Everything
old
is
new
again.
That’s
more
than
some
cliche
thrown
at
you
by
an
aging
millennial
lamenting
the
return
of
low
rise
jeans.
It’s
also
descriptive
of
Biglaw’s
stance
on
lateral
partner
compensation.
Law.com
has
an
article
explaining
that
multiyear
guarantees
—
whether
in
guaranteed
points,
shares,
or
specific
amounts
—
are
back
again
for
partners
they’re
hoping
to
lure
to
the
firm.
There
was
a
time
not
terribly
long
ago
that
partner
guarantees
were
frowned
upon
—
and
for
a
very
real
reason.
Dewey
LeBoeuf
was
overextended
on
lavish
lateral
partner
guarantees,
and
that
fact
played
a
key
role
in
its
collapse.
It’s
hard
to
overstate
how
shocking
it
was
to
the
legal
industry
when
a
100+-year-old
law
firm
filed
for
bankruptcy.
But
apparently
those
scars
heal
after
12
years,
because
now
they’re
back.
While
many
Am
Law
100
firms
have
offered
guarantees,
certain
firms
are
more
widely
spoken
of
for
using
multi-year
deals,
including
Kirkland
&
Ellis
and
Paul
Hastings,
both
of
which
often
lure
candidates
from
top
rivals.According
to
a
person
familiar
with
Paul
Hastings’
lateral
approach,
the
firm
generally
does
not
give
guarantees
for
longer
than
two
years.
The
person
added
that
many
of
the
firm’s
laterals,
successful
upon
joining,
are
receiving
discretionary
bonuses
that
may
exceed
their
guarantees.
“The
commitment
[guarantee]
is
viewed
as
a
floor,
not
a
ceiling,
if
a
lateral
performs,”
the
person
said.
Given
the
reality
of
the
current
lateral
partner
market,
partner
guarantees
are
pretty
much
a
necessity
for
a
firm
that
wants
to
attract
the
most
lucrative
legal
talent.
That
means
even
firms
that
have
been
burned
by
guarantees
have
to
get
back
on
board.
“In
my
experience,
they
go
in
and
out
of
favor
depending
on
the
market,”
said
Alisa
Levin,
founder
and
partner
at
legal
recruiting
firm
Greene-Levin-Snyder.
“When
it’s
a
seller’s
market,
you
get
more
guarantees.”Levin
said
that
firms
that
are
more
active
in
the
lateral
market
are
often
more
likely
to
use
guarantees.Even
firms
that
had
sworn
off
guarantees
are
back
to
using
them,
some
said.
“We
routinely
run
into
firms
that
utilize
guaranteed
compensation
arrangements
and
then
suddenly
have
a
bad
experience,
so
they
ban
them
completely.
Only
to
later
on
go
back
to
them
because
they
can
be
fundamental
to
a
firm’s
ability
to
attract
recruits,”
said
Blane
Prescott,
a
MesaFive
managing
shareholder
and
consultant
to
firms
on
compensation.
But
these
contracts
come
with
risks.
Beside
the
purely
financial
bet
the
firm
is
making
on
the
new
lateral
partner,
they
can
also
be
divisive
amongst
the
existing
partnership.
Professor
Tom
Sharbaugh,
at
Penn
State
Law,
said,
“Very
few
‘rank
and
file’
partners
have
multi-year
deals,
so
there
is
resentment
even
if
a
particular
lateral
partner
is
not
paid
an
exorbitant
amount.”
So
lateral
partner
guarantees
might
be
necessary
but
firms
should
use
them
judiciously
for
maximum
impact.
Kathryn
Rubino
is
a
Senior
Editor
at
Above
the
Law,
host
of
The
Jabot
podcast,
and
co-host
of
Thinking
Like
A
Lawyer.
AtL
tipsters
are
the
best,
so
please
connect
with
her.
Feel
free
to
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her
with
any
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questions,
or
comments
and
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@Kathryn1 or
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@[email protected].