It’s not exactly fair to say that the entire Biglaw landscape takes its cue from Cravath. Firms can and do employ a wide variety of management models. But it’s telling that when firms adopt innovative models, we still describe them in terms of deviating from “The Cravath System.” Cravath’s approach to running a law firm is so baked into this industry, that when firms do break from the model, we can’t help but see it as a failing on their part. “Oh, you pay black-box associate compensation… I guess you couldn’t hack it like Cravath.”
So when the firm makes a major announcement about its very structure, it’s a pretty big deal. In a memo sent out this morning, presiding partner Faiza Saeed explained that the firm would abandon the lockstep partner compensation model in place for almost half a century for a new modified system more akin to what it used in the distant past.
Today, I’m writing to let you know about a change our Partnership has decided to make. Cravath is moving to a modified lockstep compensation system at the partner level. This decision will advance our strategic objectives so that we can continue to thrive in a dynamic marketplace while maintaining the values and culture — including our ethos of shared success — that define our Firm.
Lockstep partner compensation is one practice where most of Biglaw had already parted ways with Cravath. And while Cravath’s announcement doesn’t seem to be introducing an anarchic “eat what you kill” model, it does signal that the realities of that market finally proved too much. Which is sad, because fostering a genuine “partnership” of lockstep attorneys had real advantages in avoiding petty generation credit fights and keeping the leadership of the firm focused on the institution over the individual.
Hopefully the new modified system doesn’t sacrifice those advantages for the short-term value of retaining easily tempted rainmakers.
The firm seems cognizant of not losing the “firm first” mindset. “Our modified lockstep will continue to strongly emphasize rewarding the performance of the Firm as a whole. The underpinning of the Cravath System is teamwork,” Saaed wrote. Still, it’s going to be interesting to watch the firm attempt to find that balance over the next few years.
But in any event, this is perhaps a final blow to the old collegial model of lockstep partnership compensation. It’s not exactly surprising — some blockbuster partner laterals in recent years suggested the lockstep model was suffering from eager poachers.
It’s been a good 45-year run, but the Cravath System has changed — expect to see others change accordingly.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
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