One of the most astonishing statements to emerge from Clifford Chance in recent times was uttered by its own managing partner.
Commenting on yet more departures from its US operation, Peter Cornell said: “This is all part of settling down after the merger.”
He said this in January. The merger with Rogers & Wells was four years ago.
Clifford Chance now has 89 partners in the US, only marginally more than the 83 partners the pre-merger Rogers & Wells housed back in 1999.
Since Cornell gave his assessment 10 months ago, an astonishing 37 partners have left the firm’s East and West coast operations, making a total of 56 departures since 2000, when the merger with Rogers & Wells went live.
The most recent member of this increasingly crowded club is finance partner Barbara Goldstein, who has moved to LeBoeuf Lamb Greene & MacRae.
On the one hand, Goldstein was still fairly junior after gaining partnership just four years ago – the year in which Clifford Chance, in its signature full-blown gesture, made up an astounding 72 lawyers.
On the other hand, though, Goldstein was, say sources, responsible for a $2m (£1.1m) book of business.
Often, when confronted with its ever-expanding breadth of departures, Clifford Chance counters that it has gained more partners than it has lost. This is true.
Compared with the 56 departees since 2000, it has 64 new partners.
But nearly half – 45.3 per cent, in fact – are internal promotions to the partnership; and of those 64 partners, many have left in the intervening years, including both laterals and newly made-up partners.
The firm is undoubtedly nurturing new talent, but even that has been rocky.
In the past four years, of the total partner promotions, the US accounted for 20.8 per cent in 2000, 13.1 per cent in 2001, 12.8 per cent in the following year and 6.4 per cent in 2003. This year there has been an upswing, with 16.6 per cent of new partners hailing from the US.
But the opposite side of the equation is the sheer weight of established talent, and revenue, that Clifford Chance has lost recently.
A cross-section of 11 partners – taken from a total of 37 to have departed since last October – boasted, according to a number of sources, a total book of business worth $40m-$52m (£22.4m-£29.1m) (see table).
This cross-section does include Jim Benedict, former US managing partner and former global head of litigation and arbitration, who, as revealed by The Lawyer (11 October), is understood to be on the cusp of leaving.
There have simply been too many senior partners who have left over the past year for it not to be a concern.
These include antitrust star Steven Newborn, who left with a team for Weil Gotshal & Manges, and leading IP lawyer Leora Ben-Ami, who departed for Kaye Scholer, also with a team.
Also out the door have been Kenneth Gallo, the former head of litigation and dispute resolution for the Americas; Robert Finlay, former co-head of banking and financial restructuring; and Kevin Kelley, the former global head of securities.
When is this going to stop? Since the merger in 2000, Clifford Chance’s profits per equity partner have declined by 22.1 per cent to £562,000 in 2003-04, while top of equity has dropped by 23.6 per cent to £630,000.
Clifford Chance does have ambitious targets to increase plateau pay by 35 per cent to £850,000 next year. But is money really the answer to stopping the flow of departures?
Gallo was offered between 50 and 75 extra points on top of his 100 units at plateau. He left. And Benedict is, at the moment, remunerated above lockstep.
Cornell’s assertion that these are post-merger issues is beginning to sound less and less plausible. Yes, it was another management that drove the US strategy. But Cornell, who at the time was managing partner for Europe, has been in management for three years now and things have been getting worse, not better.
Just how much settling down does Clifford Chance need? Clifford Chance was unavailable for comment.
|Cross-section of partners who have left Clifford Chance|
|Name||Value $m (£m)|
|Steve Newborn||7-10 (3.9-5.6)|
|Leora Ben-Ami||7-10 (3.9-5.6)|
|Ira Schaeffer||2-3 (1.1-1.7)|
|Tom McGavin||1 (0.6)|
|Robert Finlay||3-4 (1.7-2.2)|
|Kevin Kelley||3 (1.7)|
|Joe Cyr||1-2 (0.6-1.1)|
|David Taub||5 (2.8)|
|Bonnie Barsamian||2 (1.1)|
|Barbara Goodstein||2 (1.1)|
|Jim Benedict*||7-10 (3.9-5.6)|
|(*reported to be leaving Clifford Chance)|