Barbara Becker Is Driving Gibson Dunn Into Big Law’s New Era
In the Media | February 27, 2023
Bloomberg Law
Barbara Becker’s law firm was on an unrivaled growth streak when she took the reins of Gibson Dunn & Crutcher in early 2021. Becker quickly ushered in two major changes.
The 130-year-old firm revised its partner pay system to give more money to top rainmakers. Becker, its first woman chair, also installed a crop of relatively young, and more diverse, lawyers in key lieutenant posts.
Despite a quarter century of consecutive profit growth, the firm’s leaders were concerned how Gibson Dunn would fare in what’s become a hyper-competitive market for the world’s highest paid lawyers.
Under Becker, the firm bumped the spread between its highest-paid partners and their lowest-paid peers to about eight-to-one, up from about six-to-one. Top partners could now earn a reported $13 million a year.
The moves ruffled some feathers among longtime partners and Gibson Dunn has seen notable departures on Becker’s watch. The firm’s financial success has continued: Gibson Dunn reported another banner year of growth in 2022, with profits and revenue up by double digits.
“Last year was proof that our strategy is working,” Becker said in an interview. “The economic challenges are real for everybody and our peers are experiencing declining demand and profitability, yet we’re thriving.”
Gibson Dunn’s direction under Becker shows how even the most successful firms are responding to new competitive pressures, like some firms’ willingness to pay lawyers salaries that rival professional athletes.
‘The Glue’
Gibson Dunn is well known for a hard-nosed, “take no prisoners” approach that has made its litigators some of the most sought after in the industry, while drawing public criticism and occasional rebuke from judges.
The firm’s corporate department has made strides, securing work on deals from major private equity sponsors like KKR, Blackstone, and The Carlyle Group. Part of Becker’s strategy focuses on adding more dealmakers.
Becker, who starts her day at 5 a.m., often calls partners across the globe before riding her e-bike across Manhattan to the firm’s Park Avenue office. When making those calls from her home on the North Fork of Long Island, the goats Becker’s family tends can occasionally be heard in the background.
The M&A lawyer made her name at the firm representing major clients like Accenture, Kraft Heinz, and Merck. A mother of four, she also founded the firm’s diversity committee 20 years ago. She’s one of four women leading a Top 25 firm by revenue.
Ken Doran, the Los Angeles deals lawyer who ran Gibson Dunn for two decades, reached the end of his leadership stint in 2021. He had recently turned 65, the age at which the firm requires partners to step down from leadership roles.
Becker, now 59, landed among the finalists in a relatively informal succession process in which the field of candidates was whittled down and then voted on by a 20-member executive committee. The firm partnership voted Becker into the role after the executive committee’s recommendation.
Partners who backed Becker for the chair role often touted her efforts to support colleagues and mentor younger lawyers. Some firm leaders in interviews praised her for using a personal touch.
Kahlil Yearwood, a co-leader of the firm’s San Francisco office, said he wondered what he’d done wrong when Becker scheduled a monthly call with him shortly after she became chair.
“What I realized was she wanted to be the glue,” Yearwood said. “Barbara thinks her job is to help each person be the best version of themselves. Having a leader who connects the dots is incredibly helpful.”
Paying Legal Stars
Changes to the firm’s pay system were in the air at the firm even before Becker took the top role.
Under Doran, a group of partners convened in 2019 to study whether to revise its compensation system to adapt to the new, more stratified market for partner pay.
The law firm hadn’t fallen behind as much as others had raced into uncharted territory, paying star partners salaries that now stretch as high as $20 million a year.
“The bar continues to move up on compensating big contributors,” said Kent Zimmermann, a principal at law firm consultancy Zueghauser Group. “And that bar is being set by very large and very profitable firms.”
Gibson Dunn has the resources to play that game. Only three law firms boasted a larger profit pool than the nearly $1.6 billion Gibson Dunn generated in 2021, AmLaw data show.
The question was how those earnings should be divvied up among the firm’s roughly 350 equity partners. In an environment where outsize pay packages are increasingly common, could Gibson Dunn stick to paying partners relatively similar amounts?
Elite firms once viewed as immune to competition, like Wall Street’s Cravath Swaine & Moore and Davis Polk & Wardwell, have ditched their strict seniority-based pay systems to keep their stars and help recruit new ones.
New Policy
Before Becker was elected chair in March 2021, she and four others vying for the top position went before a large group of partners in a Zoom meeting. They were asked to describe what changes they would make, among other questions, according to two sources familiar with the meeting.
Becker told the group that compensation changes would not be major, the sources said. The system needed tweaks to remain competitive, Becker added, but the general structure should stay the same.
The new pay structure, rolled out in the Fall of 2021, remains largely similar to the previous system, according to the sources. Partners gain shares as they progress up the scale, and the firm kept in place the same cap at the highest end of 1,000 shares.
Through a one-time “share exchange,” partners were placed into a new pay tier structure that extended the highest and lowest ends of compensation.
Notably, “1,000-share partners” that have reached the highest threshold remain ineligible for bonuses, a stark departure from some firms that compensate high earners through large discretionary bonus pools.
‘Modest Change’
The changes—and the way they were made—have prompted whispers of unhappiness at Gibson Dunn.
One former partner who left after the compensation change said the firm adopted an “economic imperative” under Becker, even after she insisted early on that there would not be a “star system” at the firm. The person said most partners were not consulted in advance and the partnership as a whole was not asked to vote on the moves.
The approach clashed with the firm’s culture of “excellent” lawyering and collegiality, the former partner said.
Three rival law firm leaders said they’ve seen an influx of resumes from Gibson Dunn lawyers, litigators especially.
Big Law leaders are often loathe to acknowledge they’re driving big changes—perhaps it’s the lawyer’s urge to respect precedent, or that most firms have been financially successful over long periods of time.
Becker, in an interview, acknowledged some partners wanted more communication ahead of the changes, but said they were widely accepted—especially now that they’ve been in place for a full year.
“It really was a modest change, and it has served us well because it has allowed us to continue to attract and retain top talent,” she said.
The firm last year hired 29 lateral partners. The additions include former Texas federal appeals judge Gregg Costa, Apple Inc.’s former chief privacy officer Jane Horvath, and partners from rivals like Simpson Thacher & Bartlett, Kirkland & Ellis, Sidley Austin, and Cooley LLP.
Youth Movement
Becker also took on a delicate task for any law firm: elevating younger lawyers into leadership positions typically occupied by veteran rainmakers.
Naming new leaders for practices and offices was one of her first initiatives. The firm has nearly doubled the number of women or diverse lawyers on its top leadership committee, according to Gibson Dunn, and roughly tripled that figure for office or practice leaders.
“What Barbara has done is say to senior partners who’ve been business leaders for the past decade or more: ‘Your job is to enable and mentor the success of our younger talent,’” said Orin Snyder, a New York trial lawyer and member of the executive committee who plays a leading role in the firm’s litigation group.
“It’s a generational shift where the senior partner’s job is to accelerate the success of younger lawyers,” Snyder said. “It’s a paradigm shift.”
The biggest challenge to the transition came early in Becker’s tenure.
Star New York litigator Randy Mastro was approaching 65, the maximum age for executive committee members. Mastro, who’d represented New Jersey Republican Gov. Chris Christie in the Bridgegate controversy, was a vocal force on the committee.
He asked for an exemption to stay on, according to two sources familiar with the matter. Becker rejected the request.
Mastro left the firm for King & Spalding about a year and a half later. He declined to comment.
He said in news reports at the time that his exit was partly motivated by another looming age limit, the firm’s mandatory retirement for equity partners at 68.
Becker’s decision was emblematic of what leaders at the firm described generally as a willingness to make difficult choices with the firm’s long-term health in mind. In conversations about transitioning titles and clients to younger partners, she said she emphasizes the benefits to the firm.
“My north star is always: What’s best for the firm?’” Becker said. “And you can’t really argue with the fact that we do need to have a transition in leadership and our senior partners are an important part of that transition.”
The firm’s committed to competing for the best hires, she said, even if Big Law’s free agent era makes that an increasingly expensive endeavor.
“Our pipeline of hires is stronger than ever,” Becker said. “We’re in growth mode.”
Reproduced with permission. Copyright February 27, 2023, Bloomberg Industry Group 800-372-1033 https://www.bloombergindustry.com