Cravath loses another senior partner to Kirkland as pressure on firm's lockstep model grows

Four months after making headlines with its hire of Cravath Swaine & Moore corporate partner Eric Schiele, Kirkland & Ellis has returned to the firm for two more hires.

Sandra Goldstein, long considered one of Cravath’s most powerful partners and a former head of litigation at the firm, is moving to Kirkland’s New York office with litigation associate Stefan Atkinson, according to a source briefed on the matter.

She has resigned from Cravath’s partnership, and all inquiries on client matters are being directed to Daniel Slifkin, the current head of Cravath’s litigation group. A request for comment sent to Goldstein at Kirkland and her personal email address were not immediately returned by the time of this story.

Goldstein’s move to Kirkland, which was first reported by Reuters and The Wall Street Journal, comes as Cravath and other traditionally-lockstep New York firms grapple with challenges to their compensation model from outfits like Kirkland, which have extended lucrative pay packages to recruit high-end laterals.

Kirkland, which last year moved ahead of Latham & Watkins to become the world’s highest-grossing law firm with $3.165bn in revenue, has previously tapped Cravath for new talent. In late 2016, Kirkland hired Cravath M&A partner Jonathan Davis in New York, a move that came four years after former Cravath M&A partner Sarkis Jebejian jumped to Kirkland.

Schiele, who worked alongside Cravath’s presiding partner Faiza Saeed on some of the firm’s largest deals, including Disney’s pending $66bn purchase of 21st Century Fox, made the move to Kirkland in January. In early 2016, Cravath saw M&A superstar Scott Barshay leave its ranks for Paul, Weiss Rifkind Wharton & Garrison, which agreed to pay him nearly $10m per year, according to reporting by The American Lawyer.

The partner exits have put pressure on Cravath’s lockstep model. The firm, which will celebrate its 200th anniversary next year, has made tweaks to the timeline of its partnership compensation structure. But Cravath has also resisted incorporating major changes that some of its contemporaries, such as Simpson Thacher & Bartlett, have made to their own lockstep compensation systems.

In a statement provided in March to the New York Law Journal, Cravath defended its system as encompassing “our approach to talent development, client service and compensation”, adding: “It is the foundation of our collaborative culture, and it drives the consistency in quality across our platform that enables us to deliver the best advice to our clients in their most challenging matters.”

Saeed, a top Cravath dealmaker who in 2016 became the firm’s first female leader after succeeding Allen Parker as presiding partner, did not return a request for comment about Goldstein’s departure. Kirkland declined to discuss the matter.

Goldstein, who specialises in litigation related to M&A deals, often worked closely with Saeed, who handles the corporate side of such transactions. Goldstein headed Cravath’s litigation group from 2010 until 2016, when Slifkin assumed leadership of the practice.

As for Kirkland, Goldstein and Atkinson are the latest additions in what has been a robust few months of lateral partner recruitment by the firm, which in December absorbed a high-profile investment management team from Debevoise & Plimpton.

Kirkland recently brought on a pair of energy, infrastructure and project finance partners from Norton Rose Fulbright in Washington DC, while other recent notable recruits include its Latham’s former private equity co-head Jennifer Perkins in New York.

In London, Kirkland agreed a $10m a year deal to bring on Freshfields Bruckhaus Deringer private equity partner David Higgins late last year as its new local co-managing partner.

It was not immediately clear how much Kirkland has agreed to pay Goldstein, who is likely to have been at the high end of Cravath’s partnership compensation scheme. Profits per partner (PEP) at the all-equity firm were roughly $4m last year, according to ALM Intelligence data. At Kirkland, which unlike Cravath has a large non-equity partnership tier, PEP averaged $4.7m in 2017.

In late 2016, Kirkland shook up its own compensation framework by slashing the equity stakes of some partners, including many senior litigators. The firm has previously paid big money to recruit star laterals, including former Winston & Strawn litigation chair James Hurst, who reportedly received a $9m guarantee to make the move to Kirkland’s Chicago headquarters in late 2014.

 

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