Natasha Harrison and Nicholas Gravante of Boies Schiller Flexner. Photo: Carmen Natale/ALM

With new leadership in place followed by a stream of departures, 2020 is shaping up as a year of significant change for Boies Schiller Flexner.

At least eight partners of about 150 have announced moves from the firm since the start of the year, including three spinning off from the Miami office. Even for January when year-end compensation is paid, the departure flow was high.

Coming just weeks after Nicholas Gravante and Natasha Harrison helped take the reins as additional managing partners, the spate of defections raised fresh questions about the firm's direction. Still, Gravante, Harrison and others said the exits will have no material effect on Boies Schiller's financial performance, and they plan to maintain the strategic vision of founders David Boies and Jonathan Schiller.

All of the departing lawyers cited distinct motivations — entrepreneurial drive, a desire to work at a more global firm, a better mesh of practice groups and priorities. But observers pointed to frustrations, especially among younger partners, with aspects of leadership and the firm's pay system.

In recent years, Boies Schiller undertook a detailed review of its compensation system, a black-box system that has fans and detractors. Some partners supported a model with compensation tiers or bands, said two sources familiar with the firm. A new system could have resulted in more compensation flowing to younger business generators.

No major changes came up for a vote last year, but Harrison said in a statement Monday that the firm's leaders still plan to consider broad changes to the firm's compensation model.

Meanwhile, two sources said Schiller remains heavily involved in the firm management. He said in an interview that he has been able to focus more on firm matters since his post as the chair of Columbia University's board of trustees ended in 2018. But he described his role more as a resource for Harrison and Gravante than as a hands-on manager.

'Nothing to Do With Leadership'

Recent partner exits included three prominent Boies partners who served in the Obama administration. Kathleen Hartnett, a former Justice Department attorney who was co-leader of the firm's San Francisco office, joined Cooley at the end of January as a partner. Lee Wolosky and Dawn Smalls, New York partners who are independent monitors overseeing Deutsche Bank's compliance with a major regulatory settlement, moved to Jenner & Block. Two sources said the annual revenue that could come from the compliance gig was upwards of $10 million.

Before those exits were known, two partner groups opened new firms. Heise Suarez Melville opened in Coral Gables, and Roche Cyrulnik Freedman was founded by a 15-attorney group in Miami and New York.

In interviews, Gravante said he views the exits as a sign of natural evolution.

"In the first generation of any law firm, there's a lot of personal loyalty to people who formed the firm," Gravante said. "Now that we are maturing … I believe institutional loyalty displaces personal loyalty to the founders. My sense is it is not as strong a bond as personal loyalty."

"We don't expect any drop in revenues as a result of these departures," Harrison added. "I believe very strongly it has nothing to do with leadership."

Harrison said it's true that a report had been prepared on the firm's compensation system, and the firm's executive committee is contemplating changes to its partner compensation formula, but stressed the need to move carefully.

"We are now taking a number of steps on this important issue," she said in the statement Monday. "The first step is reevaluating our equity allocation system. That is happening now, and the results should be determined by the end of the first quarter. The second step will involve the firm's leadership determining if the firm should continue with formula compensation with some changes or replace the system entirely with a different model."

It's not just partner compensation that's being discussed, she added, saying the firm's leaders are also considering "a variety of options" for associate compensation.

To be sure, no one has suggested that Boies Schiller's future is threatened. The firm reported a robust $420 million in revenue in 2018. Profit per equity partner is over $3 million, a status shared by only 20 law firms.

The firm lists 282 lawyers on its website.

 

Speaking generally on lateral exits in a January interview, Schiller said the people "who leave our firm aren't leaving because they're unhappy with our firm. They're leaving for some greener pasture." He added, "They want to go somewhere where they're given assignments and paid and don't have to worry about other things."

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