In Hot Lateral Market, Some Lawyers Forced to Cool Their Heels
It's not just Kirkland & Ellis. Contractual 'hold' provisions have recently delayed lateral moves in Texas to Gibson Dunn, Sidley Austin and Shearman & Sterling.
August 07, 2018 at 02:13 PM
4 minute read
Image credit: Joachim Wendler/Shutterstock.com Kirkland & Ellis a six-month notice provision Weil, Gotshal & Manges market where there's much lateral activity Shearman & Sterling moved into Texas in March in Austin Baker Botts held a group of oil and gas lawyers Baker Botts faced the same issue in 2017 Gibson, Dunn & Crutcher Weil held a group of lawyers Sidley Austin Baker Botts initiated its 90-day leave policy after Latham & Watkins opened its Houston office in 2010 and quickly poached partners, according to a source familiar with the policy. Since then, with more Big Law firms opening firms in Texas or expanding with additional offices, and lawyers with big books of business being lured to competitors, reports of holds are cropping up on a more regular basis.Bill Cobb, a firm consultant in Houston at Cobb Consulting, said the enforcement of hold provisions has become more of an issue because the market is so competitive, and because the lawyers making lateral moves likely control clients that provide considerable revenue.'So Much Change'Unlike Crews, the Baker Botts counsel who can't move immediately to Kirkland, high-profile corporate lawyer Sean Wheeler joined Kirkland as a partner in Houston on July 30 without a firm-imposed delay, coming from Latham & Watkins' Houston office.Wheeler said he stayed at Latham for three weeks after putting in his notice, simply because he was working on an M&A project for a client, and wanted to see it through. He said that while Latham's partnership agreement includes a six-month hold provision, he's not aware of any instance when the firm has enforced it, and said lawyers typically depart the firm within a week or two.He said that when he joined Latham in 2010, he only stayed at Baker Botts for about five days after his notice. He said the firm instituted the 90-day hold provision in the partnership agreement shortly after he and partner Michael Darden (now at Gibson, Dunn & Crutcher in Houston) left for Latham.Wheeler suggests that firms may frustrate clients when they hold lawyers to a lengthy notice period."There's been so much change in the Texas market over the last 10 years, I think some firms just view it as a way of possibly forestalling the loss of business ... I'm not convinced it helps anyone retain a client for a long period of time," said Wheeler, who was named a Dealmaker of the Year by The American Lawyer in 2015.Hugh Tucker, the oil and gas partner whose departure from Baker Botts was delayed this spring, said in May that the 90-day hold was frustrating because the partners were anxious to get things rolling at Shearman. “It's one of those things that you wish you didn't have to go through, but I certainly understand the rationale for doing so,” he said.Bill Pollard, a solo practitioner in Austin who prepares partnership agreements for firms, said firms can benefit from hold requirements because they have flexibility to waive them or to enforce them and use the time to try to retain clients.But Pollard said most of the partnership agreements he's handled have been for relatively small firms—up to a dozen lawyers—and he hasn't included hold provisions. "Those [firms] are just not big enough where that kind of provision would be meaningful enough to be in there," he said.
sued litigation settled in May 2017 Read More: Weil Holding Departing Dallas Counsel to 6-Month Notice Period
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