The role of the full-time general counsel at law firms is evidently becoming entrenched, and also valued enough for firms to devote significant funds to the role. So why does a big-law firm swim against that tide?
Results from Altman Weil’s 2008 survey of the Am Law 200, released at the end of April, found that, compared to the last survey conducted in 2006, the number of firms with full-time GCs remained stable at 85%, 83% percent of whom are litigation partners. Earnings of GCs have gone up 34% from an average of $561,000 to $750,000, while their participation on their firms’ management committees has dropped from 40% to 22%.
Shearman & Sterling recently revamped its management structure by going in the opposite direction from most large firms: halving the size of its executive committee–reducing it from 6 to 3. It also created the role of "management team coordinator" to oversee 5 key areas–client development, practice management, partner and associate issues, firm arbitration and risk management. The firm indicated that the changes are designed to spread responsibility across the firm and enable those in management, senior partners "who are the most effective partners in client development," to concentrate on client roles.
Of even greater note, S&S eliminated its full-time general counsel position, replacing it with part-time responsibilities given to a practicing litigation partner, Henry Weisburg. John Shutkin, S&S’s now displaced general counsel, was hired in 2004 from KPMG International, where he had been general counsel for five years, one of the few GCs brought in from outside the firm.
Elizabeth Chambliss, law professor at New York Law School who has written frequently about law firm general counsel, has noted that S&S is swimming against the tide with this change. "It’s clear that the full-time professional model as a separate job is taking hold," and the elimination of Shutkin’s job "raised eyebrows."
There are of course a number of possible explanations: the person who hired Shutkin, David Heleniak, himself moved to another firm–Morgan Stanley–not long after Shutkin arrived. S&S has also had some less than stellar financial results and perhaps this is an obvious way, though a risky one, in most eyes, to cut costs. Certainly, the S&S spokesperson claims it’s not just cost-cutting, but part of "a broader realignment."
After these musical chairs, S&S says it now wants to focus on priming younger partners for management roles. "We want to make sure we nurture the younger members of the firms," says New York partner and member of the firm’s global strategy committee, Creighton Condon. "We’ll be drawing on these resources to form the extra layer of management below the committee we have in place."
Interesting if this is how S&S hopes to home grow a new cadre of potential GCs. But in the meantime, is S&S willing to rely on less than a full-time general counsel?