Summary: Cravath has been losing its top talent to rival law firms due to their limiting management style, limiting the amount these lawyers earn from their million dollar deals.
A trend has been noticed where top Cravath Swaine & Moore lawyers are leaving for other top law firms like Kirkland & Ellis. LawFuel pointed out that there has been a number of defections of Cravath’s superstar lawyers even though the firm is worth millions in earnings and pays their associates some of the highest rates.
So what is it that has these rainmakers leaving? LawFuel speculates that the traditional pay model and a priority placed on seniority over performance is pushing these money makers to find law firms with a more agreeable option for them.
Starting in 2012, Sarkis Jebejian left Cravath to join Kirkland & Ellis. In 2016, Scott Barshay departed for rival Paul, Weiss, Rifkind, Wharton & Garrison. Just the year before, Barshay was part of over $300 billion in deals for the firm, bringing over $100 million into the firm as fees on those deals. However, he allegedly grew frustrated with a firm that put seniority over things like performance, which he excelled at.
Soon after his departure, Jonathan Davis left for Kirkland & Ellis and then Eric Schiele in 2017 to Kirkland as well. They were both considered top performers and leaders at Cravath, helping the firm become what it is today. The law firm is not sinking or suffering, it is still a top grossing and highly prestigious law firm. They are the ones that started the trend of increasing first-year associate pay to $180,000.
The change is that lawyers are more open to moving around from one firm to another, not adopting the more traditional way of sticking with one firm for their entire career. Even though Cravath pays equity partners $4 million a year, lawyers bringing in more than that want to see more and some other law firms are willing to provide that. As one of the law firms with the highest yearly revenues, Kirkland & Ellis has been a good option for super lawyers seeking more for their work.
Cravath follows the traditional lockstep method where partners are rewarded for seniority, allowing for the avoidance of inter-office rivalry and endless performance reviews. This system works on a general basis for most attorneys. Kirkland & Ellis has adopted a more “eat-what-you-kill” system where there is a shared cost but most of the fees are kept by the “performing attorney.” Paul, Weiss uses another method, a modified lockstep model, because they understand that keeping top talent under the plain lockstep method is difficult. Paul, Weiss Chairman Brad Karp said, “You’re seeing sums that rival sports free-agent compensation arrangements being offered to star partners at corporate law firms.”
Do you think law firms using the traditional lockstep method need to adapt to the times or is it a method that still works? Share your thoughts with us in the comments below.
To learn more about Cravath, read these articles:
- Cravath Sets the Scale for This Year’s Bonus Season
- Cravath Continues to Be Leader in Vault’s 2018 List of Top Law Firms
- Why Did a Cravath, Swaine & Moore Partner Leave for Paul, Weiss?
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