POSTED: Monday, March 22nd, 2010 at 1:00 am

BY: dmc-admin

Making partner at a law firm is like finally biting into a juicy piece of a pie you've spent years laboring to bake.

So it's a punch to the gut to see the recession has snatched pieces away from some associates this year.

Quarles & Brady LLP, Wisconsin's largest law firm, reported 15 partner promotions last year, compared to 17 in fiscal year 2008.

The state's second largest firm, Foley & Lardner LLP, promoted 15 attorneys to partner in 2009 year and just 13 in 2010.

Quarles managing partner John W. Daniels, Jr. noted that there have been even more significant reductions in other firms around the country.

"Nationally, you have had law firms use much higher leverage ratios [and] there has been a slowing in some of their practices relative to partnership," he said.

For example, Dewey & LeBoeuf in New York announced it was promoting six attorneys to equity partner in December, down from 20 a year earlier. Mayer Brown in Chicago said it promoted 14 attorneys to partner in November, down from 27. And Orrick, Herrington & Sutcliffe in San Francisco announced seven partner promotions last month, down from 15 a year ago.

Revenue at U.S. firms was forecast to drop as much as 10 percent in 2009, according to a survey of 131 firms by Citi Private Bank's law firm group.

Dan DiPietro, the head of Citi's law firm group, said the 193 firms he monitors produced an equity partner growth rate of less than 1 percent this year, compared with a pre-recession growth rate of about 3 percent.

Instead of promoting partners, firms are extending the partner track, adding years to the typically 8- to 10-year process, he said.

"They're also having more of the 'tough love' conversations with partners who are not producing and moving them out in a variety of ways," DiPietro said.

Why the change?

Daniels said the dip in his firm's numbers have nothing to do with the recession, but are driven by the attorneys eligible for promotion.

Quarles begins to evaluate attorneys for partnership positions after seven years and the criteria for advancement has not changed, said Daniels.

"Our practice of investing in people and moving them up to partnership positions isn't something we've altered," he said. "Frankly, it really affects costs to clients if we have too much turnover."

The same is true for Milwaukee-based Davis & Kuelthau SC, which has promoted only two new shareholders in the last three years.

Managing partner Ann M. Rieger said the firm targets quality, not quantity when it makes annual decisions to offer partnerships.

"When we look at promoting within our ranks, it's a function of when individuals joined us, their experience level and their ability to attract and communicate with new clients," she said. "It's not the economy."

Eden Mandrell, a Chicago partner at legal recruiting company Major, Lindsey & Africa, agreed that law firms aren't necessarily changing their partnership requirements. They're just applying them more strictly to prospective partners.

She suggested that firms may also be eyeing lateral hires as more attractive new partners than rank-and-file associates, especially if those lateral partners land with a good book of business.

That is true at Quarles, which hired three lateral partners last year, but has already brought on 16 so far in 2010.

"We expect to hire quite a few more," said attorney James D. Friedman, of the firm's National Partners Hiring Chair.

'Not all doom and gloom'

Even given the rough economy and the slowdown in legal work, it would ultimately be detrimental for firms to severely cut their new partner ranks or keep them flat, Mandrell said.

"Firms will continue to make people partner because they need to look at their long-term succession planning," she said. "It's not all doom and gloom. The fact firms are still looking at associates and saying, 'Hey, we think you can be a good team player,' is really important. It's a really positive sign."

And some firms are making more partners. St. Louis-based Thompson Coburn upped its promotions by the largest margin in Missouri, doubling new partners from 5 in 2009 to 10 this year.

The increase is likely due to a larger pool of qualified candidates, said Debbie Rush, a member of Thompson Coburn's 12-person management committee.

"They met the criteria. They're people we think are ready," Rush said. "We want them to stay."

Daniels agreed that firms need to think long-term if they expect to compete and be successful in the future, regardless of the economy.

He said the best way to do that is to consistently commit to the lawyers at the firm, and he anticipates Quarles may increase its partnership offers this year.

"Our goal has always been to try to attract people to the community and show them the benefits of practicing law in a region like Wisconsin," he said. "And then to keep them."

Bloomberg News contributed to this report.

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