Legal eagles' dirty tricks

Data Room: Legal partners are resorting to dirty tactics to guard their territory in a subdued M&A market, but it's nothing personal.

Legal M&A partners are undermining senior associates to guard their piece of a shrinking partnership pie in a subdued deals market. 

Some partners are appropriating deals sourced by senior associates. More widespread is the practice of corporate partners BCCing senior associates in emails instead of CCing them, not attributing work they have co-authored, and leaving them off the invite list to client functions or celebrations to mark the end of a deal.

"They know who they are,” says managing director of Mahlab Recruitment Katherine Sampson, who reports the highest number of senior associates on her books since the GFC. 

“Partners at the top in M&A and ECM (equity capital markets) are defending their positions," says Sampson.

To achieve partnership at major firms, senior associates are expected to have “span” -- the work the associate charges for, supervised fees and referred fees - of $2 million to $4 million a year. With the dearth of deals around, senior associates are not able to demonstrate a business case to get into partnership.

“It’s becoming harder and harder to build that case, so you have a state of unhappiness and frustration where the talent pool is under-utilised," Sampson says.  

The ambush antics are "not a personal thing" but stem from partners having to protect their own patch and justify their existence in a subdued market, she says.

The value of merger and acquisition deals involving Australian companies fell 28.5 percent in the first half of this year from the first half of 2012, to US$32.1 billion, according to Thomson Reuters data. The average deal size fell to US$75 million from US$87 million a year ago.

Legal recruiter Jacinta Fish, a veteran of two decades, says her books are awash with senior associates in M&A and equity capital markets amid slow deal flow.

“In the last two years, I’ve had more senior associates come across my books than I can remember. There are not as many options for where they can go in the firms. They haven’t got the work, haven’t got the business case," Fish says.

Many M&A lawyers are eyeing in-house company positions, where selling a business case is not a prerequisite to being hired, But there are more candidates than jobs.   

Senior associates have a glimmer of hope, as corporate attitudes to hiring change. Companies are spending more upfront on senior lawyers because of mounting pressure to keep more legal work in-house.

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