US firms have cut annual partner promotions amid mounting concerns about the economic downturn.
Mayer Brown, Milbank Tweed Hadley & McCloy, Simpson Thacher & Bartlett and Weil Gotshal & Manges have all added fewer people to their partnerships than in 2007 after the legal market experienced widespread layoffs and a significant drop in workflow during 2008.
Weil has seen the biggest decrease. Promotion figures dropped by 35 per cent from 20 in 2007 to seven in 2008. The Lawyerreported (26 November 2008) on the firm’s New York office promoting two partners compared with a total of 11 in 2007, the majority of whom were in private equity and corporate.
“There’s no doubt the firm is being more financially prudent this year,” said a Weil partner. “That applies to client events and various expenses. ;It ;certainly includes promotions to partner. ;Whether ;this short-term perspective
is right is another matter.”
Milbank ;more ;than halved its global promotions from 11 in 2007 to four in 2008, while Simpson Thacher added five to its partnership in 2008 compared with eight in 2007.
Last year The Lawyer reported (26 November 2008) on Mayer Brown reducing annual promotions by 37 per cent, from 43 in 2007 to 27 in 2008. The London office saw two lawyers promoted compared with 10 in 2007.
By contrast, Dewey & LeBoeuf and Latham & Watkins bucked the trend by adding 20 and 30 respectively. In 2007 Dewey promoted 18, while Latham made up 26.
“It should be considered as a long-term investment and one that shouldn’t be affected too dramatically by market conditions,” said Dewey chairman Steve Davis. “If those lawyers have contributed to the firm and have consistently produced, the economy shouldn’t affect promotion opportunities.”
Davis added that maintaining healthy numbers of promotions demonstrates confidence in a firm during times of market volatility.
“It’s ;an ;important message for clients and the firm,” he said. “We want to grow organically and invest in our firm’s future because we’re confident about the coming years.”
For those firms still willing ;to ;promote substantial numbers to partner, international offices have benefited more than those in the US.
In 2007 23 per cent of Latham’s promotions were made outside the US. In 2008 promotions in the firm’s international network accounted for 40 per cent of a total of 30 promotions. The London office saw the biggest increase, with six partners being made up in litigation, finance and corporate compared with one in corporate in 2007.
Dewey’s international network also benefited from promotions in 2008, with London, Moscow and Milan all adding to their partnerships.
“It’s healthy for a firm to keep promotions high, but if a firm has a salaried partner structure it makes it easier for it to keep the numbers up,” said one US partner.
In terms of practice area, corporate remains the dominant ;group, ;with litigation ;promotions increasing slightly in 2008 compared with 2007. At Latham, partners added to corporate increased by one, from 10 to 11 in 2008, with litigation ;adding ;six partners compared with four in 2007.
“Firms are hoping that litigation and restructuring work will be the bedrock of the next few years,” said a US consultant. “Making sure these practice areas have healthy numbers is certainly wise.”
Firms have focused on cost savings since the start of the downturn, with many US firms resorting to laying off associates and reducing partner promotions.
“It’s difficult to promote in ;this ;environment because it adds cost to the firm, but you have to look beyond market pressures,” said a US recruiter. “If you pass up good opportunities and don’t promote lawyers who could be a real asset to the firm, you could potentially damage the firm’s future after the markets have recovered.”