I flew into Manhattan to The New Yorker chronicling the death of Big Law with a pacey dissection of the fall of Dewey & LeBoeuf. Three days later I flew out to The New York Times covering the fee bonanza for Wall Street lawyers generated by J.P. Morgan’s regulatory nightmare.
There you have it – Manhattan’s legal market remains as contradictory and seductive as ever. Eighteen months since Dewey collapsed, it’s not apparent that the world’s largest legal failure has had much impact at all. Certainly, there has been no discernible hard look in the mirror or serious questioning of the elevation of the star system that contributed – combined with a score of other failings – to Dewey’s final chapter.
In the years since I last toured Midtown, it is clear that the industry has become, if anything, even more focused on big-name individuals. With more demanding clients and turbulent markets, those sought after individuals are as likely to be bank litigators, or FCPA specialists as leverage finance or corporate partners but the rainmaker is increasingly trumping law firm brands in the singular world of New York law.
As such, if there was one topic uniting conversation, it was whether the aggressive recruitment tactics of Kirkland & Ellis and Latham & Watkins ‘can finally stamp out the last lockstep firms’. As one managing partner put it, Kirkland in particular is ‘shaking the foundations’. Whether the firm’s tactics in recruiting partners from Cravath and Skadden prove sustainable will have a huge impact on the profession. It’s come to something when the celebrated outlier Skadden has become the acceptable face of Manhattan’s legal establishment.
Where do City firms fit into this turbulent picture? Freshfields Bruckhaus Deringer’s New York arm continues to steadily gain traction and plaudits for its arbitration, disputes and global investigation practice. Clifford Chance – after a gloomy four-year run in the US – is in a surprisingly confident mood. Having been let down by CC’s US practice so many times before, I’m not yet ready to commit but right now they talk a convincingly good game.
What is interesting – and has implications for UK rivals – is the extent to which leading New York firms are walking a fundamentally different path to their closest London rivals, which have spent 15 years institutionalising client links at the expense of individual partners.
This is a far starker contrast than a choice between lockstep or merit compensation models. If more US firms move towards origination-drenched partnerships that pay the stars ten to 15 times that of service partners the reverberations will continue to be felt in London. It will also make it increasingly bloody and challenging to merge UK and US firms; this isn’t a different pay model, it’s a different philosophy.
The alternative view is that the top-tier New York firms – which still continue to shun such ‘barbell’ partnerships – will endure while the aggressive challengers overreach and fall. Few seem sure how this will ultimately be resolved but, for the profession, the conclusion will be felt at a global level.