|Written by Robert Kinney|
Monday, November 30, 2009
This is Robert writing for both Evan and myself this morning since Evan’s loaded for bear with meetings in Hong Kong and China this week and has no time. If you’re in Hong Kong this week, contact us and we’ll try to set you up with Evan. He may have some time Thursday or Friday. Alternatively, Evan will be in New York on Monday and both Evan and I will be in New York in a few weeks for meetings. Our schedules are loading up, so please contact us at asia at kinneyrecruiting dot com to set a time.
Since my personal recruiting practice predominately involves work with partner candidates assessing their options, this is my main area of expertise. I don’t know (off of the top of my head as others do here) how much each firm is paying in housing allowance to associates and I tend to lose track of the $10,000 difference between what one firm may pay in base expat over the other. I know that these things matter to many people, but the associates we are placing today are all likely partners at top law firms in the future. These differences will be absorbed in a single month’s pay within a few years for these candidates (top firms routinely pay their partners $200-250K in housing/expat allowance, just to give readers a point of reference), but there will still be occasions when a change of law firms will make sense. When would that be? What would be the triggers that might cause you to look again after a few years of partnership? Here are a few vignette’s from our recent experiences that might shed some light for you. I’ve changed names and details as appropriate to protect the identities of the firms and candidates.
1. Up/Down Escalator. In many cases the trajectory of a partner’s practice over a period of years can go from upward to downward simply because of relatively minor platform issues that do not destroy a practice but just retard its rate of growth. Rate flexibility might be more limited than makes sense, for example, or the growth clients in a practice area might be those that are more traditionally served by another firm. When the skill set represented by that partner is needed at another firm whose overall trajectory in the practice area is upward, while the existing firm has flattened or gone to downward in trajectory, we call this the “up/down escalator”. The idea is that by stepping from the downward escalator to the upward one, serious issues can be averted with (relatively) small effort. The partner just steps from one firm to the other and continues moving ahead in market share, client confidence, and, ultimately, in compensation. Many law firms this year have looked closely at opportunities to shore up practices by attracting this sort of lateral candidate who can readily be plugged into the existing firm practice. In one situation we saw recently a certain partner at one of a major firm’s Asia offices had the opportunity to move across to an upward escalator with a multi-year guarantee at 25% over his average compensation during the same period.2. Parachute. Sometimes a partner’s practice is affected by matters beyond his or her control in profound ways. In several cases we have seen in the last year, client conflicts have cropped up that threaten to cost a partner access to millions of dollars in client business without a change of firms. In other cases, through poor fiscal discipline, firms have completely lost their ability to continue as a going concern causing wholesale defections (the “rats from a sinking ship” phenomenon). In Asia in the last year this sort of seismic change has brought about formation of several new practices. In every case I can think of, the nucleus of the strong practices have been able to find stronger platforms for their work and move on to better rewards.
3. Mercenary Move. This is the least likely scenario to work out to a positive end in the economic environment we have experienced this year. Sometimes a partner, though moving up through the ranks steadily at the firm that bestowed the partner title originally, will decide that his or her contribution to the firm’s profitability is not being recognized appropriately (i.e., that he’s not getting paid enough). Sometimes these feelings are correct - perhaps a partner who has $3 million in “portable” billings should be earning in the $1 million range but she is still at $600,000 without certain prospects for rapid advancement. Even in the best environments for lateral hiring, though, what we have seen is that smart, confident firms will be unwilling without good strategic reasons to advance a lateral partner in such a significant way. There is a reluctance to second-guess peer firms’ decisions about appropriate compensation without good reason. Some firms have been excessively cautious in this regard. For example, one Asia-based partner candidate of ours who has a very good track record of business at $1.5-2.0 million was interested in a suitor who sang the right tune right up until the offer - which was lower than this current income. They applied a discount to his “likely” portable book scenario and then assigned a percentage to him of that “burdened” portability figure and (shockingly), decided that the $400,000 he was already earning was too much in their system. Had their been a true strategic impetus for the discussions, this situation could easily have been better categorized as up/down escalator move and everyone would have been much happier with the effort.
This is admittedly a cursory overview of the three main categories of partner candidates we see. Everyone is different, but the point is that we spend a great deal of time trying to fit people into category number one, above. When we’re successful at that, everyone is happiest.
Good luck with the remainder of bonus season and please get in touch if you have any questions.
Breaking Down the Partner Move - Why Would I Go There?
Kinney Recruiting prides itself on placing the best lawyers in ideal legal jobs. Our recruiters strive to ensure that all of our placements are the best possible career moves for both candidates and the hiring law firm. If you are thinking about a lateral move, the only choice is Kinney!