Law Firms
100 Thacher Lawyers Don’t Satisfy Sonnenschein’s Growth Ambitions
Posted Dec 22, 2008 8:51 AM CST
By Debra Cassens Weiss
Updated: The chairman of Sonnenschein Nath & Rosenthal hasn’t had much sleep in the last 10 days, but he’s not complaining.
About a month ago, Sonnenschein chairman Elliott Portnoy began negotiating to acquire groups of lawyers from Thacher Proffitt & Wood, sealing the deal to add some 100 Thacher lawyers to his firm in a hectic 10 days that ended last night.
“You don’t have many opportunities like this one that will become available,” he told the ABA Journal on the morning of the announcement. “Sleep will come. Adding great lawyers is always a priority.”
The move is a debilitating blow to Thacher, which is losing about half of its lawyers. The law firm announced Monday evening that it will dissolve after the end of the year. But it’s a coup for Portnoy, who sounded elated earlier in the day.
Portnoy says the firm’s strategic plan launched in 2006 called for increasing the scale of Sonnenschein and the scope of the services it provides. Four Thacher practice groups—structured finance, corporate and financial institutions, real estate, and litigation and dispute resolution—are making the move to Sonnenschein. The group includes the practice group chairs and about 40 partners, according to a press release.
The addition will bring Sonnenschein’s headcount to about 800 lawyers, still short of the 1,000 mark Portnoy had sought earlier. But the acquisition won’t be the last. He says he expects more lateral announcements in 2009 concerning multiple practice groups, some intersecting with the expertise of the new Thacher lawyers, and some entirely unrelated. He also says the additions will mean the need to hire additional administrative staff.
The lawyers will supplement Sonnenschein’s group of structured finance lawyers who practice in Charlotte and a few other locations. The Sonnenschein lawyers “will join together with these new lawyers to form a broader and stronger team,” Portnoy says. “It’s one of the nation’s very strongest teams and it dramatically enhances our capabilities.”
Sonnenschein is acquiring the lawyers at a time when structured finance practices are suffering, but Portnoy says the addition will not be a drag on firm revenues. “The lateral additions have been structured in a way that it will be additive to our net income in 2009,” he tells the ABA Journal. “We are not merging with Thacher or acquiring all of Thacher. Instead we’re adding a core group of its lawyers that we believe is correctly sized to meet projected client needs for next year.”
He points out that the new lawyers don’t focus only on structured finance. “They represent some of the most significant institutions in the country who continue to have needs with restructuring, needs with new government programs and initiatives,” he says.
A number of Thacher lawyers currently represent the U.S. Treasury Department in a $500,000 contract to advise on an aspect of the Wall Street bailout. They are also representing other government agencies on assistance programs, some of which is confidential, Portnoy says. He hopes the $500,000 contract will follow the Thacher lawyers to Sonnenschein.
“There are always risks associated with growth, but having added 65 new partners since 2008, we’ve seen how much stronger economically and culturally we are as a law firm,” he tells ABA Journal. He thinks the same will be true with the addition of the Thacher lawyers.
Portnoy also refers to Sonnenschein’s decision to lay off lawyers earlier this year in areas with soft client demand. Past reports put the number of layoffs at 37 in May and about 24 more in October. Portnoy says tough decisions on these layoffs have put the firm in a stronger position.
"We have a very broad practice mix and geographic platform, which helps us in challenging times such as these,” says. “We think the upside is substantially greater than any potential downside.”
Updated at 7:30 p.m. to include news of Thacher's announced dissolution.
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Comments
The empire will strike back
Dec 23, 2008 4:51 AM CST
So Sonnenschein is missing its target to grow to 1,000 lawyers. I really feel sorry for them - the empire building seems not to advance as quickly as it should.
Why did K&S turn its back on the Thacher group? It would have added bodies to their NY office. But apparently, profitability was not what it should be. It lacked the prof(f)it(t).
Too many firms these days seem to focus on empire building, rather than on their core strength. Making the Managing Partners look more important, adding mass to the firm makes sense only if otherwise, you are below critical mass.
Once critical mass is reached, it is more important to focus on growing the substance of the business and making it more sustainable - and ultimately more profitable.
2009 will be a year where we will see the wheat divide from the chaff. Unless the business has been made more solid, and sustainable in difficult times, the result of having grown the empire will simply lead to a bigger collapse.
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Justin
Dec 23, 2008 7:28 AM CST
I’m just throwing this out there, but I’m a second year law student at a third tier school in San Antonio. I’ll go to work at Sonnenschein for less money and work more hours than anyone. I’ll work hard, I’ll come in early (I even make a mean cup of joe), and stay late (I’ll even give rides home to other attorneys). I’ll do the work no one else wants, and I’ll do it well with a smile.
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LOL @ Justin
Dec 23, 2008 8:01 AM CST
Sorry to burst your bubble J, but Sonnenschein and firms of its elitest ilk generally are not interested in peons from third tier institutions. Or sub top 25 institutions. Unless you got massive rainmaking abilities or connections and the top of your class, you are better off for your career to focus on getting experience in clerkships and clinics and then pray to actually find a job doing actual legal work.
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Tester
Dec 23, 2008 8:08 AM CST
Justin: big law firms need students that are ready to complete assignments. I’ve worked with students out of first and second tier schools and the students were abysmal. In order to get a job you need to do more than make promises (they all did). Show them your competence and build your network: publish something, work for a professor that is known in your field, show hiring managers that you would not require constant coddling. That would show them you’re a good candidate rather than a willingness to do secretarial work.
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easter
Dec 23, 2008 8:29 AM CST
Justin, Sonnenschein doesn’t care where you went to school if you’re a lateral. I worked at a huge health law firm that Sonnenschein poached entire practices from. Some of the people went to lower than 25 law schools but they specialized in their area and had outside health experience before law school. I agree with Tester- show your interest in a specialization, get some good work experience, and if you don’t get where you want to go at first, go somewhere else and make a name for yourself -you’ll likely leave your first job in the first five years anyways. Of the first - third year classes at my old firm, over 60% were gone in two years. Lateral moves are expected so don’t give up if you don’t hit Sonnenschein first -go where you get a job, network, and try to build a client base, and you’ll get there.
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Observer
Dec 23, 2008 8:47 AM CST
1 makes a good comment. The empire building is motivated by firm management’s desire to appear more important AND to increase their compensation, as they sell the notion that those who manage a mediocre behemoth are more important than those who generate the revenue through hard, creative and successful legal work. Management justifies its move to the top echelon of the point chart by creating a large organization to manage. Management buys further justification by paying $$$$ to conflicted consultants (think Hildebrandt) every year to tell management and the firm at large that managers should be the handsomely compensated for managing.
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B. McLeod
Dec 23, 2008 9:18 AM CST
I heard they tried some of those little, blue pills, but it only made the partners taller.
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JD Smith
Dec 23, 2008 9:25 AM CST
Brief comment for #2. I’m “lower half of my class” grad from a T4 school in OK. I made a name for myself in IP and practiced with a major big name firm in Philly. It was aweful. I’ve found a nice soft place practicing criminal and family law 50 hours hours per week in NE Oklahoma. By the way, just to give #2 a bit of hope, I make well over $400,000 per year. Just a thought, Number Two . . .
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JD Smith
Dec 23, 2008 9:27 AM CST
. . . and thicker.
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top tier
Dec 23, 2008 12:06 PM CST
Justin,
Drop out now. you will never make it to a big firm, just as no one at St. Mary’s makes it to a big firm. Secondly, the market is much softer outside of TX, so if you can’t get hired in SA, there is more than a good chance that you will not get hired in Chi, DC, NYC, etc. Finally, promising to do secretarial work and give free rides will not earn you a 160K/yr or so job. I think bus drivers make about 25k and secretaries do not make to much more.
Sorry to burst your bubble my friend, but there is a reason everything is ranked in the legal world. Bottom tier school normally (with minor exceptions) turn out bottom tier lawyers. You’ll be lucky to get a paying job.
FYI, St. Mary’s is Tier 4, always has been, always will be.
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wall street
Dec 23, 2008 12:09 PM CST
If you don’t go to an ivy league school you are not worthy or qaulified to work at Big Law and make lots of money.
Only the priviliged ones will work here. 4th tier minor leaguers need not apply.
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new attorney
Dec 23, 2008 8:20 PM CST
Justin—Don’t let the comments of your insecure , petty fellow law students bother you. If they had any talent to speak of, they wouldn’t have to swipe at you to make themselves feel better. Good lawyering isn’t about what law school you attended. It is about striving to do good work for your client and treating your profession as a craft. Don’t worry about the market. Everyone’s first couple years are hard. One way or another, you will get some experience. Once you do, it won’t be as hard. Best wishes to you.
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B. McLeod
Dec 23, 2008 8:21 PM CST
Right. Only the “qaulified” and “priviliged” ones.
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top tier reality check
Dec 25, 2008 10:05 AM CST
Justin—ignore these kids in their early 20’s who think that the adequate LSAT scores and GPAs that got them admitted to “wall street” jobs and “top tier” schools have anything to do with being a good lawyer. Nothing could be further from the truth. Shallow idiots like them who rely on subjective opinions and polls to define their self-worth will earn every bit of derision and animosity directed their way—and there will be plenty—as it flows toward them in abundance in their future. When those clowns discover that their sheltered, grade and rankings-oriented approaches to life and subsequent inability to interact with clients and colleagues do not compensate for their lack of skills in the real world, they’ll meet up with a very unwelcome surprise that no one really cares what name is on their diploma if that’s the only thing they have to hang their hat on. Justin, concentrate on your writing, analytical and communication skills, and be confident in your ability to collaborate. You’ll do well (while the status-dependent money-grubbers will be buried in 70 hour weeks of document review, writing memos for associates who don’t even know their names).
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