Shearman & Sterling LLP
Published April 2011
2011 Vault Ranking: 22
Shearman & Sterling is among Manhattan’s oldest and most prestigious white shoe firms. For well over a century, the firm has been one of the elite corporate players in areas of capital markets, finance, and mergers and acquisitions. It has since expanded to a position of global prominence, regularly conducting business on five continents.
The firm was founded in 1873 in New York City. Early in its existence, the small firm managed to engage a number of key clients including Jay Gould, Henry Ford, members of the Rockefeller family, and the predecessor banks to Citigroup and Deutsche Bank. Though originally founded as a full service firm, its greatest early achievements included the initial public offerings of both Ford and client Merrill Lynch.
After World War II, the firm set its sights on postwar Europe, seeing an opportunity for expansive growth. Shearman established strong ties to German industry, cultivating long-term clients such as Siemens, BASF, and Daimler. It helped these companies restructure and turn into the major credible exporters they would eventually become. Spurred on by these European successes, the firm continued to expand, bringing its expertise across the globe. It now features nearly a thousand attorneys in twenty offices across North and South America, Europe, Asia, and the Middle East.
Like any other firm that relies heavily on corporate practice, the firm had a down year in 2009. Revenue in 2009 was down almost 9%, but the firm cut costs by laying off seventy-six support staff between the U.S. and London offices, enabling profit per partner to actually climb 4.2%. The firm denied reports of attorney layoffs, despite rumors that upwards of 5% of the litigation group had been released. Shearman asked for volunteers from the incoming class of 2009 to defer for one year. Those that did not defer had staggered start dates throughout the first half of 2010. It is still among the top twenty firms in the world in terms of total revenue.
Shearman is a full service firm, but its elite position is thanks entirely to its premiere corporate practice. It has had a long history of working with major players in industry and finance since its inception. Its expertise covers all manner of capital markets, derivatives, and finance work. It has been a part of numerous key deals both at home and abroad involving public offerings and mergers.
In the United States, Shearman has represented Merrill Lynch from its initial public offering, one of the first of its kind, to its eventual sale to Bank of America for $50 billion. In Europe it helped numerous German companies in their postwar reorganizations, and assisted Daimler in becoming the first German company to be listed on the New York Stock Exchange. Through its London office, the largest of any non-UK firm, it is representing Cadbury in Kraft’s attempted acquisition of the confectioner.
The firm has advised other such far flung major clients as the Abu Dhabi National Oil Company in its joint venture with ConocoPhillips, as well as Quatar’s sovereign wealth fund. Its corporate reach has gone as far as assisting in the $22 billion public offering and dual listing of the Industrial & Commercial Bank of China on the Hong Kong and Shanghai stock exchanges.
In the Vault practice area rankings, the firm holds top twenty rankings in Securities, M&A, Private Equity, Securities Litigation, and General Corporate Practice. It also has the number seven spot in the International rankings.
Nationally, Shearman has Band 1 or 2 rankings by Chambers and Partners in Banking, Capital Markets, Corporate/M&A, and Projects (assorted). In New York, it holds Band 1 or 2 rankings in Antitrust, Banking, Corporate/M&A, and Latin American Investment.
Like any top firm, Shearman is looking for the perfect blend of top credentials as well as personality. It isn’t as hung up on the prestige of a handful of top schools, and it is willing to go to lower ranked schools to recruit the top of their classes. They want someone who is both brilliant, but able to function in a practical business setting. Personality is just as important in deal making as it is in litigation.
Shearman is not a fun and games firm, and its summer program similarly follows that pattern. This has the positive effect of summer associates getting real work and responsibility, and sometimes even direct client contact. The downside is that unlike in most summer programs, summer associates can expect to be in the office until 8:00 PM on weekdays and to work at least a few hours each weekend from home. As a plus side, this can be seen as a legitimate life experience to prepare summers for life as a junior associate.
The firm provides a lunch budget for only one attorney lunch each week. Where most firms hold social events once or twice a week, Shearman holds them once every one or two weeks, though occasional unofficial after work drinks happen more often than that.
In 2009, the firm gave offers to 63 of 64 summer associates. However these associates of the class of 2010 have been deferred until an unknown date. Some of the class of 2009 had been deferred as late as February 2011. The 2010 summer class (class of 2011) received 100% offers, but the class was half the size of previous classes. It is unknown if, or for how long, this class will be deferred.
Compensation and Benefits
Associates at Shearman are paid in a lockstep compensation system, following the New York market of $160,000 to first year associates. The firm pays market based bonuses, generally matching the top of the market scales, but never leading the way. Bonuses are not directly linked to a billable hour total, but at least one year, in 2010, bonuses were customized to some degree based on the number of hours associates billed. This allowed for both above and below market bonuses. It is an unfounded rumor that the number of below market bonuses significantly exceeded the number of above market bonuses.
Shearman has no official minimum billable hour requirement, and is not particularly strict about it. Outside of 2010, there have historically been no official consequences for low billable hour totals. However 2009 featured reports of stealth layoffs. With morale still low at the firm, it would be unwise for an associate to allow himself to sit idle while other peers are billing significantly more hours, lest he be at risk for a “performance based” job action. This is also taken into account in face time policies. Associates are expected to be at the office during working hours, with more pressure for face time in the corporate practice groups.
Associates are given four weeks of vacation time, and they generally make use of it. Working on holidays or vacations is rare, but weekend work is very common. Other benefits include annual retreats, monthly happy hours, and subsidized gym membership. Senior associates receive a formal client development budget, and all associates receive reduced rates for car and home insurance through clients.
The firm has a single partnership track that ranges from seven to ten years to eligibility. There is no formal policy dealing with associates who are not made partner on their first attempt, and they are dealt with on a case-by-case basis. Making partnership is a long shot already at Shearman, so it should probably be assumed that unless something drastic changes after a first denial, partnership is unlikely to be achieved on a second attempt. The two keys to promotion at the firm, as with any other, are hard work and the ability to bring in business.
Shearman is an old school white shoe firm to the core. This reputation is so strong, that the firm awkwardly attempts to make a joke about it on their own website. It says that the label “doesn’t mean that all of our shoes are white, though at the moment, as white shoes are in fashion, quite a number can be seen walking about our floors.”
The reality is Shearman is a fairly conservative firm with a long history of elite work for elite clients. They take what they do very seriously. Though attorneys are polite and friendly, they don’t socialize often. If your goal is to join a firm where the work comes first and last, or wish to work someplace where you won’t be ostracized for keeping your work life separate from your personal life, Shearman might be the choice for you.
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