New partner announcements are starting to come in, and things aren’t looking so good. Thirteen Am Law 200 firms in California have announced new partners so far, and eight of those firmwide classes are smaller than last year.
“I anticipate a smaller class this year than last, and it’s a direct response to the decreased demand for legal services in the world,” said Keith Wetmore, chairman of Morrison & Foerster, which hasn’t yet announced its new partner class.
“When associates ask, I say, ‘You know, you can’t operate as though you are not functioning in the context of a legal economy,'” he added.
Industry observers say they don’t expect growth in new partner classes given the lagging economy and staffing issues, including layoffs, that many firms are already facing.
“I would be amazed if there wasn’t a reduction in the admission of new partners this year,” said Brad Hildebrandt, New Jersey-based founder of legal consulting firm Hildebrandt International. “Whether you call that a trend, it represents the difficult staffing situation that many firms are facing. You will see firms be more conservative.”
Gregory Chin, a corporate and securities lawyer at Latham & Watkins who was named partner this year, knew that his advocates had to make a case to management that he was a good business investment.
“It’s a business that’s owned by a bunch of people, and they have to decide, do we want a new partner, is this person going to make more money for us or just feed off the table. … I thought it was fair that they were looking at it that way,” Chin said. “This issue is: Is the pie expanding at such a rate that it makes sense for the firm to be investing in people?”
He specializes in clean tech and life sciences, areas expected to grow in the coming years.
Still, “I can’t say I wasn’t nervous,” Chin said. “When the stock market fell apart in September and October, I was not thrilled. I thought, wow, this couldn’t happen at a worse time.”
Peter Zeughauser, a Newport Beach, Calif.-based consultant with the Zeughauser Group, said there’s been new partner excess in recent years.
“It’s a tough year to be up for partner. Firms are going to pay for the sins of past years. Partner candidates this year are going to pay for the sins of prior years,” Zeughauser said.
Mayer Brown and McDermott, Will & Emery named 43 and 42 new partners last year, respectively, but both named only 27 this year. Classes are also smaller at Cooley Godward Kronish; Fenwick & West; Gibson, Dunn & Crutcher; Proskauer Rose; Wilson Sonsini Goodrich & Rosati; and Weil, Gotshal & Manges. Mayer Brown and Proskauer Rose both announced layoffs recently.
Dorsey & Whitney named the same number as last year, 17. Pillsbury Winthrop Shaw Pittman, likewise, matched last year’s class of 11.
Three firms named more partners this year than last: Kirkland & Ellis announced 70 new partners, up from 62 last year. Latham & Watkins named 30, one more than last year, and Covington & Burling named 12, twice as many as last year.
At Wilson Sonsini, nominating committee co-chair Jack Sheridan said this year’s number — eight — is within shooting range of the firm’s five-year average of 11 new partners. Last year, the firm named 13.
“The first level of criteria is lawyering excellence,” Sheridan said. “The economic overlay is relevant, although we do as a firm try to take a long-term perspective on that.”
The nomination committee put in hundreds of hours deciding who should be named this year, he said.
“Other firms that … have in the past made large classes as a result of the robust economic times, that would be a reasonable conclusion that they’d have to pull back,” Sheridan said.