Superstar Lawyers Eroding Partner Compensation System

By on April 20, 2018

April 20, 2018

A corporate lawyer who advised on about $300 billion worth of transactions, generating $100 million in fees for his law firm, Cravath, Swaine & Moore, jumped ship and joined Paul, Weiss. His gripe? He had to settle for a $4 million partnership share at Cravath, based mainly on seniority, but Paul, Weiss guaranteed him $10 million. His decision, which was followed by more such defections, shook the legal industry, because they were direct reactions to the lockstep payment system, which is intended to guarantee collegiality among partners by making sure their profit shares are not affected if they recommend the services of a colleague who is better versed in certain matters over their own. “It’s becoming more and more difficult to retain star talent in a purely lockstep model,” says Brad Karp, chairman of Paul, Weiss. And if lawyers work in a system where older partners make three times as much simply by virtue of having been there longer, why wouldn’t they head to a firm that appreciates their talents?
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One Comment

  1. Edward Hartline

    April 20, 2018 at 11:15 am

    Tuff deal having to struggle along at $4m/year. Cravath has been envied for years at being able to maintain a high quality legal firm even with a lock step compensation system. Does lose some talent (David Boise) but retains many others.

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