Midsized Practices Luring Lawyers From Large Firms
Leaders of midsized firms in New York say the combination of large law firms' high billing rates and restrictions on handling smaller matters has contributed to a strong lateral market for midsize practices.
Large firm partners exploring a move to smaller firms are reporting the difficulty of growing their practices with smaller and mid-market clients, according to leaders of firms with under 200 attorneys.
"We're getting the crème de la crème of lawyers from large firms who want a different practice, a different lifestyle, and a different business model," said Ronald Shechtman of 130-attorney Pryor Cashman. "Since the recession, we've never seen more qualified lateral candidates who have substantial practices."
Though midsize firms are cautious about whether lateral partners can transfer institutional clients, they are receptive to smaller books of business that larger firms may turn away.
There are large law firms who look at attorneys with a $1 million book of business and do not deem that profitable enough, said Jay Fialkoff, managing partner of 90-attorney Moses & Singer. "Sometimes the level of business production of a partner is not sufficient for the large firm perspective, but it is something we can work with and develop."
Recruiters are taking notice.
"We're seeing a lot of partners making moves to firms more midsize or basically where there is rate flexibility," said Margie Grossberg, a legal recruiter and partner at Major Lindsey & Africa.
"They want rate flexibility that larger firms are often unable to provide," Grossberg said, who added that it can be challenging for a young partner to build a practice when billing rates reach $1,000 an hour. "Now, with this economy, with clients becoming much more rate sensitive, I think that's accelerating."
Midsize Rate Model
"We've been getting plenty of knocks on our door," said David Scherl, managing partner and chairman of 90-attorney Morrison Cohen, adding the firm is "very selective" and does not want to grow above 115 lawyers.
"Many of the partners may be very good business originators but they don't have massive books—they have respectable books of business and they're representing more middle-market clients," Scherl said.
He said his firm looks for candidates with a high skill set, a partner that works well with others and business typically between $1 and $5 million.
Lateral candidates have told Scherl that charging $800 or $900 an hour has put their practice under pressure. Morrison's rates range in the mid $400s to the mid $600s, he said.