Joe Patrice is an Editor at Above the Law. For over a decade, he practiced as a...
Kathryn Rubino is a member of the editorial staff at Above the Law. She has a degree...
Chris Williams became a social media manager and assistant editor for Above the Law in June 2021....
Published: | November 13, 2024 |
Podcast: | Above the Law - Thinking Like a Lawyer |
Category: | News & Current Events |
It’s the most wonderful time of the year! Milbank continues to relish its role as the Pied Piper of Biglaw bonuses, once again jumping the traditional late November bonus announcement kickoff to set the bar for 2024 annual bonuses. We also learned that a number of firms make non-equity pay a share of the partnership expenses despite holding no equity. And one partner out there is using work email to complain about the neighbors with offensive terminology.
Special thanks to our sponsors McDermott Will & Emery and Metwork.
Joe Patrice:
Welcome to another edition of Thinking Like. A Lawyer. I’m Joe Patrice from Above the Law.
Kathryn Rubino:
Hi, Joe Patrice.
Joe Patrice:
That’s Kathryn Rubino. Chris isn’t going to say anything.
Kathryn Rubino:
He’s here though, I promise.
Joe Patrice:
There he is. So Kathryn Rubino and Chris Williams also blah, blah, blah, are here. And this is the show that we do every week to recap some of the big stories in legal. But first we begin with some small talk. This segment, small talk. Yeah. Yeah. Alright, so yeah. So how’s everybody doing? We’ve had a time change that’s been useful. There’s daylight in the mornings now, so that’s kind of nice.
Chris Williams:
What is it? There was, I think it was Bill Burr. He did a SNL thing. It was weak. I was disappointed. I remember the last time I saw him on SNL, he had a big thing and he was like, white women, you voted with white men. You get the punishment too. And it was great. And now it was just like, oh, well, you want me to talk about it? I guess I’ll talk about it. But nothing, it didn’t really hit. It didn’t hit, it felt like his B side stuff. It was Bill Burr, but it wasn’t Bill Burr.
Joe Patrice:
I saw the Buffalo Wild Wings sketch. I thought that was really well done about New England Patriots fans and what they’re all like. And that’s a sweeping generalization and I’m going to stand by it.
Chris Williams:
I just saw the part where, what was it? Monologue, I think it was Mono, the monologue. I think there was a Dave Chappelle monologue that came to mind that feels like it’s historically relevant on SNL. That was the Bill Burr one. And then Bill Burr came back and I was like, okay, this is going be, this is going to be good. And then it was me and I was like, ah. Disappointed.
Kathryn Rubino:
I mean, I think it’s also probably because there seems to be a different reaction to the election this time around. I think people are more sad than mad, at least from my perspective. But I don’t know what other people are hearing out there. Okay,
Joe Patrice:
Well great. With that said, I think not to put a damper on small talk.
Kathryn Rubino:
Okay. Joe
Chris Williams:
Temporally relevant. Excuse me. Yeah, I mean, I should have bet on this election. I remember there was a point where I was like, I can’t believe they’re letting bets happen. I was like, oh, I should have dumped thousands on Trump. I wasn’t surprised. There was a point early on and I was like, we went from coconut memes to actually, Dick Cheney is brat. And I was like, what is this? Why would you vote for the decaf Republican when you can just go full Republican? Nobody opts in for Diet Coke over a Coke in private Go for the full thing. I was disappointed.
Joe Patrice:
I don’t like that comparison because Diet Coke is in fact better than regular Coke at this point. But I do hear what
Chris Williams:
You say. Of course you say that in public. That’s what I’m saying.
Joe Patrice:
No, it’s so much better. The taste is just better. Now I do remember back in,
Kathryn Rubino:
Or we’ve been slowly poisoned for long enough that we think that maybe listen, I agree,
Joe Patrice:
But I remember the first time I had Diet Coke back when I was young and it was just a disgustingly different flavor than the regular Coke. But now I think it’s actually superior.
Kathryn Rubino:
Yeah, because we’ve all been poisoned over time.
Chris Williams:
Yeah. I think it reminds me of, it was a Norwegian study on taste, and what they said was that’s because you’ve lost hope and that hope declines. They appreciate, ascertain increases.
Kathryn Rubino:
That checks out. Actually, I do love Diet Coke though, and I find it vastly superior to Coke Zero, which is just the, imagine if it was Coke ish.
Joe Patrice:
Well, I actually think that’s a key thing. Coke Zero is supposed to be Coke and I have it and I’m like, you’re right, it is. And therefore I don’t like it as much as I like Diet Coke.
Kathryn Rubino:
Yeah. I tried to have this weekend that was at an event and that’s what there was. I was like, oh, okay, I guess. Yeah, it’s fine. And I was like, Nope, I don’t enjoy it. If I’m going to be drinking soda, I at least want to really enjoy the experience and it’s not like
Joe Patrice:
So Baja Blast.
Kathryn Rubino:
No, that doesn’t hit for me. I’m telling you, diet Coke is like what hits diet Dr. Pepper. I’ll tell you what is good in a zero form is Sprite zero. That is a solid, solid beverage. But I don’t know, Coke Zero just feels like it’s a try hard of the beverage world and I’m just not there for it.
Joe Patrice:
Well now let’s be mercifully done with this. So usually we talk about the big stories in legal from the week. That was this time. We will talk about it from the week. That is because we can’t really sit on this for any length of time. We have some actual news about the annual bonuses.
Kathryn Rubino:
Yeah, we do. There you go. Like that sound yet again? Millbank has led the charge in announcing bonuses before the rest of the big law world. They yesterday, well earlier this week, I’ll say on November 11th, they announced their year end bonuses. Associates in good standing will receive between 15 and $115,000 depending on class year, which matches the same scale as last year, which is a pretty generous scale so far. No other big law firms have announced their similar or matching skills. It’s kind of interesting because if you’ll recall, Millbank was also the firm over the summer. There was a couple of boutiques in smaller firms that did this as well. But the sort of big law firm that led the charge on summer bonuses was also millbank. And we really thought, I believed in my heart and my soul that all these other firms were going to of course match these generous summer bonuses. And then it just didn’t happen. It was like crickets. And now that the year end bonus announcement season is here, what’s going to happen? I think most people believe that they will get matches of those summer bonuses as part of their year end numbers. But again, because it’s part of year end, there might be sort of conditions on it, hourly rates, whether or not they’re in their office Billable
Joe Patrice:
Targets. You mean
Kathryn Rubino:
Billable targets? Sorry. You’re right. Billable targets. Whether or not they’re actually physically in the office that on the required amounts of dates, et cetera. Whereas the banks bonuses were without condition.
Joe Patrice:
Right. And we historically have some time between this even. Usually these bonuses get announced closer to the end of this month. Milbank has now two years in a row gone relatively early. We then will sit and wait for a while as the rest of the big law world stews about this is what we’re expecting. Right?
Kathryn Rubino:
Yeah. I mean that’s certainly what happened last year. There was a three week kind of waiting period between when Millbank announced and when Cravath announced. But remember last year there were also raises involved and Cravath actually wound up coming over the top for some of this midyear and senior classes. So there was some negotiation, I guess there some thought about what they should do, et cetera. But this year, the big splashy thing that Millbank did, which was the summer bonuses has been cooking for months. This is something firms should absolutely know. Whether or not they’re able to meet these summer bonus numbers by this point. And in terms of the year end bonus numbers as they matched last year, which I think is pretty predictable. I would not be shocked if it was a little bit less of a lead time between this announcement and the rest of big law kind of getting on board with the Millbank scale because I feel like these numbers were very predictable.
Joe Patrice:
Well, we just got our Q3 numbers for the entire law firm industry just came out. And so we’ve seen that law is as a general matter, making money hand over fist, not just, and they have been doing this for several quarters in a row, but historically the last few quarters they’ve relied a bit on increasing rates, which there’s no reason to really blame them for that. They were lagging behind the inflation rates anyway and had been for years. But that said, relying on rates to keep your financial numbers up. It’s a little unfortunate, not unfortunate, what’s the word I’m looking for here? A little artificial. But here this quarter we see there was actually solid demand growth, lots of growth in a variety of practices, both countercyclical and normal. We also see a growth in hiring basically in every segment except the AM law 50. And even they shrunk slower. So even they’re getting an uptick, right? So everyone’s got more money in hand and everyone knows that. And that means that if firms don’t try to make good on what Millbank did over the summer, folks are going to notice.
Chris Williams:
Kathryn mentioned that last around this time last year, Millbank also did this, and it was like a three week period before we saw other firms matching. That was the longest three weeks it felt like ever just to wait is to wait. I’ve never experienced phenomenologically being that much of a pocket watcher and that invested about people making that much more money than me. I was like, come on, come on. They need this at Jones Day match.
Kathryn Rubino:
Well, they’re black box. They’re not D,
Chris Williams:
They’re a whole different theme anyway.
Joe Patrice:
But you get the sentiment. You get the sentiment. But other firms, yeah.
Kathryn Rubino:
Yeah. It is interesting kind of the follow along, follow along kind of mentality that exists in big law. I think that especially for the top echelon, you’re kind of saying the difference between the am law 50 versus 51 to a hundred. And I think it’s getting a little bit more segmented, but if you want to be thought of as that top tier of big law firm, the Millbank numbers are the minimum you have to be offering I think at this point. And whether or not you are able to as a firm, I don’t know if that changes your self-identity in a way. And maybe that kind of is part of why there might be a little bit longer of a weight as firms realize what they can and cannot actually do.
Joe Patrice:
Still very interesting. theBar has been set. We’re going to see where people go from here. It’ll be an exciting if phenomenologically draining three weeks that we’re going to go through here probably.
Kathryn Rubino:
And once again, I will just throw out a little reminder once you get your bonus announcement. Oh yeah, good point. Dear listeners, please send it along to us. It’s tips at Above the Law dot com. We keep all sources strictly anonymous. You can send a screenshot of the memo, you can take a photo with your phone. You can could copy and paste whatever works for you. We are happy to see and know it helps I think the overall industry get momentum and to really build this bonus party.
Joe Patrice:
Yeah. Okay. We are back. What do we want to talk about next?
Kathryn Rubino:
Well, we’re talking about big law money.
Joe Patrice:
Oh, interesting. So yeah, keep on that.
Kathryn Rubino:
Let’s get the sad face emoji ready. Because I think that’s,
Joe Patrice:
So as these associates, especially senior associates are about to get a giant, giant bonus, some people are not quite in that position and those people are partners. And you might say, why would we be sad about partners?
Kathryn Rubino:
Boo-hoo. Poor partners make it so much money.
Joe Patrice:
But not everyone is an equity partner. In fact, at a lot of firms there is increasingly non-equity partners or income partners, people who get the title of partner but don’t get paid that way. Instead get paid basically like a senior associate. Now, this has a bunch of problems with it that we’ve talked about in the past. It is artificial way of making the firm look like they have made people, partners, sometimes people that they feel transparently make them look better to clients, but even though they really haven’t made those people partners. All of that said, it’s always been a situation where we’re decrying that these folks are being strung along. But it turns out it may be even worse than that.
Kathryn Rubino:
Yeah. What’s going on? I’ll tell you, I always sort of just conceptualize it as the extending the pathway of true partnership in a way that kind of felt a little misleading. But how could it be worse than just that?
Joe Patrice:
So it can be worse. And there’s actually a wrinkle to this story beyond the story that we wrote last week. Justin Henry from Bloomberg wrote up a piece doing a deep dive into how these non-equity partners get paid and what their financial situation is. And spoke with a bunch of folks as firms that have this two-tiered partnership system and learned that at several of these firms, those non-equity partners aren’t just a fancy title. That means nothing. The firms treat them as partners for all the costs associated with being a partner and just don’t pay them for the parts of being a partner. In fact, some of them have K ones that are structured to say they are an equity partner with 0% equity and therefore they are on the hook for social security and Medicare taxes, their share of the healthcare without an employer contribution. All of those things. And the paying in multiple, every jurisdiction that the firm has some degree of work in paying their share of the taxes on that on behalf of the partnership. This results at some of these firms in them paying so much of the firm’s costs that they end up making less than they did as senior associates. It also means that the equity partners, by making these non-equity partners, have not split their share of the profits in any way, but have unloaded large swaths of their economic burdens to the tune of millions of dollars every year.
Kathryn Rubino:
That’s really shitty.
Joe Patrice:
It is. And it’s one that we’ve heard about. We’ve never heard about that, and that’s the wrinkle we’re about to get to. But it’s a thing that’s been going on. And some folks in Henry’s PC found that some folks had realized this problem and made some changes. In particular, one firm McDermott had actually transitioned their non-equity partners to being W2 employees. Again, recognizing that we can’t have these non-equity partners treated this way. So they’re treated as more like senior associates than non-equity partners, which allows them to have the firm cover those costs rather than them doing it out of their own pocket. There are some other firms that have made some changes by giving some bonuses and stuff like that to help cover and defray those costs. But many of the firms responded to Henry with no comment on this sort of stuff. And then including and I have heard since putting this piece out, I’ve heard from other non-equity partners at other firms saying that this is how it operates at firms that he didn’t even originally identify.
Kathryn Rubino:
This is wild
Joe Patrice:
Stuff and that’s largely how people took it. But what Chris reminds us of is that in fact, there was a canary in this mine while a lot of the journalist world heard about this for the first time over the last week or so. There was a story that Chris wrote back in August about a lawsuit that raised some of these allegations and should have put us all on notice that this could be happening.
Chris Williams:
So just to be clear, the canary was me. I told y’all, I told people this was happening.
Joe Patrice:
Well, you and the ABA Journal and the plaintiff. And the plaintiff.
Chris Williams:
And the plaintiff. But you said journalists. I just wanted I do that Anyway. Yes. People were talking about journal
Kathryn Rubino:
ABA. Journal.
Chris Williams:
Yeah, people were talking about it. Yes. I was one of the people early. Let me get my roses. Anyway, the point is actually worse than just the fact that these partners in name are being used are basically subsidizing equity partners. The people that tend to get non-equity partnership are minorities. So at these firms, I guess ipso facto might be here, the word, but whatever the minority, well, people that have been working there for years are the ones subsidizing the partners. And the story originally talked about it as being the non-equity partnership partner relationship as a tax scheme, but it’s also a discrimination scheme in that regard. If you factor in the consequences of who are the people that are the ones who have to pay their own insurance, who don’t get a cut of the business at all, and who would just get the fancy title on the resume. And the person who did the lawsuit, she was suing Dwayne Morris, which was also one of the firms that Joe named in the piece that he wrote most recently.
Joe Patrice:
And I get Justin really put that in there, and I just kind of followed what his reporting had done. But yeah, no, and this is a key issue that Chris has identified, and we’ve written about this for a while, that the non-equity partner tier, while it’s not exclusively used for this, one of the more problematic tax that it’s taken is it has kind become a way in which firms move senior black lawyers in particular into this tier. And they then are able to for clients because there was a string. Now obviously as we enter a new Trump era and the Supreme Court has already launched warfare against DEI programs, so maybe this was on the way out anyway, but for a while there we had a series of companies with ESG standards that would mean the law department would take very seriously the idea that if they hire outside counsel, that outside counsel has to be
Kathryn Rubino:
Diverse,
Joe Patrice:
Making severe serious efforts toward diversity. And among it was staffing. And originally it was staffing, but then they started finding a bunch of junior associates being used to fill that
Kathryn Rubino:
Requirement. That’s window, I believe one lawsuit said,
Joe Patrice:
Yeah, one lawsuit called it window dressing, which is when a lot of these clients got more serious and said, we need to see actual partners with diverse backgrounds on here. And that it seemed to correlate with the explosion of some of these non-equity tiers as these firms basically put folks, they weren’t willing to make equity partners but wanted for the sake of
Kathryn Rubino:
Partnership
Joe Patrice:
Client relationships and put them in this tier, which was bad enough of a way to treat folks before we really got into wait. They’re also making them pay more
Chris Williams:
Money. It’s one thing to be a token, but for your token status to also cost you is nuts. Because I’m sure there might’ve been some conversation where there was society, somebody saying like, oh, you barely even earned equity partner. And in their mind they’re like, I’m paying for you. Why are you questioning my value here when I am helping you save money?
Joe Patrice:
Okay, and we’re back. We’re still on the big law partner world. Kathryn, you had a story last week about a big law partner who,
Kathryn Rubino:
Terrible neighbor.
Joe Patrice:
Yeah. Not the best neighbor.
Kathryn Rubino:
Yeah. We got some tips about a Goodwin tax partner and his sort of dust up with neighbors. There was a series of emails that Above, the Law reviewed about just kind of normal neighbor stuff. Noise in the apartment. Somebody left a fire door open and the alarm went off. But in this building wide email, the gwin partner, by the way, using his work email address used a slur for developmentally disabled people to refer to the tenants of one of his neighbor’s apartments. Used the slur and said that they must’ve been the people who left the fire alarm door open, which isn’t great, is real shitty thing to be, it’s not a way to make friends and neighbors and all that kind of stuff. But the thing that really got me is that, again, this was a building wide email. The property manager promptly chastised the partner, but also sent photographic evidence that it was not, in fact the
Joe Patrice:
Tenant. That’s the big part of it. It wasn’t even these people
Kathryn Rubino:
After
Joe Patrice:
All
Kathryn Rubino:
That. And after sort of being embarrassed like that, rather than apologize, like humans might just through more insults than call them insane people and stupid children. So not really learning the lesson of being a kind-hearted person at all. Just double down on the insults.
Joe Patrice:
Yeah, I mean, look, so law firm partners are, several of them are perfectly nice people, but there is a population of, it’s a number above three, a population above three of jerks. And that is not a huge surprise, but carrying that over to home is a little problematic.
Chris Williams:
Not just carrying over to home, carrying at home with your work email
Kathryn Rubino:
So that everybody in
Joe Patrice:
The building invest in Gmail people.
Kathryn Rubino:
And so everyone in the building knows where you work and who to send these offensive emails to. Is it a surprise that somebody in big law is mean? No. Is it a surprise that they use problematic language, that we really ought to retire well before the year of our Lord 2024. But the combination of all those things and their business email all at the same time is really that kind of trifecta of arrogant stupidity that is really a hallmark mark of the Above, the Law Hall of Fame.
Chris Williams:
If you’re going to be a dick on the paper trail, at least be a dick from not a Goodwin [email protected].
Kathryn Rubino:
Right.
Chris Williams:
I don’t know. Maybe, and this might be crazy. This might be wild considering our audience, but I don’t know. Think like a lawyer. Why would you want the paper trail? Don’t be the smoking gun. Don’t be the smoking gun. That’s a good line.
Kathryn Rubino:
That is a good line. But I almost understand it in 15, 20 years ago when blackberries were new and shiny and only had your work email on it, and maybe you just felt like, oh, I want it kind of pushed immediately to my blackberries. So I put all my important emails, like building emails are potentially important if there’s a leak in the building or something like that. So you get them immediately. But we all have smartphones. You can have multiple email accounts pushed immediately to your phone. You don’t have to clog up your business email with you. We’re going to be cleaning the drapes on Friday.
Joe Patrice:
Yeah. Nor should you be. Yeah. That really is a poor form to even be getting them there.
Chris Williams:
Yeah. That’s Also just bad email management.
Joe Patrice:
Yeah. Well, it opens up, I’m sure this building is perfectly well run, but you’ve opened a new vector to phishing scams and all sorts of stuff by having your firm email be where you receive all of this stuff. I mean, something gets spoofed, goes through the Homeowner association email there, and it gets clicked on. It can then mess with that whole mailbox. You don’t want that. You want to have these things sequestered like that. So
Kathryn Rubino:
Really, yeah, I feel like there’s several IT professionals absolutely cringing at several levels of the story. One. Yeah.
Chris Williams:
I’m just waiting for the point where we get some partner and in their signoff, it’s like my IP is
Joe Patrice:
All right. That’s I think everything for this week. Thanks everybody for listening. We shall be back next time around. You should be subscribed to the show to get new episodes when they come out. You should leave reviews, stars, write things. It all helps get more people on board. You should be listening to Jabo Katherine’s other program. I’m also a guest on Legaltech Week Journalist Roundtable. We have a blog called Above. the Law that you should be reading these and other stories that we write before we talk about ’em here. You can follow on social media. Actually, I’m not sure at this point. I think based on the last week, I think we need to reverse this. I’m Joe Patrice at Blue Sky because the blue sky explosion over the last five days has been wild. I’ve almost doubled my follower account and I have done literally nothing. I’ve done literally nothing over that time to get another 900 followers. So we will say I’m Joe Patrice over there and I’m
Kathryn Rubino:
Still Kathryn one.
Joe Patrice:
You’re Kathryn Numer one. Chris, you’re what? Over there
Chris Williams:
Writes for rent.
Joe Patrice:
You’re still writes for rent over there. I didn’t know if people changed their things over there anyway.
Chris Williams:
No, I felt like I had a good handle. I was like, this is hard. I’m going to use this.
Joe Patrice:
Nice. Love it. I don’t think we have an Above, the Law official account over there.
Kathryn Rubino:
I couldn’t tell you
Joe Patrice:
We should find out. Well, because at the time it was all gated because it was like you had to have invites. It’s now not. I think that’s the issue. But on the old school ex Twitters, it’s at ATL blog. Kathryn Chris have the same handles. My handle at Twitter is Joseph. Patrice. But otherwise,
Chris Williams:
For all that, any of you clever listeners, don’t try to go make the A TL Blue sky. We already did it. Now you get this days later.
Joe Patrice:
That chair. Okay, got it. Yep. Okay, great.
Chris Williams:
Peace.
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Above the Law - Thinking Like a Lawyer |
Above the Law's Joe Patrice, Kathryn Rubino and Chris Williams examine everyday topics through the prism of a legal framework.