JD Journal » compensation

Survey: Legal Department Spending Took Rare Drop in ’09

joshua — Tue, 19 Oct 2010 22:56:15 +0000

Law departments reduced their total legal spending for the first time in 10 years in 2009, according to the 2010 Law Department Survey from Hildebrandt Baker Robins.

According to the survey, the main cause for the drop was the reduction in use of outside counsel. In fact, more than 60 percent of those surveyed trimmed their use of outside counsel; while at the same time, slightly increasing internal legal spending and staffing.

“The survey results confirm what we are seeing every day in our consulting practice with law departments of all sizes, sectors, industries and locations,” said Jonathan Bellis, who chairs Hildebrandt Baker Robbins’ Law Department Consulting practice. “As shown in our survey last year, law departments began to adopt a wide range of management practices to reduce and control internal and external legal costs. These efforts have continued, resulting in an overall decrease in total legal spending for the first time in the past 10 years of the survey.”

Hildebrandt Baker Robbins said reducing the use of outside counsel, which makes up nearly 60 percent of total legal spending, is likely to continue in the foreseeable future.

“We expect that efforts to reduce spending will continue, particularly with outside counsel spending, which makes up nearly 60 percent of total legal spending,” said Lauren Chung, survey editor.

Total legal spending in 2009 was down 1 percent in the U.S. and 2 percent worldwide from the previous year. The median total legal spending was $24 million in the U.S. and $33 million worldwide. Total legal spending as a percent of revenues worldwide was 0.4 percent.

According to Hildebrandt Baker Robbins, the 2010 survey achieved an all-time high in participation. The survey is designed to provide comprehensive data on legal spending, staffing, organization, compensation and management practices. The 2010 survey also reports information on management practices that law departments have adopted in response to the current economic environment.

In-House Counsel Look to Rein In Legal Spending

joshua — Wed, 02 Jun 2010 23:41:26 +0000

A study from Robert Half Legal reveals 25 percent of in-house counsel surveyed plan to decrease its work with outside firms in the next 12 months and 61 percent expect there to be no change.

The report, Delivering Maximum Value in a Cost Conscious Legal Area, notes reducing outside legal spending has become a top priority for in-house counsel with the most recent economic crisis. Only 10 percent of respondents expected to increase work given to outside firms.

As a result of this changing relationship, law firms have begun to rethink how it delivers services in order to put it better in line with what corporate clients are willing to spend, the report notes.

The poll found 22 percent of lawyers said the greatest challenge for their firms is dealing with increased competition for business and 19 percent cited meeting revenue goals. To help increase value to clients, according to the report, many firms have been replacing traditional operating methods, such as billable hour and lockstep compensation, with flexible fee arrangements and performance-based compensation.

The report was made through Robert Half Legal’s tenth annual Future Law Office project. Charles Volkert, executive director of Robert Half Legal, described the changes taking place.

“Among all the trends we have identified in our Future Law Office research, the increasing need for law offices to provide more value-added and cost-effective legal services is the most prominent,” Volkert said “Legal departments are being pressured to reduce their spending on outside counsel and boost efficiency. In response, law firms are revamping their legal services delivery processes to retain clients and improve profitability.”

Employment Lawsuit Has Lady Gaga Crying Foul

julie — Thu, 25 Mar 2010 19:27:57 +0000

Lady Gaga, whose real name is Stefani Germanotta, has been hit with a lawsuit by her former boyfriend and business associate Rob Fusari. He alleges that he was Germanotta’s mentor and that he has a 20% stake in a company called Team Love Child LLC. In his lawsuit against the 23 year old Germanotta, filed in New York last week, Fusari is asking for $30.5 million in compensation for his role in creating “Lady Gaga.” Germanotta’s lawyers contend that Fusari is not a licensed employment agent and therefore ineligible to receive compensation for work to that end. Needless to say, employment law in New York is not something to be attacked lightly.

Lady Gaga is a recording artist whose debut album hit the charts in 2008. She has sold over 10 million albums and more than 35 million singles. Her major musical influences are Freddie Mercury, Madonna, Michael Jackson and David Bowie. Lady Gaga is also well known for her outrageous fashion.

Morning Roundup

sara — Tue, 23 Feb 2010 13:03:13 +0000

Good morning everyone! Today is Tuesday, February 23, and here’s a look back at yesterday’s stories…

Steve Epstein joined Fried, Frank, Harris, Shriver & Jacobson as a partner…

Albert P. Halluin, Senior Counsel at Wilson Sonsini Goodrich & Rosati, passed away in a plane crash last Friday…

Kirkland & Ellis reported increases in profits and revenues in 2009…

Mayer Brown reported decreases in profits and revenues in 2009…

British law firm Ashurst asked more partners to leave and closed it’s India office…

Northwestern University School of Law topped The National Law Journal’s annual rankings…

K&L Gates global development partner Janice Hartman has overseen the rapid expansion of the firm…

Winston & Strawn outlined associate salaries in a memo…

Knobbe Martens Olson & Bear were named one of the top intellectual firms in the nation by MIP Magazine…

Rosemary Becchi joined Patton Boggs Washington, D.C. office as a partner…

Revenues and profits decreased at Howrey in 2009…

Morning Roundup

joshua — Wed, 06 Jan 2010 12:15:12 +0000

Good morning! Today is Wednesday, January 6, and here’s a look back at yesterday’s news.

A federal judge has upheld most of a new law regulating tobacco companies and advertising…

Raymond Mullady has moved from Orrick to Blank Rome…

Blank Rome in turn has lost four IP lawyers to Sterne Kessler…

Dechert announced its bonuses and 2010 compensation….

and there’s new leadership in Skadden’s Chicago office…

Female Lawyers Still Earning Less Than Males

Erik Even — Mon, 13 Jul 2009 17:26:56 +0000

According to The Law Society, the representative body for solicitors in England and Wales, female solicitors earn 29% less than male colleagues in the UK.

This is slightly better than the 32% difference reported for 2007.

At the largest firms, the pay gap was 45% for 2008. Associates and assistants have the lowest pay gap, around 10%.

There was an 18% pay gap reported between Anglo-Saxon and ethnic minority solicitors.

The survey of 1,200 solicitors found that the genders work the same number of billable hours, but the men are paid more per hour.

The Law Society of England and Wales is the professional association that represents the solicitors’ profession in England and Wales. It provides services and support to practicing and training solicitors as well as serving as a sounding board for law reform. Members of the Society are often consulted when important issues are being debated in Parliament or by the executive. The society was formed in 1825.

Addleshaw Goddard Offers Reduced Hours, Sabbaticals

Erik Even — Mon, 13 Jul 2009 16:55:33 +0000

Addleshaw Goddard, which laid off 19 partners in February and 85 staff in May, has approved new measures to save money on compensation.

Some attorneys will work a four-day week and earn 85% of their normal pay.

The firm is also offering sabbaticals, or extended time off at 30% salary. Salaries have been frozen until 2010.

Addleshaw Goddard has also announced is is keeping on only 75% of its incoming associates, or 33 new lawyers.

Addleshaw Goddard LLP is a UK law firm, with almost 750 lawyers and 1,350 staff, based in Leeds, London and Manchester. It was formed in 2003 by the merger of Addleshaw Booth & Co with Theodore Goddard.

Akin Gump to Lawyers: Bonuses If You’re Good, Penalties If You’re Naughty

Erik Even — Sat, 04 Apr 2009 17:32:15 +0000

Dallas’ Akin Gump is altering its salary plan to reward lawyers who are on track to bill 2,000 hours by the end of the year.

Those lawyers receive a supplemental payment. Those who do not will not be penalized.

The firm made the announcement via e-mail Friday evening.

In early March, the firm laid off 47 associates and 57 paralegals & staff.

Akin Gump Strauss Hauer & Feld LLP was founded in Dallas in 1945 by Robert Strauss and Richard Gump. The firm now numbers more than 900 attorneys and advisors in the United States, Europe, Asia and the Middle East.

California Judges to Lose Perks; Some May Leave State

Erik Even — Sat, 27 Dec 2008 00:30:01 +0000

The California Supreme Court has voted unanimously not to review Sturgeon v. County of Los Angeles, which means judges in the nation’s largest county may lose up to $50,000 a year in perks.

The decision lets stand a lower court ruling that could void Los Angeles County’s 20-year practice of supplementing judges’ $178,000 salaries and state-provided benefits with perks that amount to almost $50 grand a year.

The ruling by San Diego’s 4th District Court of Appeal held that the practice violated the state Constitution’s requirement that the Legislature “prescribe compensation for judges.” County-funded judicial perks occur in many of the state’s 58 counties, but LA’s appear to be the most lucrative.

Judicial advocates say the state already has trouble attracting judges to the bench, with salaries that often pale in comparison to those of major law firms.

The benefits package includes travel and professional development allowances that judges can take in cash, as well as additional contributions to retirement accounts.

Some California judges have threatened to leave the state if the perks are cut.

Sullivan & Cromwell Halves Associate Bonuses

Erik Even — Fri, 19 Dec 2008 00:17:49 +0000

Just hours after we reported that Allen & Overy cut its associate bonuses in half, comes the news that New York’s Sullivan & Cromwell has informed its associates of the same cuts. But the firm indicated there may be additional money for them next April.

In memos distributed this afternooon, firm chairman H. Rodgin Cohen and vice chairman Joseph Shenker told associates they will receive regular year-end bonuses worth about half what they were last year. But the memos also said the firm intends to issue all associates another check in April, the size of which will depend on the firm’s overall financial performance.

Year-end bonuses for 2008 now range from $17,500 for first-years to $32,500 for eighth-year-associates, according to the memos. Last year the year-end bonuses, which are not tied to a minimum hours requirement, were twice that.

The news applies to all of Sulllivan’s roughly 450 associates worldwide.

Sullivan & Cromwell is one of the most prestigious and profitable law firms in the world, with approximately 700 lawyers in 12 offices, located in financial centers in Asia, Australia, Europe and the United States. As of 2006, it was the 15th largest law firm in the world.

Merry Christmas! Allen & Overy Cuts Associate Bonuses in Half

Erik Even — Thu, 18 Dec 2008 20:03:05 +0000

Allen & Overy has announced its year-end bonuses for its US associates, with lawyers seeing half of what they recieved last year.

The Magic Circle firm’s US lawyers will take home a bonus in the range of $17,500 to $32,500.

Last year A&O lawyers took home between $35,000 and $65,000 in a January payout. Associates were also handed a special bonus in December of $10,000 to $50,000, depending on seniority.

The move mirrors that of rival Clifford Chance, which publicly announced earlier this month that it was cutting its bonuses.

The majority of Wall Street firms this year have decided to halve their bonuses and scrap the additional bonuses paid out in last year’s bonus war.

On Wednesday, Latham & Watkins became the first major law firm to announce that it is freezing associate pay for 2009 at 2008 levels. The firm is one of the most generous with newly-qualified lawyers netting £96,000 ($145,000) in London, while their New York counterparts start at $160,000.

Via Law.com.

Cadwalader Announces Associate Bonuses

Erik Even — Thu, 18 Dec 2008 18:25:44 +0000

Manhattan’s Cadwalader, Wickersham & Taft has announced its associate bonuses:

CADWALADER, WICKERSHAM & TAFT — MEMORANDUM — 2008 ASSOCIATE BONUSES

We are pleased to announce that the Firm will award year-end bonuses to associates and counsel as follows. Bonuses will be based on previously communicated criteria and are expected to be paid in January 2009. Associates who joined the Firm subsequent to January 1, 2008 and prior to October 1, 2008 will receive a pro-rated portion of the bonus.

Class of 2008: $17,500, prorated
Class of 2007: $17,500
Class of 2006: $20,000
Class of 2005: $22,500
Class of 2004: $25,000
Class of 2003: $27,500
Class of 2002: $30,000
Class of 2001 and prior: $32,500

Senior Attorneys, Special Counsel and Counsel bonus awards will be determined on a case-by-case basis and will be communicated shortly.

Thank you again for your efforts and contributions to the Firm and our clients. The Partners and I wish you a happy and healthy holiday season.

The numbers will look familiar to anyone who remembers Cravath, Swaine & Moore’s numbers announced in November.

Latham & Watkins Freezes Salaries at 2008 Levels [Update]

Erik Even — Wed, 17 Dec 2008 22:51:39 +0000

Los Angeles-based Latham & Watkins is freezing 2009 salaries at 2008 levels.

While we anticipate that the diversity of our practices and global reach will serve us well in the year to come, it seems clear that the global economy will continue to be challenged at least through 2009. As a result, we are modifying associate compensation as part of a prudent business strategy. Effective January 1, 2009, associates moving to the next class year will continue to receive the same base compensation as they received in 2008. …

We expect as a general matter to continue to reward outstanding performances through our merit-based bonus pool. As in previous years, we will announce bonuses in late January.

Above the Law notes that, unlike other firms, Latham does not promise to reexamine the salary situation in Q1. Latham associates can probably expect a pretty lousy 2009.

Happy New Year, Latham & Watkins!

UPDATE:

Law.com suggests that the Latham salary freeze may start a trend:

“Everybody’s been waiting for some kind of signal from the market leader,” said consultant Peter Zeughauser, founder of The Zeughauser Group. “This will be a profound signal to the market about what to do.”

Linklaters’ Top-Paid Lawyer Earned “Satisfactory” £3.4 Million in 2008

Erik Even — Fri, 12 Dec 2008 22:39:16 +0000

Linklaters LLP, the second-largest London law firm by revenue, paid its top earner £3.4 million pounds ($5 million in real money) in 2008. This ranks the unnamed Linklaters’ partner among the top-paid lawyers at London’s so-called “magic circle” firms.

Linklaters, whose partners earned £1.44 million on average, didn’t say which of its 2,644 lawyers raked in the five mil.

In 2008, managing partner Tony Angel stepped down, and the firm laid off 125 lawyers in Eastern Europe.

London’s Clifford Chance, the world’s largest law firm by revenue, paid 14 management committee members £1.28 million each; and Allen & Overy paid partners between £658,000 and £1.65 million pounds.

The three firms billed record fees of more than £1 billion during fiscal 2008, a performance Linklaters described in its accounts as “satisfactory.”

Via Bloomberg.

Cravath’s London Office Slashes Compensation

Erik Even — Fri, 12 Dec 2008 00:26:18 +0000

The Daily Tabloids blog reports that the London office of New York’s Cravath Swaine & Moore has slashed its cost of living allowance (COLA). In 2007, Cravath associates abroad were making over $300,000.

Cravath Swaine & Moore cuts its COLA in the London office from $110,000 to $60,000 as of January 1, 2009. [A]ll the associates, one after one, were called into the office of a partner, Philip Boeckman, to receive the news. The reason mentioned for the cut is the evolution of the dollar-pound exchange rate.

One associate complained… that this comes on top of bonuses being halved and the ski weekend being cancelled, and says that these measures “pretty badly affect associate morale”. OK, no one likes to get less wedge – but low morale because of only getting £40k to live in London, when everyone else is being made redundant? Bring out the violins.

The other side of the pond just got a lot less attractive.

The second oldest firm in the US, Cravath was founded in 1819 and ranks first among the world’s most prestigious law firms according to a Vault survey.

Poof! Bonuses at Epstein Becker Disappear!

admin — Sat, 06 Dec 2008 02:02:23 +0000

Most of the chatter about year-end associate bonuses has focused on biglaw. Who cut payment by how much and why? While the answers have remained fairly consistent (thanks to slicing their bonuses in half, $17,500 to $32,300 remains the market standard for first and eight-year associates, respectively), now the focus turns to regional firms. How will they handle cutting costs in the negative economy?

The Compensation Committee at prominent regional firm Epstein Becker & Green has made a decision that will probably be copied at regional firms throughout the company. Because their cash position at the end of 2008 is more limited and clients’ payment to the firm has been less timely than normal, EBG has decided to eliminate employee bonuses for the year. The move to eliminate special bonuses was what they believed to be “a moderate response to what are unprecedented circumstances facing [the] industry.”

In a memo to employees explaining the decision, the firm did highlight their optimism that the new administration and investment in strategic lateral growth would put them in a solid position for 2009.

Although other mid-sized and regional firms may not completely cut out bonuses altogether, it’s very likely since Epstein set the standard early (as in, well they did it so we don’t feel so bad doing it.)