Executive partner inherits a firm that seems capable of defying the crunch.
It is the changing of the guard over at Skadden Arps Slate Meagher & Flom, with executive partner Bob Sheehan preparing to step down at the firm’s partnership retreat on 25 April after 15 years at the helm. Corporate partner Eric Friedman is taking up the baton in his place.
The two men could not be more different. Meeting at Skadden’s office in midtown Manhattan earlier this month, Sheehan’s relaxed attitude is understandable just weeks before he stands down. But Friedman has the air of a man media-trained and prepared for the tough challenge ahead.
But just how tough a challenge? Skadden may be one of the few US firms not to announce associate layoffs since the downturn began, but it has not escaped entirely unscathed. Like its New York counterparts, Skadden has definitely felt the pressure of the economic crisis.
The firm has cut costs by reducing support staff numbers, cutting hiring across the firm and extending its ‘Sidebar’ programme, which encourages lawyers to take a year off to pursue other interests.
Skadden is also encouraging incoming 2009 associates to defer entry until 2010. Those participating will receive a third of their salary in one lump sum. Cutting costs is clearly high on the agenda.
“These are very difficult times and we have to be aware of how we can reduce costs,” admits Sheehan. “As well as asking office heads to be careful with expenses, we’re asking practice groups to look internally for associate resources rather than hiring outside of the firm.”
Skadden may have avoided large lawyer cuts so far, but neither Friedman nor Sheehan deny that layoffs could be necessary in the future. “We’ve not made any legal cuts as yet. We’re in good shape,” says Sheehan. “But all firms need to review this.”
Skadden has also cut back on lateral hires, but has by no means stopped hiring entirely. In December 2008 the firm snared the white-collar team of partners comprising John Carroll, Warren Feldman and David Meister from Clifford Chance’s New York office (The Lawyer, 2 December 2008).
“It’s been a great move for us,” says Friedman. “Our team here knows them very well and they’re very well respected in the market.”
Litigation hires during the downturn make sense, as does Skadden’s recent focus on bankruptcy and restructuring.
Since 1997 the firm has steadily created a group to rival the likes of bankruptcy giant Weil Gotshal & Manges, and in 2007 Skadden snared Weil partner Chris Mallon for its London office.
“We’re very well positioned during the downturn,” says Sheehan. “We’ve been working on this practice group for years during a time when it was less fashionable. This is how you make sure the firm’s ready for a shift in the market. If you turn your attention to this now it could be too late. You could miss the downturn.”
The effort has paid off. Skadden partner Peter Atkins is leading a team advising Delphi Corporation on the sale of its steering business to car manufacturer General Motors as part of its Chapter 11 restructuring.
“We have a 100-strong restructuring team, but a significant team in the transactional area that’s involved in these kinds of deals,” says Sheehan. “This deal is a good example of using our M&A lawyers to advise in areas that are naturally busier at the moment.”
Running Skadden’s domestic practice will be just one of Friedman’s tasks when he takes up the executive partner role. The firm has one of the largest international networks among US firms. Has maintaining that been a burden during the economic crisis?
“No, not at all,” says Friedman. “Our aim has always been to emulate the success we’ve had in the domestic market internationally. We’ve successfully done this in challenging international markets.”
Skadden has made its international goals very clear. To take advantage of the opportunities presented by the downturn, earlier this year the firm launched several new practice groups in London, including tax controversy, financial services and funds investigations (TheLawyer.com, 9 February).
Elsewhere, the firm’s São Paulo outpost got off to a rocky start when it lost sole partner Jonathan Bisgaier to Brazilian investment group Banking and Trading Group (TheLawyer.com, 10 December 2008) just months after Skadden launched in Brazil. The firm plugged the gap, however, when it hired partner Dick Aldrich from Shearman & Sterling earlier this year (TheLawyer.com, 9 February).
“There’s definitely still a place for the global law firm,” argues Sheehan. “There are firms that are adapting to suit the new era, and everyone has to do that to a certain extent. But we feel a global network’s a benefit. We’ve worked hard to create a successful international platform.”
Friedman and Sheehan are confident about the future. Whatever the severity of the downturn, Skadden’s leaders see the firm as well equipped to deal with it.