Partner compensation rules are being broken as we dismiss and explain away the money being thrown at top partners to lure them away from once untouchable firms—Quinn Emanuel grabs partners from Skadden, Kirkland grabs a top rainmaker from Winston & Strawn, and just last week Paul, Weiss picked Scott Barshay out of Cravath. These lateral moves have gone from a unique occurrence to a pattern—a pattern which is just getting started.
The rule breaker firms offer more than money, they offer the rare opportunity to redefine the legal world as we know it. Money isn’t everything—helping to build a new law firm world order is close to having everything—but it is an essential ingredient for dislodging top-performing partners from their current homes.
A small group of forward-thinking law firms are using the kinks in the state of partner compensation to their strategic advantage. These savvy firms are exploiting this weak spot to attract the best laterals, those whose compensation plans leave them exposed.
The law firms making outsized deals realize the investment is dwarfed by the potential future success the new lateral partner brings. Setting new records to attract the right laterals is risky, but not nearly as risky as sitting still or doing what every other law firm does.
These lateral hires also teach us lock step compensation is dead, or at least mortally wounded. Market forces will drive lock step into a slow death spiral as firms realize it won’t keep the rainmakers in place, draining the bench and forcing law firms to make compensation more performance based and less open.
We are witnessing the industry disruption first hand—right now. This compensation breakdown is disrupting how law firms run themselves and will change the structure of the industry, strategy, recruiting, partner compensation, and business development for years to come.