20 YEARS OF THE LAWYER: RECRUITMENT

Staying at one law firm for life is a thing of the past. We look at the changes of the past 20 years

Two decades ago lawyers were touchingly loyal in their relationships. In 1987 Allen & Overy (A&O) partner Christopher Walford said: “We’ve not had a partner leave the firm in the last 15 years.” While Simmons & Simmons’ Colin Menzies stated: “We personally have had no one poached from us and we don’t use poaching to get our own staff.”

Nick Root, who co-founded recruitment consultancy Taylor Root in 1987, explains: “Twenty years ago, if you became a partner, you didn’t move unless something quite obscure happened. Now, every day someone’s moving and it’s absolutely natural for partners to move.”

So what has made lawyers lose faith in monogamy?

The salary wars

In 2000 SJ Berwin sparked the first City firm salary war when it raised assistants’ wages by an unprecedented 25 per cent to £42,000. Accountancy-tied law firm KLegal soon followed suit and upped the ante to £45,000 and the magic circle was not far behind.

US firms piled into the melee and Cadwalader Wickersham & Taft hiked its newly qualified remuneration up to £54,000.

Later that year salaries reached their apparent ceiling. In 2007 the battlefield is now around bonus payments, with some US firms announcing they would pay their junior assistants in London almost £30,000, forcing the City to respond.

Since then, the skirmishes around lawyer remuneration have become an annual event around New Year and Easter times.

Born in the ’80s
Fuelled by the Big Bang in 1986 and the Thatcher-era privatisations, profits and salaries continued rising to stratospheric heights. Notwithstanding the shell-shock of Black Monday in October 1987, by the end of that year London salaries for two-year PQEs had risen by 30 per cent in only six months and were “still continuing to rise at over 25 per cent with no obvious signs of abatement in sight”, according to Anita Doswell, marketing manager for recruitment consultant Reuter Simkin.

What is more, the path to partnership was relatively short. The Lawyer noted in September 1987: “On average it takes no more than five years from qualifying to see your name on the notepaper.” Some firms tried to turn this into an advantage. In the same year a Clyde & Co recruitment advert proclaimed it had “55 partners, all but two of whom are less than 45 years old”.

But City firms were starting to suffer from a dearth of experienced lawyers and the provocative entry of banks and other City institutions in the hunt for legal talent.
The sentiment was echoed everywhere. Staff partner Morley Jacobs at Slaughter and May told The Lawyer at the time that “there’s no shortage of applicants, but there is a shortage of good ones”. Alasdair Douglas of Travers Smith Braithwaite said: “It’s a real sellers market.”

Many firms found to their detriment that they had caught on too late that talent was best nurtured at home when young and more difficult to attract once mature.

Eight enormous departure spats

1994: Stuart Benson quit ailing firm Turner Kenneth Brown for Dibb Lupton Broomhead (now DLA Piper). His departure broke a partner lock-in, which subsequently led to the firm’s takeover by Nabarro in 1995.

1994: Frere Cholmeley Bischoff partner David Zeffman resigned for Simon Olswang & Co. Frere
Cholmeley asked for an injunction restraining his contact with clients and preventing him from disclosing the fact that he had given notice of resignation or that he had
accepted Olswang’s offer to become a partner. The injunction was overturned in 24 hours.

1997: Clifford Chance partner Andrew Wilkinson resigned from Clifford Chance for US firm
Cadwalader Wickersham & Taft. Clifford Chance, worried Wilkinson would try to take assistants with him, passed a tough new partnership agreement in August and tried to make him serve an entire 12-month notice period. A major client broke the deadlock: it told the firm it had to allow Wilkinson to work or it would withdraw all work from the firm.

1997-99: Every Wilde Sapte departure. Only two equity partners in any given year were allowed to leave the firm, but a series of resignations meant there was a logjam. Project finance lawyer Bruce Johnston, who resigned in 1999, was facing a two and a half-year wait. Only Wilde Sapte’s merger with Denton Hall released him.

2002: Four Norton Rose acquisition finance partners – Andrew Bamber, Robin Harvey, Tim Polglase and
Clive Wells – resigned for Allen & Overy. Pressure from clients JPMorgan and Deutsche Bank made Norton Rose release the four months before their official departure date.

2003: Thai Clifford Chance partner Wirot Poonsuwan faced an expulsion vote from Clifford Chance in 2003, after an acrimonious dispute following his suspension in 2002.

2005: A group of sacked German Linklaters
partners threatened to sue the firm, claiming they had been removed from the firm in breach of the partnership agreement.

2005: Clifford Chance faced legal action from Paris junior assistant Avi Bitton, who defended his right to act as at trade union rep. He had been dismissed over performance issues, but claimed his job was protected by two union roles.

The smaller firms were lagging behind in the graduate recruitment stakes, whereas Norton Rose filmed the first graduate recruitment video, shooting in Bahrain, Hong Kong, London and Singapore for a glamorous £40,000. Leeds firm Simpson Curtis (now Pinsent Masons) resorted to attracting graduates by comparing Leeds house prices with those in London.

International secondments became the norm and articled clerks’ (as trainees were then known) salaries were hiked. Glossy brochures and the ‘milk round’ became the norm and the vacation placement market went “mad” that year, according to Judith Freedman, careers officer at the London School of Economics.

However, firms had not yet created efficient graduate recruitment structures. Michael Simmons, senior partner at Malkin Cullis & Sumption, wrote in The Lawyer in 1987: “Recruitment and training used to be very much a haphazard affair. There were always students writing in, but it was often easier to adopt the soft option and work on recommendation alone.”

But despite the opportunities available to them, assistants were unhappy at their treatment. In 1989 a recruitment conference organised by The Lawyer had two speakers who would go on to make their names in very different areas: Gareth Quarry, a relative novice to recruitment, and Stephenson Harwood assistant Stephen Gillespie. Gillespie gave a paper called ‘Did Reality Live Up To Expectations?’, in which he argued that, if articled clerks were treated with more respect, staff losses would not be a problem, citing the troubling statistic that at Stephenson Harwood 37 per cent of graduates had left within a year of qualification. Quarry would set up QD, one of the leading recruitment agencies at the 1990s, which he sold to TMP Hudson in 2000. (Gillespie himself left for A&O, where he became a star finance partner. He is now at US firm Kirkland & Ellis.)

What goes up…
But then, almost as suddenly as it had started, the yuppie dream died. The junk bond crisis and market jitters had turned from a malaise into an economic pandemic.

“In 1990-91 it was nearly impossible to find a job as a newly qualified [NQ]. I remember almost being inundated. Often 30 candidates with not much to offer went for the same job,” recalls Adrian Fox, formerly of QD and latterly co-founder of recruiter Fox Rodney. “It was quite a depressing period in London.”

Only 38 of the top 100 firms offered NQ vacancies for laterals and more than 50 training contracts had been withdrawn or deferred, reported The Lawyer in 1991. In an infamous incident, McKenna & Co (now CMS Cameron McKenna) dispatched motorbike couriers to sack associates, with dozens getting the chop.

But the slump in London also proved a boon to the regions. It was of long-term benefit to firms such as Eversheds and Dibb Lupton Broomhead (now DLA Piper). Salaries were not comparable to the City’s, but jobs were still going and the quality of life was perceived to be higher. In-housers also gained a reputation boost.

Importantly, it was also the time that partners started realising that they could vote with their feet if their business partners’ profits were not up to scratch. Partner mobility was virtually non-existent. A&O, in a celebrated case, poached three insolvency stars – Peter Totty, Gordon Stewart and Nick Segal – from Cameron Markby Hewitt in the mid-1980s, but that was a one-off. The market was not yet ready to embrace partner movement. Perhaps a more significant move in its timing was the decision in 1990 by Denton Hall partner Steven Beharrell to join Coudert, the first US firm to target UK lawyers aggressively. The Lawyer described his move as a ‘turning point in partner mobility”. US firms had to wait until the mid to late 1990s to make a real mark in partner hiring, but the example had been set.

In the meantime, the firms making the running on laterals were aggressive regional firms such as Dibb Lupton Broomhead (now DLA Piper) and Hammond Suddards (now Hammonds), which had opened in London at the beginning of the decade.

By 1993 the market was in recovery. The accountancy firms, led by the now defunct Arthur Andersen, entered London’s legal world with much fanfare. They promised salaries up to 20 per cent more than law firms’, a land of plenty in terms of influx of work and other benefits over a life in partnership. In short, they “gave a serious alternative”, remembers Quarry.

The prize seemed there for the taking and, by the mid-1990s, US firms began piling into the fray with a fistfuls of dollars.

Initially the majority had come to the City under tickets to serve only US clients and doing only US law. But it was actually then that the battle lines were drawn.

In October 1994 The Lawyer reported the City’s reaction on an anonymous advertisement in its pages: “Lawyers were stunned by news that a New York firm is offering a £450,000 salary – believed to be the highest advertised salary for a UK lawyer.”

And then, when White & Case came out in 1996 and announced it would hike London NQ pay from £27,000 to New York-levels of around £45,000, it “threw down the gauntlet”. The move was “met with confusion by the City”, reported The Lawyer at the time. UK firms stumbled about whether to follow suit and the first seeds of the salary wars were sown.

Nevertheless, says Scott Gibson of Hughes-Castell, it took the US firms a while to realise that “you can’t get partners out of the magic circle so easily”. By the end of the decade some spectacular failures had made headlines, such as when Chicago firm Sonnenschein Nath & Rosenthal beat a hasty retreat in 1999 after five years in London, abandoning four English partners and six fee-earners.

Six lateral hires that made waves

1990: Steven Beharrell moved from Denton Hall to Coudert Brothers, becoming the first high-profile recruitment of an English solicitor by a US firm

1991: Stephen Mostyn-Williams and a team left Barlow Lyde & Gilbert for Ashurst Morris Crisp to create an acquisition finance practice from scratch. He later brought a four-partner team in 1999 to Shearman & ­Sterling.

1993: Kenneth MacRitchie, a newly elected project finance partner at Clifford Chance, moved to US firm Milbank Tweed with his assistant Nick Buckworth. Both became
partners and built a formidable US-UK project finance business before leaving for Shearman & Sterling.

1994: Garretts, the legal arm of Arthur Andersen, poached five partners from Leeds-based blue-chip Simpson Curtis (now Pinsent Masons).

1998: US firm Weil Gotshal & Manges hired Clifford Chance corporate partner Mike ­Francies. It was one of the few trophy moves where a feted rainmaker would actually deliver – and then some.

2003: Graham White, a private equity partner at SJ Berwin, left for Linklaters with senior ­assistant Raymond McKeeve. White and ­McKeeve built Linklaters the private equity ­business it craved, but subsequently left for Kirkland & Ellis in 2006.

Here we are, now entertain us
At the turn of the century an equilibrium in the market began to form as everyone grew fat off dotcoms: salary wars became a regular event on the legal calendar, as did the acceptance of US-style bonuses of up to 20 per cent almost across the board.

When the bubble popped in 2002 after 9-11, recruitment, pay packets and lawyers’ training contracts deflated too. Although only slightly: some redundancies were made, salaries decreased and trainees who volunteered to defer were offered up to almost £15,000 to take a gap year.

Recovery was correspondingly swift and we now find ourselves amid young recruits from ‘Generation Y’ who expect record salaries and total mobility at every level.

Some blame the recruiters for having destabilised the profession and having destroyed what some remember as the partnership and the ‘family spirit’ of the profession years ago.

But it brings the profession in line with the rest of the world, says Quarry. “Does anyone nowadays stay with the same employer for 40 years straight?” he asks.

And mobility may very well have been a catalyst in the legal industries’ boom. “The whole poaching mania was an important Darwinian principle: law firms have now become far more efficient,” says Quarry.

Revenge of the fee-earners

In 2002 morale among Clifford Chance associates in New York reached a new low and they vented their frustrations in an infamous 13-page memo to the partnership. They slammed dehumanising billing targets of 2,420 hours that encouraged padding, the firm’s pro bono commitment and partner attitudes. The memo was leaked and circulated in the legal community.

A year later Clifford Chance revoked the billable hours target and improved its recognition of associates’ pro bono efforts.

None the wiser, in 2003 Allen & Overy (A&O) in London suggested that in future their associates bill 2,200 ‘office’ hours per year, working out as 500-600 additional hours per year. To achieve that target the firm suggested associates keep on top of knowhow by reading on the Tube journey to and from work.

A&O associates rebelled, organised themselves, got the Young Solicitors Group involved and effectively stopped the proposals dead in their tracks.

In 2007, after having faced an associate attrition rate of 25 per cent, A&O was the first City firm to agree to have an associate sit on its weekly management committee meetings. CMS Cameron McKenna, SJ Berwin and many other firms also now have similar programmes giving associates an input into firm management.