Of all the occupational golden ages to come and go in the twentieth century—for doctors, journalists, ad-men, autoworkers—none lasted longer, felt cushier, and was all in all more golden than the reign of the law partner.
There was the generous salary, the esteem of one’s neighbors, work that was more intellectual than purely commercial. Since clients of white-shoe firms typically knocked on their doors and stayed put for decades—one lawyer told me his ex-firm had a committee to decide which clients to accept—the partner rarely had to hustle for business. He could focus his energy on the legal pursuits that excited his analytical mind.
Above all, there was stability. The firms practiced a benevolent paternalism. They paid for partners to join lunch and dinner clubs and loaned them money to buy houses. When a lawyer had a drinking problem, the firm sent him off for treatment at its own expense. Layoffs were unheard of.
Perhaps more importantly, the security of the legal profession lodged itself inside our cultural imagination. For generations, the law functioned as a kind of psychological safety net for the ambitious and upwardly mobile. If you wanted to be a writer or an actor or a businessman, you could rest assured that law school would be there if your plans fell through. However much you’d maxed out your credit card, however late you were on your rent, you were never more than an admissions test and six semesters away from upper-middle-class respectability.
“Stable” is not the way anyone would describe a legal career today. In the past decade, twelve major firms with more than 1,000 partners between them have collapsed entirely. The surviving lawyers live in fear of suffering a similar fate, driving them to ever-more humiliating lengths to edge out rivals for business. “They were cold-calling,” says the lawyer whose firm once turned down no-name clients. And the competition isn’t just external. Partners routinely make pitches behind the backs of colleagues with ties to a client. They hoard work for themselves even when it requires the expertise of a fellow partner. They seize credit for business that younger colleagues bring in.
And then there are the indignities inflicted on new lawyers, known as associates. The odds are increasingly long that a recent law-school grad will find a job. Five years ago, during a recession, American law schools produced 43,600 graduates and 75 percent had positions as lawyers within nine months. Last year, the numbers were 46,500 and 64 percent. In addition to the emotional toll unemployment exacts, it is often financially ruinous. The average law student graduates $100,000 in debt.
Art Streiber
Meanwhile, those lucky enough to have a job are constantly reminded of their expendability. “I knew people who had month-to-month leases who were making $200,000 a year,” says an associate who joined a New York firm in 2010. They are barred from meetings and conference calls to hold down a client’s bill, even pulled off of cases entirely. They regularly face mass layoffs. Many of the tasks they performed until five or ten years ago—like reviewing hundreds of pages of documents—are outsourced to a reserve army of contract attorneys, who toil away at one-third the pay. “All these people kept on going into this empty office,” recalls a former associate at a Washington firm. “No one introduced them. They were on the floor wearing business suits. ... It was extremely creepy.” Still, any associate tempted to resent these scabs should consider the following: Legal software is rapidly replacing them, too.
Part of the reason the law-firm ecosystem has changed so dramatically in a single generation is greed: The most profitable partners steadily discarded their underachieving colleagues, because they didn’t want to share the spoils. And part of the reason is the brutal recession that began in 2007, prompting corporations to slash every conceivable expense, law firms included. But the biggest problem is that there are simply many, many more high-priced lawyers today than there is high-priced legal work.
The crisis in the profession isn’t likely to improve, either. In late June, the New York–based Weil Gotshal, one of the most alabaster of white-shoe firms, announced it was laying off 60 associates, about 7 percent of its total. A few dozen of the firm’s 300 partners will see their pay cut, in many cases substantially. The news shook the legal community, both because of Weil’s pedigree and because it was one of the few firms that had weathered the recession intact. Almost as disconcerting as the firings was the way the firm’s executive partner, Barry Wolf, explained them. “We believe that this is not just a cycle, but that the supply-demand balance is out of whack across the industry,” he told The New York Times. “If we thought this was a cycle and our business was going to pick up meaningfully next year, we would not be doing this.”
There are currently between 150 and 250 firms in the United States that can claim membership in the club known as Big Law, the group of historically profitable firms that cater to the country’s largest corporations. The overwhelming majority of these still operate according to a business model that assumes, at least implicitly, that clients will insist upon the best legal talent instead of the best bargain for legal talent. That assumption has become rickety. Within the next decade or so, according to one common hypothesis, there will be at most 20 to 25 firms that can operate this way—the firms whose clients have so many billions of dollars riding on their legal work that they can truly spend without limit. The other 200 firms will have to reinvent themselves or disappear.
So far, the transition has not been smooth. In fact, the more you talk to partners and associates at major law firms these days, the more it feels like some grand psychological experiment involving rats in a cage with too few crumbs.
If you set out to pick a single firm to capture the escalating plight of Big Law, it would be hard to do better than the Chicago-based Mayer Brown.
At the time of its founding in the early 1880s, there were two basic approaches to running an establishment law firm. The prototype for the first was Cravath, which traced its lineage back to Secretary of State William Seward in the 1800s and became perhaps the most genteel firm in America. The “Cravath model,” which spread to other corporate firms on Wall Street, was to hire a large number of associates from the five or ten best law schools in the country and then weed them out, so that only the most brilliant legal minds ascended to its partnership. (Historically, about one in twelve associates made partner.) Those who didn’t advance nonetheless came away with the most sterling legal credential in the world. They had their pick of top government and corporate jobs, or partnerships at other leading firms. In the meantime, they were socialized into the mores of the gentleman lawyer—rivals referred to Cravath as “graduate school” for attorneys—while the firm made a killing by billing them out at top-of-the-market rates.
The alternative approach might be dubbed the “Chicago model,” after the city that housed the most white-shoe firms outside New York, though it took hold in most other large cities, too.1 Befitting its Midwestern roots, the Chicago model was less competitive. Although the top Chicago firms could be quite choosy in their hiring, says Indiana University’s Bill Henderson, they typically had far more partnership slots available for the associates they brought on and promoted many more of them. As a result of this lower “leverage”—the ratio of non-partners to partners—the Chicago firms were traditionally less profitable. But they were less rigid and hierarchical, and gave associates more responsibility sooner.
MOTHER MAYER’S CHILDREN
Mayer Brown LLPPAUL THEISSMayer Brown’s chairman isn’t particularly bullish about the law’s future: “I don’t think ... that this isn’t only a temporary situation,” he said.
Mayer Brown was the paradigmatic Chicago firm. Thanks to its ever-accumulating pile of clients, money, and influence, Mayer Brown could afford to be exceptionally generous to its lawyers, and it took great pride in nurturing them. For decades, its nickname was “Mother Mayer.” Every morning at 9 a.m., the most senior partners mixed with the lowliest associates over donuts and Danish in an eighteenth-floor coffee room. At night, they would huddle at Binyon’s, a nearby restaurant, to dine on the firm’s tab. “It would envelop you, take care of you forever,” says a former partner. Admission to the partnership after seven years was the natural order of the universe as Mayer Brown understood it. “The ground rules were: Do legal work of a high quality. Work reasonably hard, and keep your nose clean. Don’t make stupid mistakes,” says Alan Salpeter, who joined the firm in 1972 and became one of its highest-billing partners. “I was not exceptional.”
The only major adversity Mayer Brown encountered came in 1984, when Continental Illinois Bank, which supplied one-third of the firm’s revenue, collapsed amid a pile of bad oil-patch loans. It took some heroic improvisation by the firm’s then co-chairman, Bob Helman, to navigate the turmoil.2 But such was Mayer Brown’s sense of entitlement—so validating was the glow it lent clients—that even Continental couldn’t shake it. Within a few years, Mayer Brown was minting partners with little regard to the bottom line.
MOTHER MAYER’S CHILDREN
Greenberg Traurig Maher LLPPAUL MAHERMaher was a divisive figure within the firm (nickname: the Dark Sith Lord) who felt as if it was too staid for its own good.
In the meantime, some firms outside New York were already beginning to depart from the Chicago model. The proximate cause was a previously obscure statistic known as profits per partner, or PPP—the firm’s profits divided by the total number of equity partners. The PPP came into vogue in 1985, when a trade publication called The American Lawyer began publishing an annual ranking that touted it heavily. All of a sudden, firms that had previously considered themselves rough equals discovered they were separated by vast chasms of wealth.
Many believed the PPP numbers would be self-reinforcing. Firms with high PPPs would have an easy time attracting rainmakers from rivals and become ever more successful. On the other hand, a low PPP could send a firm into the equivalent of a bank run: The most profitable partners would depart for bigger paydays, depressing PPP further and encouraging the next most profitable partners to leave.3
MOTHER MAYER’S CHILDREN
Mayer Brown LLPJOEL WILLIAMSONA tax attorney and a legend at Mayer Brown. Colleagues don’t begrudge him his multimillion dollar salary—they just begrudge other peoples’.
By the early 2000s, even Mother Mayer was anxious about this changing landscape.4 To make things worse, clients were beginning to question the expenses firms long used to pad their bottom lines—everything from 25 cents a page for photocopying to $250 an hour for a first-year associate with no legal skills to speak of. It was fair to wonder whether Mayer Brown would soon be earning too little to support its sprawling brood. In 2002, it acquired the London firm Rowe and Maw in hopes of adding lucrative bank business. But Rowe and Maw had less cachet in the United Kingdom than many at Mayer Brown had been led to believe, and the profits were disappointing. Many in the firm’s leadership believed they had little choice but to cut unprofitable partners.
The most formidable figure in this internal debate was the ambitious head of the firm’s London office, Paul Maher. Maher inspired a mix of awe and resentment, with his withering rhetorical style (he was prone to belittling partners “uncontaminated with clients”) and brass-tacks assessments (he opined that struggling satellite offices like New York and Los Angeles should be hacked down to size). Some of the firm’s big producers appreciated Maher’s modernizing ways, but several Chicago partners were deeply suspicious, dubbing Maher the “Dark Sith Lord.”5 Maher, in turn, alternately (if not always coherently) referred to his detractors as “the isolationists” and “the neocons.”
Maher’s view eventually prevailed. “You can’t pay a guy writing briefs seven hundred, eight hundred, nine hundred thousand, a million dollars,” says a former partner, describing what the rainmakers dubbed “bracket creep.” In 2007, the firm’s management committee stripped more than 10 percent of these brief-writers of their equity stake—45 total—only weeks before Mayer Brown held its annual partners meeting in London.6 The timing was unfortunate. Many partners had already reserved plane tickets for their spouses at their own expense. “They were all ready to go when the pink slips came out,” recalls a partner with a close friend who was affected. “One of the guys let go had that day booked a flight for his wife.”
The partners who made the trip were unsettled by its poshness. Mayer Brown had rented out the Grosvenor House hotel, one of the most expensive in London, and booked top billers into cavernous suites overlooking Hyde Park. One evening, the firm chartered boats to take partners down the Thames for dinner at the Royal Observatory in Greenwich. When they arrived, they were escorted down a canvas carpet by guides carrying torches and dressed like beefeaters. The speaker for the evening was the future British foreign secretary, William Hague.
Back at the hotel, the conference featured presentations by senior partners, including Maher, who took the stage amid strobe lights and booming rock music. “It was like one of Apple’s product launches,” recalls one partner. Maher talked about integrating all corners of Mayer Brown’s far-flung empire. Above all, he dwelled on the need for profitability. Some of Mayer Brown’s rivals were boasting PPP of $2 million. Maher set a goal of approaching that figure, an ambitious target given that the firm’s profits were barely more than half this amount. Sitting there, “rolling their eyes at the volume and the lights,” as one partner recalled, the old guard no longer recognized the firm they had joined.
No relationship in the legal profession is more fraught than the one between partners and their money. On the one hand, the generous pay is a major reason they became attorneys in the first place. On the other, it is often their biggest source of misery.
Although there are almost as many different schemes for compensating partners as there are law firms, they all fall somewhere along a spectrum that runs from “eat-what-you-kill” to “lockstep.” In a pure eat-what-you-kill system, each partner takes home only what she generates in income, after covering expenses and paying staff and associates. In a pure lockstep system, pay isn’t tied to what a lawyer brings in, and partners of the same seniority make the same amount. The classic lockstep firm is New York–based and corporate, so overflowing with pedigree that it has its pick of business. (The old joke is that times are tough when Cravath picks up the phone after two rings rather than three.)
For decades prior to the 1980s, Mayer Brown tilted in the lockstep direction. But, after the collapse of Continental, Bob Helman realized the firm would go under if his partners sat around waiting for business to walk in the door. Hereafter, he decreed, each partner’s compensation would depend heavily on the amount of business he or she drummed up.
Helman’s plan may have worked too well. Ever since it went into effect, partners have competed aggressively not just against lawyers at other firms, but against one another. Chicago partners would fly into New York to poach clients from their Manhattanite counterparts, holding clandestine meetings in which they would pitch themselves as less expensive and a mere two-hour plane ride away.7 When the New Yorkers invariably caught wind of these plots, they would remind clients that they were far more efficient than their Midwestern cousins. “What we would end up saying is ... ‘Chicago will staff you with four partners on something we’d staff with one or two,’” recalls a former partner. “It’s crazy that I have to go in and have a conversation about it. Denigrating.” (The problem has been somewhat mitigated in recent years by more formal firm-wide “client teams,” though many still complain about the struggle to be included.)
Like most large law firms, Mayer Brown has a well-established system for tracking the hours a partner bills and the amount of business he or she generates for the firm. This—especially the second—is the ostensible basis of his or her pay. As a result, the process of determining compensation would seem to be largely mechanical: The data come in, the numbers get tallied, and a final sums pop out.
In practice, settling on compensation for partners at Mayer Brown, as at many firms, is an elaborate ritual that runs through the first two months of each year and includes a remarkable amount of special pleading by way of memos and personal interviews. Finally, in late February, the management committee hands down the “points list,” Ten Commandments–style, enumerating what share of the firm’s profits each partner is entitled to. In a typical year, each “point” might be worth $3,000, so that someone who received 500 points would take home $1.5 million. (The firm may also award a bonus on top of this amount.)
Unlike most other firms, Mayer Brown then introduces a final wrinkle: The points list is disclosed for all to see. Since each partner aspires to be among the 50 who make the first page, where the highest earners appear, the amount of resentment this engenders is hard to overstate.
Before 2007, there were often 75 or 100 different levels of income. Two partners making over a million dollars per year could be separated by as little as ten thousand dollars. Now, the firm has more of a lockstep model, slotting every partner into one of roughly 15 “bands” and awarding each person within a band the same number of points.
Alan Dershowitz, Michael Kinsley, and Others on How to Fix Law School
The new system was supposed to eliminate the brutal internal competition for credit and the frenzied haggling during compensation season. “It was very clearly explained to people that, when you’re in a band, you’re probably in it for two-to-three years,” recalls a former partner on the firm’s management committee. “If you had a great onetime year, you’d get a bonus. ... But you’re not going to move a band because of one change.” It didn’t pan out that way. “Practice leaders ... would say, ‘Here are fifteen people who need to move a band,’” adds the partner. “All hell broke loose.”
Given that it is human nature to hoard in lean times, it didn’t help that a recession was about to bear down on the firm. When the points sheet came out in February 2009, partners discovered that each point—the share of profits they were entitled to—was worth roughly 20 percent less than the previous year, a huge pay cut. The following February, the points were devalued by 10 percent more. This in itself was understandable; the firm had been hit hard by the financial crisis. But when the partners looked more closely at the points list, they noticed something infuriating: A small minority of their colleagues had been made whole through bonuses.
Some of the beneficiaries were major business generators. As 2008 wore on, many of these big shots had eyed the exits and a few began to leave. “Rich Morvillo”—a prominent white-collar criminal defense lawyer—“said, ‘I don’t want to be the last man standing in D.C. If there’s going to be an exodus, I’m going to be part of that,’” recalls one former partner. Meanwhile, others simply let it be known that they were out the door unless the firm opened its wallet—“the table-pounders,” as some called them. While the logic of appeasing them was self-evident, the message it sent was terrible. “There was a sense among many of us at the time that the firm had in good faith been trying to move from eat-what-you-kill to a more collectivist culture,” recalls one former partner. “It was a serious backtrack—punishing partners who had been playing by the rules.”
Even more frustratingly, entrée into this protected class didn’t always correspond to productivity. The 2010 points sheet, which one partner shared with me, illustrates the problem. There is exactly one person in band 16—a tax lawyer named Joel Williamson, who was awarded 768 points that turned out to be worth about $2 million, along with a standard bonus of $400,000 and a “super-bonus” of $400,000 more.8 Williamson is a giant of his profession and brings in several dollars for each one he earns. No one begrudges him his generous compensation. But not far below Williamson, there are names that inspire more controversy.
One is a litigator named Joe De Simone, who joined Mayer Brown in 2000 and made equity partner six years ago. De Simone is a talented lawyer with powerful patrons and a knack for landing important positions in the firm.9 As such, he has been a reliable generator of revenue, but much of it has come by way of what’s known as “institutional business”—firm business that falls in his lap.
Between 2008 and 2010, De Simone vaulted from band four to band eleven, an almost unheard-of ascension. This new status afforded him 508 points (worth $1.13 million in 2009). De Simone received no standard bonus on the 2010 points list, but was awarded a $400,000 bonus marked “other.” (He told management that he’d received an offer from another firm.) “Joe was way behind what his business generation and client service commitment would justify,” says Richard Spehr, the head of the New York office. “We felt that Joe’s compensation should reflect his total contributions to the firm, including representing institutional clients.”
When the firm was flush, few might have minded rewarding a good company man like De Simone. In these leaner times, though, it stung. Any bonus “violates the concept of partners working together,” says a former colleague, who brought in several times the business that was expected of him—all of it his own—and still saw his pay cut substantially. But it was the second-level bonus that really chafed. “It’s just noted as a special arrangement,” adds the colleague. “You have no idea how big that pool is.”
There was frustration with other aspects of the new compensation system, too. Previously, partners were reluctant to ask colleagues to help on their pitches, because credit was a zero-sum game: If a partner landed the business, she would have to award some of the credit to the colleague, leaving less for herself. Under the new rules, the firm allowed the partner to claim up to 100 percent of the credit herself, then dole out up to 100 percent more among any partners who had helped.
This encouraged collaboration at times, according to several former partners. The downside was that many began to view the additional 100 percent worth of credit as a slush fund, ladling it out to friends with little role in their cases or transactions. “It led to sleazy deals,” recalls one former partner. “It took about thirty seconds for people to figure it out.” Says a former finance lawyer of two senior partners in his group: “I saw the billing going around. One was getting credit on stuff the second opened, and the second was getting credit for stuff the first one opened.” There seemed to be no way around it: The more Mayer Brown set out to fix its problems, the more deviously its partners behaved.
As demeaning as life can be for a partner these days, it’s altogether soul-crushing for an associate. One of Mayer Brown’s young attorneys recalled scaling back her hours around the time her first child was born. The new schedule meant getting to the office by 6:30 a.m. so she could leave by 6 p.m., in time to put her daughter to bed. The problem arose when she had to work late, a not infrequent occurrence. “Then you’re in the office from 6:30 a.m. till 1 a.m. It sucks even more,” she says. Periodically, some of the women partners would lead seminars on striking a work-life balance, but she found them of limited use. “The primary talk we would get was: ‘Outsource your life. Your husband can stay at home. Or you can hire a cook, a cleaning staff, and you can [spend time with your kids] on vacations.’ Thanks.”
The legal profession has, of course, struggled with these challenges for decades. The problem is that the rewards today are less certain than ever before. There is, for one thing, the ever-lengthening partnership track. In 2004, the firm introduced something called an “income partnership,” a probationary period in which promising lawyers have to prove their worth before earning an equity stake. To the outside world, it looked like the income partner had arrived. Her business card said she was a partner, as did the press release the company issued. But, in reality, making income partner typically means three-to-five more years of hustling, after which the lawyer may come up for the true promotion. (It wasn’t lost on associates that, when a lawyer becomes an equity partner, she receives a budget to order plush new furniture, while income partners keep “the same stuff I had,” as one put it.) Becoming a bona fide partner at Mayer Brown, like many of its competitors, is now a ten-to-twelve-year proposition.
This epically drawn-out process has exacerbated other problems. While it never hurt to have a well-connected mentor within a law firm, today such a rabbi is essential for making partner. Unfortunately, it can be agonizingly difficult to figure out who will have influence years down the line, since partners constantly come and go or lose status within the firm. “You have to pick a horse in the race,” says a former associate. “Your horse may win. It might get taken out back and shot. But if you don’t pick a horse, you have no chance.” In the early to mid-2000s, Mayer Brown’s New York office was dominated by two prominent litigators who didn’t get along and who eyed each other’s associates warily. “Your first year, you figure, ‘I’ll be nice to everybody,’” says the associate. “Three years down the road, being nice to everybody is not doing anything for me.”
As for their own protégés, the partners seem less invested than ever before. One former income partner told me the way he learned he had no future at the firm was through a two-line e-mail from the head of his practice group: “The partners have determined that you will not be an equity partner. If you have any questions, please contact me.” He promptly called the senior partners he had been closest to during his decade at the firm, two of whom had attended his wedding. Neither ever responded.
Even lawyers with a dedicated mentor have trouble making equity partner unless they meet a second criterion: demonstrating a potential for attracting clients. There is an irony that flows from this. Lawyers at an elite firm like Mayer Brown have typically spent their lives amassing intellectual credentials. They are high-school valedictorians and graduates of elite universities, with mantles full of Latin honors. They have made law review at top law schools and clerked for federal judges. When, somewhere between the second and fifth year of their legal careers, they discover that brainpower is only incidental to their professional advancement—that the real key is an aptitude for schmoozing—it can be a rude awakening.
Fortunately, Mayer Brown doesn’t expect its lawyers to actually drum up business until they make income partner, although it certainly isn’t frowned upon beforehand. The bad news is that it’s not only enormously difficult to accomplish this as a young lawyer; it can be a struggle to receive credit even when you succeed.
One Mayer Brown associate had worked at a large bank before joining the firm, and, in 2010, a former colleague there asked him to assist with a major financial transaction, quoting him a sizable fee. The senior partner in his group congratulated him on bringing in the business and told him they would work on it together. But, within a few weeks, the partner simply appropriated it for himself. “He said, ‘I’m going to be working with [another lawyer] on this,’” recalls the associate. “It was pretty ballsy.” Still, not as ballsy as what came next: A few months later, the partner went abroad on vacation with the deal still pending—and asked the associate if he might kindly wrap it up for him.
In fairness, only an income or equity partner can open a “matter” (and therefore formally receive credit) under the firm’s administrative scheme. But tales of partners gobbling up their younger colleagues’ clients are legion. One lawyer recalled bringing in several cases as an associate, for which he assumed he would later get credit, only to have partners blow him off once he made income partner and tried to reclaim it. Another income partner worked on a transaction as part of a team with a more senior partner, and the client was interested in giving the firm more business. “[The senior partner] was pitching for work with the client behind my back,” says this person, to whom the client forwarded the other partner’s e-mails. “I congratulated him when he got a deal. He responded in a nasty way: ‘You need to find your own work.’”
The scratching and clawing was unquestionably made worse by the recession and its demoralizing aftermath. “[The partners] were under a lot of stress,” says one of the wronged lawyers. “That was a tough, tough time.” But the recent downturn only goes so far in explaining the behavior, which has been on display for years. One Mayer Brown partner named Mike Mascia was sufficiently scarred by the struggles he endured as a younger lawyer that he has since become famous around the New York office for his advice to junior colleagues. Your best hope at landing clients, Mascia says, is to attach yourself to an aging partner and “steal his clients when he retires.”
Right, the recession. it is almost impossible to overstate the trauma of that moment on the associates who lived through it. For decades, elite law firms simply refused to entertain layoffs. In tough times, they might hire slightly fewer newbies. They might trim their numbers through attrition or let some go through suspiciously timed upticks of lousy performance reviews. But laying off dozens of associates at a time was simply too grim to contemplate. Besides, the big firms saw themselves in a bitter competition for the sharpest law school grads and worried that mass firings would get them blacklisted at the Harvards, Chicagos, and Berkeleys of the world.
Mayer Brown was among the first to break with this tradition, laying off 33 associates in November of 2008. Part of the problem is the way law firms hire associates, which effectively happens almost two years in advance, when they offer summer jobs to second-year law students. (Almost everyone who “summers” at a firm like Mayer Brown receives a full-time offer.) Although this makes every firm vulnerable to sudden economic collapse, it was especially debilitating for Mayer Brown. During the boom years of the mid-2000s, the firm had made a killing helping investment banks slice up mortgages and sell them off to investors, a process known as securitization. But when the securitization market abruptly turned in late 2007, Mayer Brown had just brought on 98 American associates and had already committed to 100 more the following year. In 2008, the crisis spread from the financial markets to the entire economy, and the firm had no choice but to clean house.
Even so, the taboo remained. Mayer Brown only acknowledged its first round of layoffs after a popular legal blog, Above the Law, posted rumors of them. It would take a few more months for the industry to get over its queasiness—specifically, until February of 2009, when the venerable corporate firm Latham & Watkins announced it was cutting 190 of its own. The firm’s name abruptly entered the legal lexicon as a verb: “to be Lathamed.” But whatever ill will it generated, the firm’s move had the effect of giving cover to its too-proud competitors. “Latham was regarded as one of the most successful firms in the world and one of the best run,” says Tom Goldstein, who recently ran the litigation department of Akin Gump, a large Washington firm. “[After Latham], that stigma was gone.” Mayer Brown would have two more waves in 2009 and 2010.
The firm was relatively generous to the associates it fired. It typically gave them three months’ salary and benefits. It let them work from their offices while they looked for jobs and provided them with career-counseling services. After the second round of layoffs in 2009, it tried to avoid a third by placing associates in-house with major clients and paying them $60,000 plus benefits for a year, in the hope that the client would hire them permanently. The blow to morale was nonetheless enormous. “Once you have one round, pretty soon you’re cutting into good people,” says a former associate. “There was almost a survivor mentality—sort of guilt mixed with rage. ... The partner at the top made the choice of who stays, who goes. It colors your view of that person.”
Over time, the remaining associates began to subtly turn on each other. J. Davidson started in the firm’s finance practice in September 2007. Initially, there was enough work to keep associates busy, and they would beg off less desirable assignments. “It was like, ‘Who wants to do that?’ and you’d pause and stare at each other,” says Davidson. Once the bottom completely fell out in 2009, however, associates would lunge for even the most tedious tasks. “You were lobbying for the work before it was even happening.”
Davidson’s mentor had recently moved to the firm’s Charlotte office, making it even more difficult for him to score assignments. Face time, always a crucial commodity in law firms, became oppressively so. Every day, he would make the rounds of the partners in his practice to let them know he was free. And, almost every day, they would give him the runaround: “They’d say, ‘Give me a call later.’ I’d call later, and they’d said, ‘Ehhhh.’”
Somewhat perversely, when associates like Davidson finally did get an assignment, it became more important than ever to turn it around quickly. The faster you worked, the less you appeared to have on your plate, and the more partners might send your way. Even if a partner gave you several days to complete the task, the last thing you wanted to do was take the whole time. Suddenly, a new phenomenon was born: The gratuitous all-nighter.
And then there was the nagging fear that one day a partner would drop by your office and, instead of handing out an assignment, would shut the door and explain apologetically that the firm was staffing down. In normal times, getting fired wouldn’t be the end of the world. But in the middle of a brutal recession, it could be disastrous: Every other major law firm was laying off associates. Corporations were slashing their in-house legal staffs. “There was no place for people to go,” says a former associate. Even contract work was unavailable: The staffing firms often deemed the out-of-work associates “overqualified.”
Art Streiber
In May, I spoke to a former Mayer Brown associate who joined the firm’s finance group out of law school in 2001 before transferring to the pensions department so she could work saner hours. The associate, call her Helen (not her real name), survived two rounds of layoffs, then got pregnant in 2009. Helen had previously felt she was on track to make partner—her performance reviews were consistently strong—but she began to worry as she was preparing to go on maternity leave. “We would have these group meetings where we’d talk about billable hours, how down they were for our group. I knew that, if there was another layoff, we were going to be hit.”
Helen’s son was born on March 19, 2010. Just before he turned three weeks old, she received the call she’d been dreading. Mayer Brown gave her the rest of her maternity leave, plus another three months pay as severance. It was, under most circumstances, a fair offer. But Helen was in a bind. Her husband was a stay-at-home dad, and the couple owned a condominium in downtown Chicago. “I sent out a ridiculous number of resumés,” she says. “If I didn’t have a job lined up by time the time the severance ended, I didn’t have a way to make payments on my house.” She landed two or three interviews and no offers. “The market was so bad in the spring of 2010. Not a single law firm was hiring.”
Inevitably, the bank foreclosed on her condo. She and her husband relocated to the Michigan town where he grew up, and she eventually joined a local firm. Her annual salary when she left Mayer Brown was $230,000. Last year she made $40,000. It was barely enough to put food on the table and clothe her children, much less keep up with tens of thousands of dollars in law school debt. “There’s probably a bankruptcy in our future. I don’t think there’s a way out of it,” Helen told me. “In ten years, hopefully we’ll be financially recovered, we can buy a house, have a credit card again.” Before we hung up, I pointed out that the legal market had improved since 2010. Why not look for another fancy job in Chicago? “There’s no way I would go back to Big Law,” she said. “I’m doing a lot of criminal law now. I love it. It’s originally what I’d intended to do when I went to law school.”
In late June, I traveled to the Chicago headquarters of Mayer Brown to meet with the company’s chairman, Paul Theiss. The firm moved into the gleaming 48-story Hyatt Center a couple years before the recession. At the time, it occupied twelve floors and had an option to lease more. As of this year, it hadn’t exercised the option and had even shed a floor. An associate who left in 2012 estimated that, before the firm gave up that floor, there were five attorneys in a space that could accommodate more than 50.
The firm had resisted making any member of management available to me for weeks, and when I finally did turn up, Theiss’s team seemed to be on edge. He was flanked by the company’s marketing director, Peter Columbus, and head of public relations, Bob Harris, in a conference room on the thirty-second floor. As I entered, Harris invited me to have a seat in a chair next to a large brown accordion folder. It was packed with documents attesting to the firm’s basic humanity—promotional literature, industry reports, press clippings. The three of them spent a good 45 minutes reviewing it before I could get off a question I’d prepared.
Theiss, who just finished his first year as chairman, was jacketless, with weary eyes and a throaty voice. He had a winning blue-collar affect—similar to a police lieutenant’s or fire captain’s—that was at odds with his corporate-lawyer resumé. I could immediately see the appeal of anointing him chairman after years of internal strife: He is someone who, by his mere presence, makes you feel embarrassed to lobby on your own behalf. When I alluded to “income partners,” Theiss interrupted and said, “partners, we’re all partners.” He invoked the word “team” several dozen times during our two-and-a-half-hour conversation, only part of which was on the record.
More than anything else, Theiss was at pains to transmit an upbeat image of life at Mayer Brown. In his telling, associates are energetically nurtured—he had just returned from an associate retreat in Virginia where he spoke about career development—and they have a better shot of being promoted than at competing shops. As for partners, he said: “We regularly have people approach us from other firms who are very unhappy with exactly what you’re describing, who not only hear about the way we do things here, but when they get here, they invariably are happy that it’s actually true. That there is a premium on teamwork and cooperation.”
There is certainly some evidence to support this. The firm’s Washington office, with its prominent Supreme Court practice and antitrust lawyers, has been notably cohesive for years. Some industry-wide surveys of associates rate life at Mayer Brown very highly (though others give it middling grades). Still, it was hard not to feel as though we were talking past each other. Theiss seemed most eager to show how favorably Mayer Brown compared with its competitors when it came to its lawyers’ personal fulfillment. I was, in turn, happy to concede that Mayer Brown was no laggard in this respect, and in many ways above average. That was, in fact, the point. If Mayer Brown is what passes for civility, then what should we make of the rest of the profession?
In any case, the real question hanging over the conversation was economic. If corporate America continues to be so stingy in its legal spending, Theiss could be as well-intentioned as a Peace Corps volunteer and still not have much to offer his lawyers beyond competently managed decline—charging clients the same for more work, or less for the same work; shedding bodies, or keeping the same number and paying most of them less. Theiss talked excitedly about “the drive for efficiency.” But it was hard not to see this for what it is: the further immiserization of the legal class.
It was only when I suggested that a mere fraction of the world’s Big Law firms would survive another decade or two that I grasped the bone-fatiguing chore of running such a business. Theiss wouldn’t endorse the premise, but he didn’t exactly refute it, either. Demand had stopped growing, he told me. There was “substantial overcapacity.” Billable hours were way down industry-wide. “I don’t think anybody who follows the profession would suggest that this is only a temporary situation,” he said. The longer Theiss spoke, the bleaker the picture became. Finally, Columbus, the marketing director, attempted to steer the discussion in a more upbeat direction.
“I think it’s fair to say as well, as the general economy improves ... legal demand should increase,” he interjected brightly.
But Theiss cut him off. “Uh, OK,” he said, looking rather skeptical. “I mean, maybe.”
Noam Scheiber is a senior editor at The New Republic. Follow @noamscheiber.
- The definitive work on the Chicago legal world in the twentieth century is Partners with Power by Robert Nelson of Northwestern University.
- The firm’s other co-chairman, Leo Herzel, also played a key role in keeping it afloat. But the Mayer Brown lawyers I spoke to from that era recall Helman as the more dominant force.
- There was a second development that reinforced this trend: A regulatory change in the 1990s allowed law firms to incorporate as limited liability partnerships (LLPs) rather than general partnerships. The change mattered primarily for the one thing law firms know best: lawsuits. If a member of a general partnership commits malpractice, and a court hands down a half-billion dollar judgment against him, every one of his colleagues is financially responsible. But under limited liability, the other partners are largely insulated.Prior to the LLP-ization of the legal profession, inviting someone into your partnership meant vouching for their professional integrity with your home, you cars, your retirement savings. Not surprisingly, partners typically felt most comfortable promoting from within, since it gave them years to assess a lawyer’s scrupulousness at close-range. But amid the LLP craze, scrupulousness became secondary. Now it was in a firm’s interest to find partners who could make the biggest contribution to its bottom line. This made them even more interested in recruiting rainmakers from other firms.
- For more on these trends, see The Lawyer Bubble by Steven Harper.
- Nathan Carlile of Legal Times first reported this nickname in an excellent piece about Mayer Brown’s internal political struggles back in 2007.
- Some of the de-equitized partners were allowed to stay on indefinitely as salaried employees, albeit for lower pay. Others were given until the end of the year to find new jobs.
- Andrew Longstreth of The American Lawyer authored the best in-depth look at Mayer Brown’s New York/Chicago split back in 2006. In it, he explained this phenomenon at length. You can read the piece here (subscription required).
- This glosses over a small nuance: The “points list” that comes out every February slots each partner into a band and assigns them points for the current year. The points list also reveals how much each point from the previous year is worth, as well as how big a bonus each partner has received (if any) for the previous year. So, for example, the February 2010 points list revealed the value of Williamson’s 2009 points (which were allocated to him via the February 2009 points list), as well as his 2009 bonus. Williamson wouldn’t find out how much his 2010 points were worth until February 2011, when the next points list came out. It’s the mix of retrospective and prospective elements that make Mayer Brown’s compensation scheme so convoluted.
- For example, De Simone is currently head of the New York office’s litigation group, and a co-leader of the firm’s securities litigation group.