63 5.56 5.23 5.16 4.77 4.75 4.61 4.57 4.32 4.19 4.14 4.06 4.05 4.04 4.02 4.00 3.93 3.87 3.70 3.70 3.56 3.32 3.30 3.08 3.08 2.71 2.59 2.24 2.00 Source: Legal Business
November 2004 Legal Business 69
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TOP 15 MOST PRESTIGIOUS FIRMS AS RATED BY ASSISTANTS AT UK GLOBAL ELITE FIRMS* (MEAN SCORE OUT OF 10) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Slaughter and May Freshfields Bruckhaus Deringer Skadden, Arps, Slate, Meagher & Flom Allen & Overy Clifford Chance Linklaters Shearman & Sterling Sullivan & Cromwell Cravath, Swaine & Moore Herbert Smith White & Case Simpson Thacher & Bartlett Davis Polk & Wardwell Cleary Gottlieb Steen & Hamilton Weil, Gotshal & Manges
8.95 8.75 8.50 8.43 8.35 8.30 8.29 8.29 8.08 7.83 7.68 7.65 7.63 7.61 7.52
* The UK global elite law firms are: Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Herbert Smith, Linklaters and Slaughter and May
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Slaughter and May Freshfields Bruckhaus Deringer Allen & Overy Linklaters Clifford Chance Herbert Smith Skadden, Arps, Slate, Meagher & Flom Lovells White & Case Shearman & Sterling Macfarlanes Sullivan & Cromwell Cleary Gottlieb Steen & Hamilton Weil, Gotshal & Manges Baker & McKenzie
Kirkland & Ellis Mayer, Brown, Rowe & Maw Slaughter and May Freshfields Bruckhaus Deringer Allen & Overy Linklaters Skadden, Arps, Slate, Meagher & Flom Clifford Chance Sullivan & Cromwell Herbert Smith Latham & Watkins Shearman & Sterling Lovells Cravath, Swaine & Moore Cleary Gottlieb Steen & Hamilton
8.72 8.65 8.49 8.45 8.40 8.27 8.17 8.11 7.97 7.88 7.72 7.56 7.52 7.40 7.37 Source: Legal Business
Source: Legal Business
TOP 15 MOST PRESTIGIOUS FIRMS AS RATED BY MEN (MEAN SCORE OUT OF 10) 1 2 3 4 5 6 7 8 9 10 11= 11= 13= 13= 15
TOP 15 MOST PRESTIGIOUS FIRMS AS RATED BY ASSISTANTS AT US FIRMS (MEAN SCORE OUT OF 10)
8.69 8.58 8.36 8.32 8.28 7.74 7.68 7.63 7.38 7.32 7.21 7.21 7.20 7.20 7.00
TOP 15 MOST PRESTIGIOUS FIRMS AS RATED BY WOMEN (MEAN SCORE OUT OF 10) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Source: Legal Business
Clifford Chance Freshfields Bruckhaus Deringer Allen & Overy Slaughter and May Linklaters Herbert Smith Lovells White & Case Skadden, Arps, Slate, Meagher & Flom Mayer, Brown, Rowe & Maw Baker & McKenzie Shearman & Sterling Norton Rose Weil, Gotshal & Manges CMS Cameron McKenna
8.83 8.61 8.59 8.49 8.39 8.06 7.78 7.75 7.73 7.60 7.50 7.43 7.25 7.18 7.15 Source: Legal Business
Assistants at US firms see things very differently. They rank the London office of Chicago-based law firm Kirkland & Ellis as the most prestigious firm in the UK, followed closely by the merger giant Mayer, Brown, Rowe & Maw – a great achievement for Paul Maher’s legacy UK firm. White & Case, meanwhile, doesn’t even make it into the top 15. Men and women also have conflicting views, with men opting for the traditional choice of Slaughters as the UK’s most prestigious firm, while women choose the world’s most expansive and opportunistic firm, Clifford Chance. 70 Legal Business November 2004
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PERCENTAGE OF RESPONDENTS RATING EACH CATEGORY AS THEIR PRIMARY MOTIVATION LONDON FIRMS
UK GLOBAL ELITE
Prestige 15% Generating fee income 5%
Fear of failure 13%
Fear of failure Prestige 13% 16%
Achieving partnership 30%
Generating fee income 7%
Money 37%
Generating fee income 8%
Money 36%
US FIRMS
REGIONAL FIRMS
Prestige 14%
Achieving partnership 28%
Fear of failure 12%
Fear of failure Prestige 18% 7%
Achieving partnership 31%
Generating fee income 5%
Money 35%
Achieving partnership 33%
Money 37%
Source: Legal Business
Assistants’ primary motivation is money, followed by the desire to become a partner. Worryingly, generating fee income – the job assistants are paid to do – is ranked as the least important. In the UK global elite and at US firms, just 5% of respondents claim it as their principal motivation. MY FIRM HAS A FLEXIBLE WORKING POLICY THAT I FULLY UNDERSTAND
I FEEL WELL PAID FOR THE WORK I DO Percentage of respondents who agree with this statement: UK global elite 60% US firms 88% London firms 60% Regional firms 51%
Percentage of respondents who agree with this statement: UK global elite 31% US firms 36% London firms 49% Regional firms 41%
Source: Legal Business Source: Legal Business
THE WORK TARGETS I’M SET ARE FAIR Percentage of respondents who agree with this statement: UK global elite 77% US firms 80% London firms 85% Regional firms 76% Source: Legal Business
72 Legal Business November 2004
Most assistants think their work targets are fair. However, lawyers at US firms feel that they are well paid for their work, while those at UK firms are less sure. The majority of solicitors do not understand their firm’s flexible working policy – even if it has one.
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I EXPECT TO BE WORKING IN PRIVATE PRACTICE IN TEN YEARS’ TIME
I EXPECT TO ACHIEVE NON-EQUITY PARTNER STATUS AT THIS FIRM
Percentage of respondents who agree with this statement: UK global elite 54% US firms 60% London firms 62% Regional firms 67%
Percentage of respondents who agree with this statement: UK global elite 30% US firms 39% London firms 50% Regional firms 59% Source: Legal Business
Source: Legal Business
Regional firms are under the most pressure when it comes to creating alternative career paths, with 67% of associates expecting to stay on in private practice. That said, most of them want a significant long-term role in the firm – 59% expect to achieve non-equity partner status. I EXPECT TO BECOME A FULL EQUITY PARTNER AT SOME POINT IN MY CAREER
IF I THOUGHT I WASN’T ON THE TRACK TO PARTNERSHIP, I WOULD LOOK FOR ANOTHER JOB
Respondents and seniority UK global elite 0-2PQE 3-5PQE 6-9 PQE 9+ PQE US firms 0-2PQE 3-5PQE 6-9 PQE 9+ PQE London firms 0-2PQE 3-5PQE 6-9 PQE 9+ PQE Regional firms 0-2PQE 3-5PQE 6-9 PQE 9+ PQE
Percentage of respondents who agree with this statement: UK global elite 52% US firms 65% London firms 55% Regional firms 58%
Percentage of respondents who agree with this statement: 67% 49% 46% 50%
Source: Legal Business
75% 66% 43% 50%
PERCEIVED TRANSPARENCY OF PARTNERSHIP (MARK OUT OF 10, WITH 10 BEING MOST TRANSPARENT)
74% 51% 54% 42%
UK global elite US firms London firms Regional firms
5.20 7.15 5.14 4.36 Source: Legal Business
41% 57% 48% 70%
LOYALTY TOWARDS FIRM (MARK OUT OF 10, WITH 10 BEING ABSOLUTE LOYALTY) Source: Legal Business
UK global elite US firms London firms Regional firms
7.00 8.27 6.95 6.00 Source: Legal Business
In terms of making equity, the general trend is that expectation decreases with experience. However, over half of all respondents claim they would look for another job if they thought they weren’t on the track to partnership. Finally, US firms are perceived to have the most transparent partnership selection process and regional firms the worst. Accordingly, US firms generate the most loyalty and regional the least. November 2004 Legal Business 73