THE AM LAW DAILY

SURVEYS AND RANKINGS

MAGAZINE

SPECIAL REPORTS

The Talent

February 28, 2011 5:00 AM

Behind the Arrival of DLA's $5 Million Man

Posted by D.M. Levine

On February 7 DLA Piper announced that it had hired James Wareham, the former head of Paul, Hastings, Janofsky & Walker’s global litigation practice. The next day, in an article about law firms luring star attorneys to their firms by offering outsize salaries, The Wall Street Journal reported that at DLA, Wareham "will make about $5 million a year, a significant raise from his pay at Paul Hastings."

What is DLA getting for its money? Wareham "checked a number of boxes for us," DLA Piper global chairman Francis Burch tells The Am Law Daily. "We saw [him] as a game-changing-type addition to the firm. . . . I expect him to be doing really sophisticated lawyering involving top clients." DLA brought in the Washington, D.C.–based partner, Burch says, to help the firm build up, among other things, its cross-border investigations and international arbitration practice. 

Five million dollars isn't an unheard of sum among the ranks of partners in The Am Law 200, but it is rare. Prompted in part by The Wall Street Journal's report, The Am Law Daily looked into the question of what DLA is getting for its money and how big a book of business a lawyer might need to earn $5 million.

Neither Paul Hastings nor Wareham would comment for this story. Paul Hastings says only that the firm "wishes Wareham the very best." Wareham declined to comment except to say, "one of the best decisions I ever made was to move to Paul Hastings. One of the most rewarding things I've ever done professionally was to lead the litigation department at the firm."

However, a source close to Paul Hastings, who asked to speak anonymously, says Wareham's billings dropped in the last two years and that this was part of the reason why the firm asked Wareham to step down from his post as litigation chair last fall. But a source close to Wareham, who also asked to speak anonymously about the former Paul Hastings partner, says that Wareham was one of the biggest rainmakers at Paul Hastings and that Wareham's decision to step down as litigation chair was mutual.

Wareham joined the Paul Hastings litigation department in 2003 from Jones Day. He became global litigation chair at Paul Hastings in 2005. In his seven years at the firm, the 50-year-old Wareham was a top-billing partner. Much of his book of business came from high-profile clients such as UBS AG and Chevron Corporation. These relationships resulted in a whopper of a year in 2008: the total amount of work for clients under Wareham's direction that year was $53,522,372, according to a source close to Wareham who has seen Paul Hastings's billings records. 

But, like many Am Law 200 partners, Wareham saw his billings fall as the economy tanked. In 2009 his total billings dropped to $25,504,125; in 2010, they fell to $23,691,488. Sources close to Paul Hastings declined to comment on the specific numbers.

Wareham's compensation also followed a similar trajectory. Wareham was one of the highest-paid partners at Paul Hastings, but how much he made in recent years also is a source of dispute. The sources close to Paul Hastings say that he made between $4 and $4.5 million a year before the recession, and that in 2009 he made $4.9 million; in 2010 he made $3 million. A source close to Wareham agrees that the Paul Hastings partner was paid $4.9 million in 2009, but that his compensation dropped to just $4.3 million in 2010--not $3 million. (The Wareham source did not provide a compensation number for 2008.) 

There also is disagreement about why Wareham stepped down as Paul Hastings's global litigation chair last fall. According to two sources close to Paul Hastings, Wareham was asked to step down from his position as litigation chair in November 2010. But a source close to Wareham says that the decision to relinquish the title was mutual, and that Wareham began talking to other firms as early as last summer. 

Given the apparent drop-off in his billings, is DLA overpaying for Wareham? While $5 million is by no means unheard of, "there are very few lawyers who make that much," says Jon Lindsey, the office managing partner at Major, Lindsey & Africa, who was not involved in Wareham's hiring. "Any time you're setting anyone's compensation in any industry, you're trying to gauge their value and what is the market for their services," Lindsey says. He adds, "At face, [Wareham's $5 million] doesn’t seem crazy."

A lawyer's worth is also relative to the particular firm. In The Am Law Daily, retired Kirkland & Ellis partner Steven J. Harper recently speculated that Wareham would have to produce some $20 million in billings to support a $5 million share of DLA's profits (given the firm's reported 26 percent profit margin).

But recruiter Lindsey says that it is often difficult to determine a lawyer's worth from just his billing or origination numbers. Ultimately, it's really a question of how the new firm chooses to value an incoming lateral. 

What does DLA think? Responding to a question about the reported drop in Wareham's billings, DLA chair Burch says, "We're not buying revenue. We're bringing on a guy who we think has a lot of talent and understands what we're trying to do and potentially playing a leadership role [here] as he did at Paul Hastings." Burch adds, "We're not day traders, we're investors."

 

Contact D.M. Levine at DMLevine@alm.com.

 

Make a comment

Comments (2)
Save & Share: Facebook | Del.ic.ious | | Email |

Reprints & Permissions

Comments

Report offensive comments to The Am Law Daily.

Obviously Paul Hastings valued him differently than DLA. Just as obviously, Paul Hastings was in a much better position to evaluate evaluate him.

It's interesting how the $5 million dollar man has never even been ranked in Chambers! Good Luck DLA!!!

The comments to this entry are closed.

By: TwitterButtons.comhttp://www.facebookloginhut.com/facebook-login/


theamlawdaily@alm.com




From the Law.com Newswire

Sign up to receive Legal Blog Watch by email
View a Sample

Advertisement