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Cleary Gottlieb’s Managing Partner, Michael Gerstenzang, is set on substantially increasing the firm’s revenue without resorting to significant headcount growth or altering its single-tier partner pay structure. The ambitious objective is to position Cleary among the Top 20 firms by gross revenue, necessitating a remarkable $500 million leap from the previous year. This target represents a substantial 36% gain, propelling Cleary from its No. 30 ranking among US firms in gross revenue.
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Resisting the Lateral Partner Market Froth
Gerstenzang’s pursuit of revenue growth occurs against the backdrop of a legal landscape witnessing a fervent lateral partner market, characterized by what he calls “incredible frothiness.” He notes the recent trend of top talent making lateral moves for staggering compensation packages. Although he refrains from specifying particular hires, he acknowledges the lure of eye-popping numbers, emphasizing the challenges posed by comparisons in the legal industry.
Cleary Gottlieb’s Distinctive Culture and Financial Standing
Best recognized for its M&A work and top-tier global antitrust practice, Cleary Gottlieb is one of the country’s most profitable law firms. Partners at Cleary earned an average of $4.3 million in 2022, a testament to its financial prowess. With 196 partners, the firm boasts a substantial partner count, diverging from the model of exclusive firms like Wachtell Lipton Rosen & Katz or Cravath, Swaine & Moore.
Navigating Different Models and Leveraging AI
In contrast to competitors who operate with large ranks of nonequity partners, Cleary’s decision against adopting a nonequity tier in 2020 is rooted in preserving its culture and maintaining a reputation for consistent, high-quality work. Despite this, Gerstenzang acknowledges the success of managing a big pool of nonequity partners at other firms and expresses a desire to improve without compromising on culture.
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Gerstenzang is optimistic about leveraging artificial intelligence (AI) to compete with larger firms. Cleary is actively exploring generative AI advancements, conducting tests on the firm’s datasets. The launch of ClearyX, a subsidiary technology and project development incubator in 2020, underscores the firm’s commitment to staying at the forefront of legal technology. Gerstenzang believes generative AI will reduce the reliance on large legal teams for projects, fostering a shift towards value-based billing, and ultimately benefiting both clients and law firms.
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