Wall Street law firm rewards partners for making an extraordinary contribution
One of the top Wall Street law firms, Cravath Swaine & Moore, has discarded its lockstep structure for partner pay. The move comes two months after it lost its corporate partner to UK's Freshfields Bruckhaus Deringer in New York. This leaves the diminishing group of elite firms that are still continuing with the model.
In a statement, presiding partner Faiza J Saeed said, "This decision will advance our strategic objectives so that we can continue to thrive in a dynamic marketplace while maintaining the values and culture, including our ethos of shared success that defines our firm."
Saeed added that the firm needed to reward partners making "extraordinary" contributions and that while seniority-based pay bands would still exist, partners making the strongest contributions would receive more money.
The move is rather defensive in helping the firm fend off approaches from larger rivals like Kirkland & Ellis. It is also potentially offensive as, early this year, it hired banking regulatory lawyer David Portilla from another lockstep firm Debevoise & Plimpton.
The recent hire of senior partner Damien Zoubek by UK Magic Circle law firm Freshfields underlined Craveth's vulnerability to raids from less profitable firms prepared to pay big bucks for the best talent.
The pressure on law firms to tweak their business models to maintain their competitiveness is likely to grow in the near future.