The BLT: The Blog of Legal Times

ABA Still Requesting Loan Relief for Law Graduates

Neither the Obama administration nor Congress has gone along with a proposal from the American Bar Association to help some recent law-school graduates defer their student loans. But that doesn't mean the ABA has stopped pushing.

ABA President Carolyn Lamm said this week that the association is still trying to build support for student-loan relief for recent graduates. The National Law Journal reported in November that the ABA was lobbying the Obama administration on the issue, highlighting the plight of graduates who went into debt but have not found jobs because of the recession.

“What we can’t have is this situation of a generation of young lawyers squashed by debt,” said Lamm, a Washington partner at White & Case.

Lamm said that she or other ABA officials have met with aides on Capitol Hill, at the U.S. Department of Education, and in the White House to press their case, so far without success. “Wherever we have an opportunity, we share our views,” she said. “They’re very interested in education. They’re very interested in finding a way to help. I can’t say that we’ve found a solution yet.”

One pool of money the ABA has suggested is the $700 billion bailout of the financial sector, known as the Troubled Asset Relief Program. TARP is scheduled to remain in place through October 2010, but Treasury Secretary Timothy Geithner said this month that he would limit the funds to only a few areas, including prevention of home foreclosures and lending to small and community banks.

This month, Congress approved two major appropriations bills to pay for the federal government’s operations through September 2010. Neither included money for law graduates’ student loans.

Wilmer's Big Week: Makes Women Partners, Breaks Lockstep

Wilmer Cutler Pickering Hale and Dorr has announced its year-end promotions, and women have done particularly well this year. Of the nine counsel being moved up to partner, five are women.

Three counsel were promoted to partner in Washington, including two female partners. The new partners in D.C. are Hartmut Schneider, Nina Tallon, and Shirley Cassin Woodward.

Carol Clayton, Wilmer’s assistant managing partner, said the number of women being promoted is a reflection of the firm’s effort to hire and promote women. “We see this as the start of something we hope becomes a trend,” Clayton said.

The 2010 partner class also includes a new partner in London, two in Boston, and three in New York. This year’s class of partners is one person smaller than last year’s. Of the 10 lawyers who were promoted to partner last year, four were women.

In Wilmer’s non-partner promotions, women also made a strong showing. Eleven of the 14 new special counsel are women, as are 19 of the 54 new counsel, and 56 of the 100 new senior associates.

In other Wilmer news, the firm announced today that it would become the latest firm to move away from the lockstep approach to compensating associates, senior associates, and counsel. The Am Law Daily reports that the new compensation system, which will be phased in through 2012, will shift a larger portion of lawyers’ pay to their bonuses as opposed to base salaries.

Bonuses will be awarded based on merit and will not be linked to seniority or billable hours. Non-partner lawyers will be evaluated based on the quality of their work, efficiency, productivity, and ability to work as part of a team, Clayton said. She added that the move reflects what Wilmer is hearing from clients. “We feel that it’s important to align compensation with our clients’ focus on the value lawyers deliver,” Clayton said.

See the full Am Law Daily story here.

Online Federal Clerkship Applications at All-Time High

The federal judiciary saw a huge spike in online applications for clerkships from last year, according to a release from the judiciary.

The Web site used by about two-thirds of all federal judges to find clerks saw 401,576 electronic applications between Oct. 1, 2008 and Sep. 30, 2009. That’s a 66 percent increase from that time period last year, when 241,529 applications were turned in.

The applications came from only 10,722 applicants this year, meaning each applied for an average of about 38 clerkships. That’s a 42 percent increase over last year’s applicant pool, which was 7,556. Last year, each clerk hopeful applied for an average of about 31 jobs.

The increases make sense, said Kirsten Solberg, a Harvard Law School clerkship advisor. She said law firms and public-interest employers have been slashing positions because of the state of the economy.

“Clerkships have been relatively stable as an alternative and are attracting people who had not previously considered them,” Solberg said. “Given the increased competition, applicants have cast wider nets in their search for clerkships, applying to various types of judges in various locations.”

Fifty-two percent of this year’s applicants were law school graduates and 48 percent were third-year law students. But 68 percent all the applications were generated by third-year law students, meaning they applied for more clerkships on average than their graduated peers.

It’s definitely not an increase in the number of participating judges that accounts for the spike, said Dick Carelli, a spokesman for the federal courts. There were 1,244 clerkships advertised this year. While that’s more than last year, the rise was modest compared to the boost in applications.

The online application system has been in use since 2005, when it saw 94,693 applications from 4,902 applicants. In 2006, 5,614 applicants submitted 174,363 applications and the next year 7,556 applicants submitted 180,832 applications.

Gibson Dunn Promotes 11 to Partner

Gibson, Dunn & Crutcher has announced its new class of partners and with 11 lawyers being promoted, including three in Washington, this year's class is down slightly from last year. In 2008, the firm promoted 13 lawyers to partner.

Jeffrey Thomas, who chairs Gibson Dunn's partner evaluation committee, said the dip in the number of partner promotions was a result of the economic downturn. But Thomas said that despite the recession, the demand for work in the majority of the firm’s practices has been "pretty much business as usual."

“In some of our practices, like M&A, private equity, and securities, work has slowed a bit, so for an individual who practices in one of those areas, the workload may factor into whether they were promoted,” Thomas said. “There were probably cases were an individual was deferred a year to see how that practice is doing a year from now.”

Thomas said that Gibson Dunn begins evaluating associates in their seventh year at the firm to see whether they will make partner after their eighth year. The firm does not have an “up or out” policy, Thomas says, so it is not unusual for an associate to have their promotion deferred one or two years to keep practice headcount in line with workloads. “We look at each case individually and do an in-depth evaluation. Obviously, the first consideration is the skill set of an individual," Thomas said. "But the second step is the practice area. It’s definitely possible that there were one or two individuals who were asked to wait a year that might have made it if the corporate world was going gangbusters." He added that for those who were promoted, “It really speaks to the quality of these people.”

The associates who were promoted in Washington are Elizabeth Ising, whose practice focuses on corporate and Securities and Exchange Commission regulatory matters; Benjamin Rippeon, who does tax work; and Geoffrey Sigler, who is a member of the firm’s litigation and health care practices. This year’s class also includes four promotions in Los Angeles and one promotion each in the firm’s offices in San Francisco, New York, Paris, and Century City, Calif. offices. The promotions take effect on Jan. 1.

Reed Smith Cuts First-Year Salaries, Billing Rates

Reed Smith has become the latest firm to announce that it was tweaking its first year salaries and billable hour requirements to meet client demands.  The firm said today that it was reducing first-year associate salaries in its 15 U.S. offices by about 20 percent.

In its largest U.S. offices, which include Washington, New York, Chicago, and California, that means associates will see their annual salaries drop from $160,000 to $130,000. In Philadelphia, first years will go from $145,000 annually to $117,500. In Pittsburgh, they will go from $135,000 to $110,000.

The salary adjustments will affect the class of 51 deferred associates who start in mid-January. Four of those will be in Washington.

As part of the reduced salaries, first-year associates will see their billing rates cut by 20 percent. Eugene Tillman, Reed Smith’s global head of legal personnel, said the firm does not comment on what actual billing rates are.

Tillman said the new salary structure will require first-year associates to bill fewer hours, dropping from 1,900 to 1,700 hours to “give them more time to focus on their development and training.”  He said the reduced hours are part of the firm’s move away from lockstep associate compensation. Late last month, Reed Smith announced that it was breaking away from lockstep compensation, opting instead for a hybrid lockstep/merit-based system. Starting next year, associates will be categorized as junior, mid-level, or senior associates depending on whether they’ve demonstrated certain core competencies.

“This is a move the firm is making to better meet client demands,” Tillman said. “We’ve been hearing from our clients for a while that they were uncomfortable paying for first-year associates to work on projects. These associates are exceptionally intelligent, but they don’t have the training or expertise that older associates have.”

In the past year, Reed Smith  has had two rounds of layoffs that affected both staff and associates. In December 2008, the firm cut 155 staff members in its U.S. offices and 11 associates and seven staffers in its London office.  In April, the firm pink-slipped 26 associates and 55 staff members.

Other firms that have reduced first year salaries include DLA Piper; Pillsbury Winthrop Shaw Pittman; Kilpatrick Stockton; Nixon Peabody; and Drinker Biddle & Reath.

Latham & Watkins Promotes 23 to Partner, Six in D.C.

In what Eric Bernthal, managing partner of Latham & Watkins' Washington office, called a show of confidence, the firm promoted 23 associates to partner yesterday and another 13 to counsel. Of those, six of the new partners and a new counsel will be based in Washington.

The promotions mark a strong play in Latham's corporate practices, which were hardest hit by the economic downturn last year. According to this year's National Law Journal 250 survey (available in Monday's edition of the NLJ), Latham lost 444 lawyers during 2008. The firm's round of layoffs in February saw 190 associates pink slipped.

The new class of partners includes 12 corporate partners and 5 new finance partners. Half of the six new partners in Washington have corporate practices. Latham's promotions will also add to its ranks in regulatory and litigation, including its health care, intellectual property, white collar, and securities practices among others. All of the promotions take effect on Jan. 1.

"The way we see it, we are one of the premier capital markets and corporate players in the world, and these promotions show that we are prepared to vote on talents, not on short term economics," Bernthal said in an interview. "When the economy turns around, and it will, these lawyers will better position us to be there for our clients."

Latham's class is down by about 25% from the 30 promoted last year, but it's still larger than some of the other firms that have announced new partner classes in recent months. Last month, Sullivan & Cromwell announced that it had promoted five associates to partner and Covington & Burling upped 10. Kirkland & Ellis, which was one of the first to announce its new partnership class in early October, promoted 51.

New Partnership Class Announced at Covington & Burling

Covington & Burling has announced its new partnership class, promoting nine lawyers to partner in the Washington office and one in the London office. That's down slightly from 12 promotions last year but up from six the year before, according to Kathy King, spokeswoman for the Washington-based firm.
 
Marney Cheek, David Fagan and Kimberly Strosnider work in the international practice.
 
Kevin Collins works in the intellectual property practice, as does and Lucinda Osborne, who is resident in London.

Sarah Wilson and Matthew O’Connor are members of the litigation practice.

Yaron Dori works in the communications and media practice.
 
Miriam Guggenheim is in the food and drug practice.
 
And Seth Safra works in the employee benefits and executive compensation practice.

The Morning Wrap

Attorney-Client Privilege: The U.S. Supreme Court dug into attorney-client privilege on the opening day of the Court's fall term, examining whether a party can appeal a judge's finding that it has waived the privilege in an order releasing material for discovery, The National Law Journal reports. In Mohawk Industries Inc. v. Carpenter, the Court looked at whether such an order be appealed before the trial resumes or only after it wraps ups. Mohawk, represented by Alston & Bird, said a party should have the right to appeal immediately. The New York Times examines several cases the Supreme Court declined to hear. The court today is expected to hear argument in a free-speech case that involves dog-fighting videos.

Executions on Hold: Following the failed execution of a man in Ohio last month, Gov. Ted Strickland has postponed two other executions to give corrections officials additional time to examine and revise injection procedure, The New York Times reports. The standard execution procedure failed Sept. 15. Ohio officials are looking into backup procedures.

Tweaking Compensation: The Recorder reports that Bingham McCutchen is moving to a "merit lockstep" system that will keep base pay on lockstep but introduce a merit component into bonuses. Several firms this year announced a move away from lockstep compensation, including Howrey, Orrick, Herrington & Sutcliffe and Townsend and Townsend and Crew. Nixon Peabody and Pillsbury Winthrop Shaw Pittman have lowered salaries for some associates in each yearly class, resulting in a de facto departure from lockstep.

A Vote At Last? The nomination of Thomas Perez to head the Justice Department's Civil Rights Division has stalled for months, but the gridlock could end today, The BLT reports. Senate Democrats are hoping for a confirmation vote for Perez, who was nominated in March. A vote to end debate on Perez’s nomination has been scheduled for 12:15 p.m. today. A vote to confirm Perez would follow if 60 senators agree to end debate.

The 'Original': Vincent's, the clam bar on Mott Street in Manhattan, was barred from billing itself the "original" Vincent's amid a dispute with a competitor, The New York Law Journal reports. A federal judge in U.S. District Court for the Eastern District of New York faulted an attempt by the owner of Vincent's of Mott Street to register two versions of the name while still in litigation over whether it could use the formulations.

Arent Fox Rescinds Offers for Some Deferred Associates

Arent Fox Chairman Marc Fleischaker has confirmed reports that the firm has rescinded offers made to some of its deferred associates. The associates who had their offers withdrawn were told this morning.

In all, Fleischaker said, about 12 incoming associates were affected. Washington, which has the firm's largest office, had “about eight,” New York had "between two and three," and Los Angeles had one, Fleischaker said. The news was first reported on Above the Law.

In a phone interview with The National Law Journal, Fleischaker said that while the firm did not want to take the step of telling deferred associates that they needed to look for work elsewhere, he said that it was the right thing to do.

"We're probably going to be pilloried for it, but we felt strongly that it was not fair to keep people in limbo when the likelihood was low that they were going to get the call. These people probably put their lives on hold waiting to hear from us, and they should have the chance to be looking for work elsewhere."

Fleischaker said the decision was made with input from practice leaders from across the country and human resources staff members before it was brought to the firm's executive committee. "It went to the top of the firm. This was not a quickly implemented or rash decision," Fleischaker said. "It may not be perfect, but we all agreed that it was right." He added that if the situation changes at the firm, those who had their offers withdrawn will be "the first ones called" to fill any vacancies.

Fleischaker said the firm was pushed to make the decision to cut some associates loose because the incoming class was larger than in past years. "The class was about twice the size of past classes. We gave more offers and had a higher acceptance rate than in the past," he said. The firm typically hires around 12 associates each year.

Fleischaker said the firm also wanted to avoid a "logjam" when this year's class of summer associates are ready to be hired. "There are a lot of great people in that class, and they should be in the running too. We're really trying to limit the number of people who are affected," he said. Fleischaker said so far, the summer associates have received their evaluations but no offers have been made yet.

To "soften the blow," the firm is giving those who have their offers rescinded a $20,000 stipend. "There is no legal obligation to do that, but we felt it was a moral obligation," he said. "These people should be able to get on with their lives, even if it's going to be someplace else."

Surveys Say Washington Firms Handling Recession Well, Considering

Washington is still a pretty good place to be an associate, recession or not.

According to surveys of associates released recently by The American Lawyer and the National Association of Legal Professionals, salaries appear to be holding steady and mid-level associates at several Washington firms say they generally pleased with their jobs.

On this year’s Am Law Mid-Level Associate Survey, Ropes & Gray took top honors among Washington offices for workplace satisfaction among its associates, receiving a 4.57 on a 5-point scale with seven associates responding. Gibson, Dunn & Crutcher; Morrison & Forester; Hughes Hubbard & Reed; and Finnegan, Henderson, Farabow, Garrett & Dunner rounded out the Top Five. To be considered, each firm had to have at least five associates respond.

Among the firms that have implemented layoffs, the recently departed McKee Nelson ranked No. 1 nationally for how management handled cutbacks and how they communicated the news. McKee, which merged with Bingham McCutchen earlier this week, received a 4.86.

Other firms with D.C. offices that received high marks for handling and communicating about layoffs were Stradley Ronon Stevens & Young, Patton Boggs, Cooley Godward Kronish, Morrison & Foerster, Perkins Coie, and Proskauer Rose.

At the other end of the spectrum, the Winston & Strawn associates who responded to the survey ranked it as the nation's worst at handling layoffs. The firm received a 2.78 for its handling of cuts and a 1.56 for how it communicated them.

Other poorly ranked firms with D.C. offices included White & Case; Dewey & LeBoeuf; Sherman & Sterling; Sutherland Asbill & Brennan; Milbank, Tweed, Hadley & McCloy; Dechert; Kaye Scholer; Nelson Mullins Riley & Scarborough; and Schiff Hardin.

According to NALP’s 2009 Associate Salary Survey, $160,000 has remained the prevailing salary for first-year associates working at some the largest firms in the Washington area. But because some large firms have cut salaries in recent months, the $160,000 benchmark may be slipping.

Among firms with more than 251 lawyers responding to the survey, the average salary for first year associates went up about $5,000 over last year’s salary level, climbing from $151,974 to $156,400. It should be noted, however, that with 36 firms responding this year, two fewer firms have been tallied.

Nationally, the median starting salary was $130,000, and ranged from $70,000 in firms of two to 25 lawyers to $135,000 in firms of 501 to 1,000 lawyers, and $160,000 in firms of more than 1,000 lawyers.