Dechert halls” />DECHERT
US firm reshuffle leaves partners on knife edge
There are some jumpy lawyers in the halls at Dechert right now. And we don’t mean the ones working in the firm’s finance and real estate practice (there are still some).
As The Lawyer revealed last week (3 March), Dechert became the latest US firm to lay off a number of associates last month after it admitted there was insufficient work for all of its 167 lawyers in its finance and real estate group.
The firm gave notice to 13 associates but offered them the chance to remain at Dechert in alternative roles. Last Wednesday (5 March), a Dechert partner confirmed that all but one of the 13 had accepted offers to remain for at least 60 days in other departments while the firm assesses its requirements in these areas.
“It gives them additional time on the payroll as well as allowing them to look for new positions while currently employed, if they decide to stay in finance and real estate,” says the partner. “Conventional wisdom has it that this is preferable to looking for a role while unemployed.”
He added that the associate who had not so far signed up to Dechert’s offer of a transfer had asked for more time to make the decision.
So Dechert appears to have emerged relatively unscathed and with a degree of credit from a potentially damaging situation. And yet the disgruntled noises surrounding the firm continue to circulate. According to one well-placed New York recruitment consultant, the disquiet relates to a restructuring of Dechert’s partnership that could lead to a number of de-equitisations and exits.
“Dechert has told partners that there is a certain threshold of billings they need to hit,” the recruiter claims. “If they’re below that, they’re out.
For the past few weeks, rumours have been circulating the US market that Dechert is about to have a clear-out. According to one partner, the reality is a little more prosaic, although the de-equitisation suggestions are not far off the mark.
“We’re currently in the middle of the partner compensation resets,” says the partner. “We do it once every other year. And every time we do it some people go up, some people go down. Then there is a relatively small group that we de-equitise.”
0Dechert kicked off the latest partner compensation reset process on Wednesday (27 February). The initial five-day part of the exhaustive process, which ended on Sunday (2 March), involves the members of Dechert’s entire 13-partner policy committee (which also serves as the compensation committee) locking themselves away in a room and examining the performance of every one of the firm’s 255 partners.
The committee evaluates a range of criteria, partner by partner, until the entire 255 have been assessed. The criteria include a partner’s chargeable hours, business generated, and pro bono and mentoring commitments. Each partner is then placed into a remuneration tier, of which Dechert currently has 14.
“It’s a tough process,” says the partner. “And as this is going on, it’s fair to say the partnership is a little tense.”
Once the five-day initial evaluation is complete, the committee sends out a provisional list of partners’ placings. Then all the partners are interviewed individually.
“They get to ask questions, usually ‘why aren’t I higher?’,” jokes the partner. The final list is then voted on. The vote is expected to take place early next week.
“Will some partners be de- equitised?” says the partner. “Yes. Will it be more than usual? I don’t think so.”
While confirming the de- equitisations, the partner claims that the rumours of there being a set billings threshold as the sole criteria are wrong.
“What we look at is the role the equity partner is playing,” he says. “But I can tell you that if you’re a longstanding equity partner, and you lead no assignments, generate no business and do nothing to expand client relationships, but because your compensation was set two years ago, two years when our profit per equity partner went up 27 per cent and 18 per cent, and just for breathing your compensation has gone up by almost 50 per cent, then I’d say that’s good and bad for you. Good, because your compensation has gone up 50 per cent in two years; bad, because people tend to take a closer look at what you’ve been doing.”
Dechert is looking right now. Headhunters take note.
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