Wall Street’s top lawyers are now so in demand that bidding wars between firms for their services can resemble teams’ frenzy to sign star athletes.
Eight-figure pay packages, uncommon a decade ago, are increasingly common for corporate lawyers at the top of the ladder. his game, and many of these new heavyweights have one thing in common: private equity.
In recent years, highly profitable private equity giants like Apollo, Blackstone and KKR have gone beyond company acquisitions into real estate, private lending, insurance and other businesses, amassing trillions of dollars in assets. As their demand for legal services has skyrocketed, they have become big revenue generators for law firms.
This is driving up lawyer salaries across the industry, including at some of Wall Street’s most prestigious firms, such as Kirkland & Ellis; Simpson Thacher & Bartlett; Davis Polk; Latham & Watkins; and Paul, Weiss, Rifkind, Wharton & Garrison. Lawyers with close ties to private equity increasingly enjoy pay and prestige similar to that of the star lawyers who represent America’s blue-chip companies and advise them on high-profile mergers, takeover battles and litigation.
Many people compared it to a star-centric system like the NBA, but others worried that rising salaries had gotten out of control and could put pressure on law firms, forced to stretch their budgets to prevent talents left.
“Twenty million dollars is the new ten million,” says Sabina Lippman, a partner and co-founder of the law-recruitment firm Lippman Jungers. In recent years, at least ten law firms have spent — or acknowledged to Lippman that they need to spend — around twenty million dollars a year or more to attract top lawyers.
A law firm recruiting partner said $20 million pay packages were typically reserved for those who could generate more than $100 million in annual revenue for a firm.
Last year, six Kirkland partners, including some who were hired during the year, each earned at least $25 million, according to people with knowledge of the deals who were not authorized to speak publicly about the salaries. Several others in its London office earned about $20 million.
A law firm partner said compensation for top lawyers had roughly tripled in the past five years.
The take-home pay of some top lawyers is approaching that of the heads of big banks. Jamie Dimon of JPMorgan Chase, the nation’s largest bank, earned about $36 million last year. David Solomon of Goldman Sachs earned about $31 million over the same period.
At the center of the action is Kirkland, a 115-year-old law firm founded in Chicago that went after private equity clients when few rivals saw them as big moneymakers. About a decade ago, Kirkland began poaching heavyweights from rival law firms, many of them based in New York, that had longstanding relationships with major private equity players.
That inspired fierce competition among major law firms, including Simpson, Latham, Davis Polk and Paul, Weiss. Some have changed their compensation structures or adjusted their budgets to prevent stars from leaving. Others have responded by raiding Kirkland to build their own private equity businesses.
“Companies don’t feel like they can only think about being defensive about their talent,” said Scott Yaccarino, co-founder of legal recruiting firm Empire Search Partners. “They also have to be on the offensive.”
Lawyers have been earning multimillion-dollar salaries for more than a decade. When Scott A. Barshay, one of the industry’s most prominent mergers and acquisitions lawyers, left Cravath, Swaine & Moore to join Paul, Weiss in 2016, his $9.5 million salary created a stir in the industry. (Barshay’s compensation has since increased significantly, two people with knowledge of the contract said.)
But the recent pay rise has come at a dizzying pace and for many more lawyers. Coupled with fierce poaching, it is rapidly reshaping the economics of major law firms. Kirkland has even guaranteed some employees fixed stakes in the company for several years, according to several people with knowledge of the contracts. In some cases, it has made forgivable loans as sweeteners.
Last year, Kirkland hired Alvaro Membrillera, a prominent private equity lawyer in London who counts KKR as a key client, from Paul, Weiss for about $14 million and a multi-year guarantee, according to two people with knowledge of the deal.
White & Case recently hired O. Keith Hallam III, a Cravath partner with private equity clients, for about $14 million a year, according to a person with knowledge of the deal. The firm also hired Taurie M. Zeitzer, a private equity lawyer at Paul, Weiss, for about the same amount, another person with knowledge of the deal said.
For some, the changing landscape represents a more meritocratic system in which partners can expect compensation based on talent rather than seniority. Cravath, a 205-year-old historic firm, long followed the so-called seniority-linked ladder system, but modified it in 2021. Debevoise & Plimpton is one of the few remaining firms that continue to follow the ladder model.
“Law firms have become much more commercial in the way they operate,” said Neil Barr, chairman and managing partner of Davis Polk. “Firms operate like businesses rather than old-school partnerships, and this has led to more rational corporate behavior.”
Kirkland’s early bet on private equity has paid off. Globally, private equity firms managed $8.7 trillion in assets as of 2023, more than five times what they oversaw at the start of the financial crisis in 2007, according to data provider Preqin. Blackstone alone manages more than $1 trillion in assets, and other firms including Apollo, Ares, KKR and Brookfield collectively oversee trillions more.
As the private equity business took off, Kirkland’s clients began steering it with hundreds of millions of dollars of business each year. By 2023, Kirkland had grossed more than $7 billion in revenue, according to The American Lawyer’s annual ranking, making it the highest-grossing law firm in the world.
A single firm like Blackstone or KKR can generate legal work from the constellation of companies, banks and others that are part of its universe. For example, although Blackstone’s main law firm is Simpson, it paid Kirkland (one of its secondary firms) $41.6 million in 2023, according to a regulatory filing.
“These firms’ private equity clients are minting money,” said Mark Rosen, a legal recruiter.
Simpson, an illustrious Wall Street firm with roots in the Gilded Age and one of the largest private equity practices, has been a particular target of poaching by Kirkland. A person with knowledge of the rivalry called the Kirkland company’s “farm team.” Kate Slaasted, a spokeswoman for Kirkland, said in an email: “As a company, we have the utmost respect for Simpson Thacher.”
At least seven top Simpson partners, including Andrew Calder and Peter Martelli, have joined Kirkland in the past decade. Kirkland also hired Jennifer S. Perkins, a star Latham lawyer who has represented KKR in some of its deals, to join its private equity practice.
According to three people familiar with the compensation details, Calder and Jon A. Ballis, Kirkland’s chairman, were among partners who earned at least $25 million last year. Calder and Melissa D. Kalka, also a Kirkland partner, work closely with Global Infrastructure Partners, the private-equity firm that recently announced a deal to sell itself to BlackRock for $12.5 billion.
In 2023, Paul Weiss, who counts Apollo Global Management among his top clients and is aggressively building his private equity business, poached several Kirkland lawyers to build his London office. The firm also hired Eric J. Wedel, whose clients include Bain Capital, KKR and Warburg Pincus, out of Kirkland, and Jim Langston, another private equity-focused attorney, from Cleary Gottlieb Steen & Hamilton.
Simpson changed his salary structure last year to be more competitive with Kirkland and other rivals. “We intentionally made the decision to adjust our compensation structure to attract and retain the best talent in strategically important practices across our global platform,” Alden Millard, chairman of Simpson’s executive committee, wrote in an email.
One sign of the frenetic nature of hiring is the use of multiyear compensation guarantees to attract lawyers. These guarantees fell out of favor after Dewey & LeBoeuf filed for bankruptcy in 2012, unable to meet the millions of dollars in fixed payments and bonuses it had promised partners. Now, a different kind of guaranteed pay has become popular.
Some companies give new employees a certain amount of company stock for a set period, usually two to five years. These offers are attractive because they guarantee a specific share of a company’s profits, regardless of its annual performance.
The frenzy has seen even lawyers without private equity connections see their pay rise. Freshfields, a large British firm that is building a base in the United States, has hired lawyers for between $10 million and $15 million and provided additional salary guarantees to some, according to three people with direct knowledge of the details of the pay.
“Law firms want people who are motivated by their culture,” said Lippman, the recruiter. “But there comes a time when, if there is a big difference between law firms, they all have a price.”
