Marking a victory for a disappearing management structure, Debevoise & Plimpton, the venerable New York law firm, was named by The American Lawyer as winner, General Litigation Department of the Year (2013). In the magazine, Michael D. Goldhaber tells how the firm “over two years produced two $25 billion results, a pair of trial defense wins worth $3.5 billion apiece, and the biggest investor-state award in arbitration history.” Yup, that’s a lot of money. But what’s most interesting is how the divvy it up.
It used to be that most premier US law firms divided profits among partners based on seniority. The system encouraged cooperation and rewarded all partners somewhat equally for a firm’s overall success. These days few firms stay in “lockstep”.* Instead they deliver starkly divergent compensation packages for individual partners–a rainmaker at a big firm may take home $20 million, while a partner having a challenging year might bring home $250,000. (A similar change of structure has affected the way Wall Street firms operate, and also large corporations where the ratio of CEO-to-worker pay has ballooned.) The new arrangement creates a more Darwinian competitive environment, with big winners and also-rans destined for dismissal. The egalitarian “lockstep” structure is not done yet, however. The consistent accomplishments of Debevoise & Plimpton should give pause to those embracing the dog-eat-dog atmosphere at most big firms. The pay ratio between the 43 litigation partners at Debevoise & Plimpton was a mere 3:1 between its partners, based on seniority. Downright equitable, plenty of loot, and a virtual moratorium on quibbling.
*in addition to Debevoise, Cravath and Cleary Gottlieb remain exemplary lockstep firms
