Cravath CEO Faiza Saeed Modernizes Venerable Law Firm

0


When Faiza Saeed took over as Cravath, Swaine & Moore in 2017, it was seen as the crowning achievement of a lawyer who had distinguished herself as one of the few elite whisperers.

Cravath had, for decades, represented the top of the New York establishment and was so influential that almost all of his rivals had reproduced his values ​​and customs.

Almost five years later, Saeed, the first woman and person of color to lead Cravath, finds herself at the center of a fierce war for talent.

A major M&A boom, driven by the private equity industry, has enriched top law firms and allowed rivals to tempt Saeed colleagues with jaw-dropping pay deals.

Earlier this week, Saeed and his colleagues at Cravath ditched the famous ‘pure lockstep’ pay system he pioneered, in which same-tier partners are paid the same regardless of performance. Now he has to navigate what will undoubtedly become a more ruthless environment both inside and outside of his own boardroom.

Saeed, a magna cum laude graduate of Harvard Law School in 1991, is a prominent figure on New York boards, known for providing insightful advice to powerful clients in complex difficult situations.

“She’s a phenomenal lawyer,” said Blair Effron, co-founder of Centerview Partners, a boutique investment bank and client. “She has good judgment. . . intellectual integrity, and she’s genuinely nimble at helping navigate very complicated situations.

Speaking to the New York Financial Times, Saeed said, “The business is much bigger and more complex than it was when we adopted pure lockstep about 50 years ago, the partnership is three. times more important, we reach nearly a billion dollars in revenue and we operate in a much more competitive market. . .[The new system] adds an ability to reward extraordinary contribution.

“I did not come with a bias that I was going to change [lockstep], “she said.” But I was always ready to be open-minded about it. “

Cravath’s partners aren’t badly paid – they took in nearly $ 5 million on average last year, according to the US attorney. The firm has only two offices and focuses primarily on mergers and acquisitions and general corporate litigation, while those that follow it have spanned all specialties.

Its most notable challenger is Kirkland & Ellis – the world’s most profitable law firm with revenues of around $ 5 billion – which has grown aggressively in part through poaching of partners and forging relationships. narrow with private equity. Kirkland’s partners took in over $ 6 million last year on average, according to AmLaw data, and its performance-driven pay is more like an investment bank model.

Cravath’s ethics are poles apart. In the past, his associates hardly ever defected to other large law firms and were considered to have gainful employment for life.

Two former Cravath lawyers described the firm as an “agricultural team,” where articling students could get excellent training and move elsewhere. “Cravath is now five steps behind the market,” said one of them.

In 2016, chords superstar Scott Barshay scrapped ship for Paul, Weiss, Rifkind, Wharton & Garrison for a deal worth $ 10 million a year. People with knowledge of the details said it generated some $ 100 million in revenue per year for Cravath. In 2018, Kirkland attracted elite litigator Sandra Goldstein.

The departures of several junior partners, some of whom were supervised by Saeed herself, may have been more problematic.

That was one of the factors behind the change, people familiar with the decision said. The new model will integrate individual performance, as well as taking seniority into account.

Senior antitrust lawyer Christine Varney was one of the people pushing for change. She told the FT: “You don’t want a compensation system that ties one hand behind your back, but you have to make sure. . . preserves the atmosphere we have in Cravath.

The decision – agreed upon over a series of weekly partner lunches – was seen as the right step, according to the partners. Saeed herself has said that her “willingness to make judgments and to see them through” defines her leadership style.

Under his leadership, Cravath – which has offices in Manhattan and London – generated record revenues of more than $ 824 million last year, according to AmLaw. Saeed herself advised Disney on its $ 85 billion acquisition of 21st Century Fox in 2019.

Former Starbucks CEO Howard Schultz, a longtime client, said, “She’s an amazing lawyer. . .[The lockstep decision] demonstrates bravery as a leader. . . Sometimes you have to make changes. . . but she did it in a way that brought all of her partners with her.

Saeed, who is of Pakistani descent, remains one of the few women in the male-dominated world of mergers and acquisitions and corporate law. She said: “I was a molecular biology student in college and then I chose to be a M&A advisor on Wall Street, so from a career perspective I’m used to being the one of the few women in these circles. “

She doesn’t believe the new compensation model will threaten Cravath’s culture.

“If someone is motivated only by money, they are not suitable for us,” she said. “It’s a crazy race to chase after that because we don’t have a ‘eat what you kill’ model and we don’t want it… You want to be competitive, but the people chasing the last dollar does not match us.


Share.

About Author

Comments are closed.