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Partner pay rises despite economic recession

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Partners at Indianapolis’ largest law firms are enjoying healthy pay increases despite the tough economic times.

The city’s big three — Barnes & Thornburg, Baker & Daniels and Ice Miller — collectively increased partner pay an average of 12.6 percent over the past three years, a span that included the worst recession since the Great Depression.

Partner pay at the three firms rose 8.3 percent in 2010, pushing the increase over the past five years to more than 20 percent, figures from American Lawyer surveys show.

Ice Miller paid its partners an average of $590,000 last year, the most of any local law firm, followed by Barnes & Thornburg at $550,000 and Baker & Daniels at $425,000.

The salary increases mirror what’s occurring nationwide within the legal profession, though the increase in partner pay at the big Indianapolis firms last year was slightly higher than the 7.7 percent average for the 200 largest U.S. firms based on revenue.

Many law firms nationwide are emerging from the recession in better fiscal health by shedding overhead and, perhaps more important, whittling down the number of attorneys who share a piece of the pie.

Dividing that pie fewer ways has helped drive up partner pay at both Ice Miller and Baker & Daniels. Both firms have reduced their roster of equity partners more than 6 percent over the past three years.

“There’s certainly an increase in the discipline of who gets to share in the profits, and that’s true everywhere,” said Ward Bower, a legal consultant at suburban-Philadelphia-based Altman Weil.

Attorneys that make partner are typically divided into two groups: the equity partners, who have an ownership stake in a firm and share in its profits, and others who receive a set salary. Equity partners make more and usually command higher fees.

Over the past three years, the number of equity partners at Ice Miller fell from 110 to 102, and the number at Baker & Daniels declined from 110 to 103.

Barnes & Thornburg bucked the trend, going from 185 to 193 equity partners during the same time, mainly because of expansions into several cities.

Ice Miller partners last year received average pay increases of 18 percent — far higher than the 4.8 percent doled out at Barnes & Thornburg and 1.2 percent at Baker & Daniels, according to American Lawyer. Law
                              firm pay

But Baker & Daniels’ partners received a 12 percent raise in 2009 after absorbing cuts of 2.4 percent in 2007 and 1.3 percent in 2008. And Ice Miller’s 2010 increase followed a 1 percent decline in partner pay in 2009. Barnes & Thornburg has managed to avoid cutting partner pay in recent years.

Antony Page, a business law professor at the Indiana University School of Law – Indianapolis, attributed the increases in partner pay to prudent management.

“I don’t think there’s any real sort of mystery here,” he said. “Essentially, what I keep hearing is that all three firms have been managed pretty conservatively.”

The only secrecy is from the firms themselves, whose managing partners declined to discuss specifics. Only one, Tom Froehle of Baker & Daniels, agreed to an interview. The other two provided only emailed statements.

Their hesitancy exemplifies a long-standing practice within the generally conservative legal profession to keep financials close to the vest.

Baker & Daniels and Ice Miller said they don’t provide financials to American Lawyer, though Froehle maintained the publication “significantly” underreported revenue and pay per partner at his firm.

Barnes & Thornburg declined to even divulge whether it supplies the information. For those firms that don’t, American Lawyer says it uses its own research to come up with estimates.

Revving up revenue

Revenue at the Indianapolis firms is on the upswing, as well. All three recorded increases in 2010 that exceeded the 4 percent average for the nation’s 100 largest firms and 2.2 percent average for the next tier of firms — 101 through 200 — the grouping they fall into.

Barnes & Thornburg led the way, with revenue of $260 million in 2010. The 7.7 percent increase from a year earlier landed the firm in the 109th slot on the top-200 list.

Since 2009, Barnes & Thornburg has entered Atlanta; Minneapolis; Columbus, Ohio; and Los Angeles.

Alan Levin, the firm’s managing partner, said Barnes & Thornburg also was able to add clients by keeping rates in check.

“The firm’s recent growth is a product of this conservative financial management, coupled with our ability to attract top legal talent to serve existing clients in new markets throughout the U.S.,” he said via email.

Ice Miller’s managing partner, Phil Bayt, struck a similar tone, citing “cost management” and “increased productivity” for his firm’s performance last year. Ice Miller’s revenue increased 6.2 percent, to $129 million, making it the 172nd-largest firm.

Ice Miller’s strongest practice groups included government — with a boost from the federal stimulus package — as well as litigation, employee benefits, labor, environmental, and bankruptcy, Bayt said.

Baker & Daniels recorded $152.5 million in revenue in 2010, up 5.9 percent from 2009, making it the nation’s 160th-largest firm, according to American Lawyer.

Froehle credited the growth partly to the opening of the firm’s Chicago office, which has swelled from seven to 35 lawyers since 2008.

He said aggressively pursuing new business with existing clients helped as well.

“When we saw the economy turning, we really encouraged our people to go out and talk to clients and to find out how we could help them meet their challenges,” he said. “I think it’s been a very effective approach.”

Bower at Altman & Weil isn’t surprised the Indianapolis firms were able to weather the economic crisis and even boost revenue and partner pay while some firms in historically more volatile parts of the country faltered.

“Indianapolis is a pretty stable legal market, especially in relation to the East and West Coast markets,” Bower said. “You don’t have the highs and the lows.”•

Originally published in Indianapolis Business Journal, an IBJ Media publication.

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  1. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

  4. When I hear 'Juvenile Lawyer' I think of an attorney helping a high school aged kid through the court system for a poor decision; like smashing mailboxes. Thank you for opening up my eyes to the bigger picture of the need for juvenile attorneys. It made me sad, but also fascinated, when it was explained, in the sixth paragraph, that parents making poor decisions (such as drug abuse) can cause situations where children need legal representation and aid from a lawyer.

  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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