It has been a good year for associates at US law firms. At the beginning of the year, Simpson Thacher & Bartlett raised the bar for all other law firms when it raised the base salaries of its first-year associates by $15,000 to $160,000. All other associates ? lawyers who typically have recently graduated from law school but not yet made partners ? also received pay hikes. Now, as the year comes to a close and bonus season approaches, law firm associates are again in for another treat, this time initiated by Cravath, Swaine & Moore.
The move by Simpson Thacher, the long-time law firm of Kohlberg Kravis Roberts and The Blackstone Group, was swiftly followed by a pack of law firms. After Simpson Thacher's announcement in January, major law firms ? many who are the who's who in private equity legal advisors in the US ? ?matched? Simpson Thacher's salaries of its associates. These firms include Cadwalader, Wickersham & Taft; Cleary, Gottlieb, Steen & Hamilton; Clifford Chance; Davis, Polk & Wardwell; Debevoise & Plimpton; Fried, Frank, Harris, Shriver & Jacobson; Kirkland & Ellis; Proskauer Rose; Shearman & Sterling; Skadden, Arps, Slate, Meagher & Flom; Sullivan & Cromwell; and Weil, Gotshal & Manges.
Private equity has been both a boon and a bane for these major law firms. The growth of private equity activity has been driving much of the need for legal advisory work, from fund formation, transactions, IPOs, leveraged finance, litigation, tax, employee benefits and compensation, to local regulatory knowledge. Many law firms now regard private equity as the cornerstone of the corporate department's growth ? and profits. At Simpson Thacher, its relationships with KKR and Blackstone alone reportedly contribute 15 percent of gross revenue. Richard Beattie, Simpson Thacher's M&A and leveraged buyout key man, increased his rate to $1,000 per hour recently.
But private equity has also been luring associates away from law firms as they formalize the legal function in-house and to manage the relationships the private equity firm has with external legal counsels (see page 11 for best practices in managing relationships with external legal counsels). Many general counsels, as in-house lawyers are known outside of law firms, are former associates who have worked at law firms for four to five years before being poached by private equity firms. Law firms have been suffering from high turnover as associates leave for higher salaries and/or a better quality of life at other organizations.
With associates already enjoying base salaries of $160,000 for first year associates and up to $290,000 for ninth-year associates, it will be a happy year end. When compensation leader Cravath announced it will pay special bonuses ranging from $10,000 for first year associates to $50,000 for senior associates, again major law firms followed suit, including Debevoise & Plimpton, Simpson Thacher and Sullivan & Cromwell. These bonuses come on top of year end associate bonuses of ranging from $35,000 to $60,000. Happy holidays, indeed.
Linklaters simplifies leveraged term sheet production
Linklaters has launched the Leveraged Term Sheet Generator (LTSG) to enable its clients to produce leveraged loan term sheets automatically at their desktops. According to Linklaters, LTSG, which is meant to automate and simplify the production of term sheets for leveraged loans, can produce a draft of a term sheet in 30-60 minutes, instead of 8-12 hours by hand. Linklaters first launched the first ever online legal document creation system for basic syndicated loan financings in 2003. Separately, Linklaters has announced the opening of its new Düsseldorf office. The corporate partners in the new office are Klaus-Marinus Hoenig, Hans-Ulrich Wilsing, Wolfgang Sturm, Thomas Niessen, Rüdiger Thiele and Nikolaos Paschos, as well as recent hires from Freshfields Bruckhaus Deringer, Ralph Wollburg and Achim Kirchfield.
Fried Frank opens Shanghai office
Fried, Frank, Harris, Shriver & Jacobson has opened an office in Shanghai, the firm's second in greater China and seventh worldwide. The office will focus on M&A, private equity, capital markets, finance real estate and litigation. Michael Hickman, the firm's managing partner in Shanghai, specializes in privately-offered fund transactions, foreign direct investments, mergers and acquisitions, restructuring, capital market transactions, licensing of intellectual property rights, and project financing. Hickman is joined in Shanghai by corporate partner Liang Tsui, who advises multinational companies on foreign direct investment and M&A activity in China, as well as major corporate restructuring, investment and joint venture projects. Both Hickman and Tsui first joined Fried Frank in December when the firm opened its Hong Kong office, from Simmons & Simmons in Shanghai.
Kirkland & Ellis promotes 14 in PE
Kirkalnd & Ellis has elected 62 new partners globally. Fourteen new corporate partners practice private equity. In Chicago, Howard Steven Norber, Matthew Richards, Christopher Shannon and Derek Vander Heide focus on private equity, M&A and general corporate matters, while Russell Light concentrates on the tax aspects of M&A, buyouts and venture capital investing. In San Francisco, Arshad Ahmed and David Dixon work on all aspects of private equity, while Noah Boyens and Laura Rupenian work with clients on leveraged buyouts and financings. In London, Anu Balasubramaniam focuses on M&A, leveraged buyouts and equity issuances, while James MacArthur has broad corporate experience including M&A, private equity and investment funds. In New York, Albert Cho focuses on fund formation. In Hong Kong, Tai Hsia focuses on complex private equity, growth capital, venture capital, M&A, LBOs, restructuring and fund formation. In Munich, Wolfgang Nardi focuses on advising institutional investors on the financing aspects of private equity transactions.
Mayer Brown elects seven
Mayer Brown has announced the election of 43 new partners worldwide, including 27 in the US and 16 in Europe. In Chicago, Zachary Luber specializes in M&A, venture capital and private equity investments and corporate governance. In New York, Luke Richbourg focuses on debt and equity securities, private equity, corporate finance and project finance transactions. He specializes in transactions in the US and Latin America. Reb Wheeler, also in New York, represents clients on M&A, leveraged buyouts, joint ventures, licensing arrangements, restructurings, venture and later-stage equity financings and debt securities offerings. In Washington DC, Amy Pershkow focuses on investment companies, investment advisers and financial institutions. In London, David Bates advises on all aspects of corporate work including international and domestic M&A as well as private equity and joint venture transactions, while Stephen Beales specializes in domestic and cross-border mergers and acquisitions and also advises on private equity, venture capital and outsourcing transactions. François Devedjian in Paris advises on capital markets, public M&A, corporate and private equity transactions.
Cleary Gottlieb promotes three
Cleary Gottlieb Steen & Hamilton has elected new partners and 11 new counsels. New corporate partner Benet O'Reilly focuses on public and private mergers and acquisitions, private equity investments, and restructuring transactions. O'Reilly is currently advising TPG Capital and Goldman Sachs Capital Partners in their $27.5 billion acquisition of Alltel and Bank of America on its $2 billion investment in Countrywide Financial Corporation. New counsel Niping Wu in Beijing focuses on cross-border corporate and financial transactions as well as capital markets transactions, including private equity investments, M&A and IPOs. She represented TPG in its investment in BankThai and Newbridge Asia in its investment in Taishin Financial Holding. New counsel Deborah Janssens in Brussels focuses on M&A, private equity transactions, corporate reorganizations, capital markets and (secured) debt finance. She has represented BC Partners in its successful bid for Bureau van Dijk Electronic Publishing.
Sullivan & Cromwell elects three
Sullivan & Cromwell has elected six new partners, three in corporate and three in litigation. New corporate partner Robert Chu is the head of the firm's Beijing office after having been resident in its New York and Hong Kong offices. Chu has worked on M&A and corporate finance transactions involving companies in the United States, Asia, Europe and the Middle East. In Frankfurt, new corporate partner Carsten Berrar advises on international public and private securities and M&A transactions. New corporate partner Benjamin Perry in London advises on corporate and finance transactions including cross-border M&A, private equity, leveraged and project finance and capital markets. The promotions are effective January 2008.
Proskauer Rose promotes two
Proskauer Rose has elected 11 new partners and four new senior counsel. Of the five promotions in the corporate department, two practice private equity ? Nigel Austin was made partner and Stephen Devaney was named senior counsel. Austin focuses on domestic and international private equity transactions and leveraged buyouts. He advises private equity clients in all areas of private equity, from transactions to recapitalizations, venture and growth capital investments, restructurings, financings and fund formation. He also advises private equity portfolio companies in connection with transactions and compensation. Devaney advises institutional investors with respect to investments in domestic and international venture capital, buyout, real estate and hedge funds. He also advises on financings, including senior secured, unsecured and mezzanine financings. Both are based in New York.