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WHAT WE'RE WATCHING

NO TELLING HOW MUCH - Many law firm leaders are of the opinion that formalized client satisfaction surveys are unnecessary. After all, if their clients were unhappy, the firm would be the first to hear about it, right? Well…no. In fact, they're often the last. As Law.com's Hugo Guzman reports, a new study has found that legal departments are aggressively shifting work from the Am Law 100 and Am Law Second Hundred to less expensive law firms. The trend began to take root during the 2007-08 financial crisis but was partly masked by a decadelong boom in transactional work, according to a new legal market report by Thomson Reuters and the Center on Ethics and the Legal Profession at Georgetown Law. "These shifts were subtle," the report says, "as clients simply moved some of their business to a different segment of the market, without notifying their prior providers. As a result, some firms retained a false sense of security even as client work was slipping away."

CALCULATED RISK - Years ago, I sat with a Big Law leader as they walked me through their firm's partner compensation calculus—an insanely complex formula that involved dozens of seemingly random objective and subjective factors. I was lost within four minutes and nodded and smiled through the remainder of the hour. But the point is: comp systems can be incredibly complicated. The only thing that really matters is whether they keep partners happy. As Law.com's Abigail Adcox reports, while many large firms are now adjusting pay to reward partners with large books of business, not all of them are. Covington & Burling, for example, continues to eschew billing and origination credits, instead compensating partners, as chair Doug Gibson explains, "based on their overall contributions to the firm." While some say a lack of origination credits may carry risks, such as relying on perceptions instead of hard data, Covington argues its pay model reinforces its team-based approach to client matters and has, at times, provided an edge in lateral hiring.

ON THE RADAR - Sunoco LP has agreed to acquire NuStar Energy in an all-equity transaction valued at $7.3 billion, including assumed debt. The transaction, announced Jan. 22, is expected to close in the second quarter of 2024. Dallas-based Sunoco was advised by Weil, Gotshal & Manges and a Vinson & Elkins team led by partners Lande Spottswood, Jackson O'Maley and Ramey Layne. NuStar, which is based in San Antonio, was represented by Sidley Austin and a Wachtell, Lipton, Rosen & Katz team led by partners Igor Kirman and Zachary S. Podolsky. Stay up on the latest state and federal litigation, as well as the latest corporate deals, with Law.com Radar.  

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