Zeughauser Group Partner Kent Zimmerman, in a presentation to the Legal Marketing Association of Texas, said that more national and Magic Circle firms are seeking to enter the Houston market and that those law firms are able to pay potential lateral hires double or even triple their compensation packages in order to lure them away.
said that even though Texas managing partners tell him that their firms are doing well, they are clearly worried that they cannot compete with the competition.
"You see it on their faces.
They feel the weight of the world on their shoulders because they are losing their top talent," he
"They can't afford to keep up and triple the pay of their lawyers."
Revenues and rates for the largest law firms are up more than four percent during the first half of 2014 and lawyer productivity is up for the first time since 2011, but not all firms are witnessing the benefits, he
Zimmerman noted that revenue per lawyer at Thompson & Knight has jumped 18 percent since 2008.
Bracewell & Giuliani and Vinson & Elkins
have witnessed revenue jumps of 12 percent.
Despite those increases, Zimmerman
said that too many law firms still have many unproductive equity partners who are weighing negatively on firm profits.
said firms that discard less profitable practice areas, even if it means shrinking the size of the firm, will be the winners.
If law firms such as V&E
, Baker Botts
and Norton Rose Fulbright want to grow stronger and more competitive with national firms such as Latham & Watkins
, Kirkland & Ellis
and Sidley Austin
said, they need to "cancel out underperforming lawyers."
said there is a growing disparity in compensation between equity and non-equity partners at larger firms.
Equity partners now earn an average of $1 million a year, while non-equity partners' compensation is about $340,000 annually.
In an interesting twist, compensation for corporate law firm partners in Dallas has actually declined 17 percent in recent years, he
The reason, he said, is that a dozen or more mid-market firms have opened shop in Dallas, causing the average annual partner compensation to drop.