Summary List Placement
Davis Polk & Wardwell, one of the country’s oldest and most established law firms, announced on Thursday that it is switching to a modified pay system.
The move leaves just a few firms, such as Cravath, Swaine & Moore and Debevoise Plimpton, as strongholds of the traditional strict-lockstep model, where lawyers’ compensation is determined by seniority.
“Davis Polk has long been a hold out on lockstep, but this is going to put more pressure on the remaining firms,” said Alisa Levin, principal of legal search group, Greene-Levin-Snyder.
The new modified system “recognizes and rewards the entirety of a partner’s contributions on behalf of clients and in support of firm priorities,” Davis Polk said in a statement.
Some think the change is a way for the firm to grow in an increasingly competitive market. In an interview with Bloomberg Law, which first reported the change, Neil Barr, a managing partner at the firm, said, “The firm is strategically focused on measured growth and we are cognizant of the market environment in which we find ourselves.”
Legal experts that Business Insider spoke with, however, see the move less as one geared toward attracting new talent, and more about keeping the talent they already have.
Fending off other law firms to keep “their best people in the door”
Davis Polk’s momentous move comes at a time when law firms have been using higher pay to tempt rainmakers at other firms.
On Monday, Cleary Gottlieb, which abides by the traditional partner compensation model, lost Neil Whoriskey, who co-led its M&A practice, to Milbank, as first reported by the American Lawyer. Cleary has been hit by a number of exits from their M&A practice to Freshfields in late 2019, per Above the Law. Freshfields abandoned the lockstep model earlier that year.
“Firms like Kirkland and Paul Weiss have shown that they’re willing to pay up for the top people,” said Avery Ellis, national executive managing director and senior recruiter at Mestel & Company, adding that some firms have shelled out anywhere up to $12 million, or even more, to attract top-performing partners. The New York Times reported that Sandra Goldstein, who was a senior partner at Cravath, was poached by Kirkland in 2018 for a staggering $11 million annual salary for five years, plus a signing bonus.
Compensation experts told Bloomberg Law in 2018 that top partners at Big Law firms can earn between $3 million and $10 billion a year.
“Lockstep just doesn’t compete with what they’re willing to pay,” Ellis, who specializes in placing lateral partners, said. “With today’s world, everything’s on the table.”
Read more: There’s a ‘fundamental shift’ happening at Big Law firms, which are laying off workers even as they’re raising pay
Levin, a recruiter who’s worked with white-shoe law firms like Cravath and Kirkland & Ellis, added that she doesn’t see Davis Polk’s modified lockstep as a similar means of gaining new talent. “I don’t think Davis Polk is going to be the next Kirkland or Paul Weiss with very deep checkbooks,” …read more
Source:: Business Insider