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Wachtell, Lipton, Rosen & Katz LLP
Published February 2011
2011 Vault Ranking: 1
As the number one law firm in the Vault rankings, Wachtell Lipton Rosen & Katz (more commonly referred to as Wachtell Lipton or simply Wachtell) has long captured the imagination of aspiring corporate attorneys. Their selectivity, compensation and impact on the mergers and acquisitions sphere are legendary, and every year hundreds of highly-ranked students from the best law schools in the nation compete for the 20-30 spots in their comparatively small summer associate class.
Despite being comprised of nearly as many litigators as attorneys in its corporate and related practice areas, Wachtell Lipton is regarded by many as an elite M&A boutique due both to their revenue makeup and historical leadership in the area. Many of the largest and most influential deals in the world are facilitated by Wachtell’s associates, sometimes even representing both/all parties. They operate only one office, in New York City, which is home to approximately 250 attorneys.
Wachtell Lipton was founded in 1965 in New York City by Herbert Wachtell, Martin Lipton, Leonard Rosen and George Katz, four graduates of NYU. The firm was governed by several principles that many have attributed to their rather unique position in today’s legal sector, including but certainly not limited to: selectivity in picking cases and hiring attorneys, emphasis on quality over quantity and a commitment to egalitarian staffing and compensation. These factors caused Wachtell Lipton to grow somewhat slower than peer firms at times, but their ability to turn away cases as well as oversized associate classes in both boom and bust periods and consistently execute well on historic deals and other matters of tremendous financial value has given them unprecedented control over the shape of their business. The numerous innovations of their partners, the most famous of which is likely the “poison pill” defense crafted by Marty Lipton in the 80s to stem the tide of hostile takeovers flooding the corporate world, also firmly established their leadership in a number of important and highly profitable practice areas. Today the firm is widely considered to be a leader in M&A, corporate governance, capital raising, private equity, takeover defense, shareholder activism and numerous other essential business functions that have kept it well stocked with work for decades.
Hiring at Wachtell Lipton is notoriously competitive, and although they attend OCI at eleven schools they hire in statistically significant numbers from only seven (YHSCCNP). Among these, Harvard, Yale and Columbia typically make up anywhere from half to two-thirds of the summer class, followed closely by Stanford and NYU.
Wachtell Lipton does not operate under a defined GPA or class-rank cutoff, but the average candidate tends to fall approximately in the range of top 10-15% at HYS and top 5% at CCN, with successful applicants from lower-ranked schools often falling near the top of their class with significant other qualifications. They do not require or expect law review, except as an indication of high academic performance, and like many firms have been known to value work experience, particularly in finance. They are also somewhat more MBA friendly than many other firms who might be concerned with flight risk, and hire several dual-degree candidates in a typical recruiting season.
The interview process is also rigorous. Its format is standard for firms participating in OCI, consisting of first-stage interviews and callbacks, but the percentage of candidates who successfully obtain an offer is exceedingly low. For instance, less than 10% of the already heavily self-selected group of applicants at Yale’s OCI made the cut last year. At Harvard and Columbia the number was less than 7%.
Additionally, many candidates have reported that their interviews were significantly more substantive than at most firms, and although they contain the usual firm information and behavioral fit components students can also expect reasonably difficult questions related to their intended practice area. Interviewers also purportedly look to screen out candidates who are motivated primarily or entirely by the firm’s compensation record, which many current and former employees have reported as being not enough to justify the hours and difficulty of work without a genuine commitment to one’s practice area.
Despite its comparatively small size, Wachtell Lipton is one of the most profitable firms in the world, due largely to its somewhat unique fee structure. Rather than billing out associate time as a flat rate dependent on experience, the majority of transactions are billed as a percentage of the estimated value of the deal itself. This allows to firm to pay both partners and associates well in excess of New York BigLaw averages.
This surplus primarily takes the form of an unusually large bonus, calculated as a percentage of base pay and varying only slightly by class. Wachtell Lipton also prides itself on being a market-leader in base, paying $165,000 annually to first-year associates (just over the prevailing market rate). The percentages used to calculate bonus have fallen in recent years due to the decline in the broader economy and reduced deal volume, but even last year the firm managed to pay 50%, bringing total compensation for first-years to almost $250,000. For several years preceding the downturn, Wachtell Lipton paid bonuses of 100% of base, sometimes quintupling the payments of peer firms.
Salary and bonus are advanced on a lock-step scale after the first year at a rate similar to other V10 firms, although the change in total compensation is decidedly greater due to the compounding effect of the base-dependent bonus, often outpacing the standard class year increases in bonus of other firms.
The founders of Wachtell Lipton have always believed in a lean professional hierarchy, much unlike the “Cravath” model of maximizing associate leverage to increase profit per partner (PPP). As a result, Wachtell Lipton has maintained what is far and away the lowest leverage in its peer group, with an associate to partner ratio of only 1.4:1. After accounting for voluntary attrition, this statistic lends a great deal of credibility to the firm’s claim that all associates are hired with the expectation that they are capable of becoming and one day will become partners.
This is not to say, however, that all associates do transition into partnership. Last year the firm announced only two new partners; a decidedly lower figure than the number of otherwise eligible associates. There is only one partnership track at Wachtell Lipton, and like many V10 firms it generally takes 7-8 years for an associate to be considered. Despite their low leverage, the extraordinarily high value of most of the firm’s work makes them consistently one of the highest ranked in PPP, coming in well north of $4 million in recent years.
Wachtell Lipton’s summer associate program lasts 13 weeks, from mid-May to late-August. Pay, like most BigLaw firms, is the prorated equivalent of first-year associate base (summers are not eligible for bonus) and comes out to $3,100 per week. The content and structure of the program are notoriously rigorous compared to the prolonged retreats offered by many top firms in years past. Whereas many firms expect summer associates to stay only during the approximate business hours of 9-6 or so, summer associates at Wachtell Lipton typically work almost as much as their full-time counterparts, routinely putting in double-digit hours. Depending on deal flow the program consists of approximately one substantive project per week, although not necessarily spaced out in those intervals. Social events are also notoriously light, consisting primarily of lunches, dinners and other meet-and-greet type events with partners.
On the plus side, summer associates are often given highly interesting and detailed work, not at all unlike the caliber of assignment given to first and second years at the firm. Since very little of the firm’s work is of the low-touch grunt work variety to begin with, this exposure is routinely cited as being extremely educational and greatly appreciated by students concerned with beginning their professional development. Summer associates are also allowed to largely set their own rotational schedule, giving them an opportunity to try out several practice areas and groups that are of interest to them. They are also given hefty budgets for the limited social events they do attend, with per-person lunch subsidies in past years coming in at $150, and all firm sponsored events are well-funded and well-attended.
Although Wachtell Lipton has no explicit billable hour requirements, expectations reportedly hover around the 2700 mark depending on deal volume, and billing 3000 hours in a year is not uncommon. This number vastly exceeds the already high billable averages of NYC BigLaw, which more often fall in the 2000-2400 range depending on the firm and the associate’s ambitions regarding partnership. Also important to note is that these extra hours disproportionately affect the social lives and out-of-office free time of associates, who generally work 12-14 hours per day including nearly every weekend. Taking out time for commuting and sleep makes it easy to see why the firm is not well known for its extensive outside-work social scene and universally panned by proponents of “lifestyle” firms.
The firm does, however, try to balance the unparalleled demands it places on associates with above-average vacation time, offering 20 days per year. Associates report that they generally do take most or all of this time, unlike many other firms in the V10, although accessibility by phone and/or email is generally expected and being asked to reschedule is a real possibility, as with most deal-driven practices.
Training and Mentorship
Wachtell Lipton’s low leverage ratio makes it possible for new associates to work closely and often with partners and senior associates, despite their busy schedules. Very few attorneys are staffed on most matters, giving even young associates significant and sophisticated hands-on experience very early in their careers and somewhat freeing them from the document review work that many of their peers at larger firms often do. The firm has also been ramping up efforts to institute formal training in recent years, although the experience-based model of working alongside more senior attorneys on full deals is still largely preferred and more heavily utilized.
Perks and Benefits
In addition to their industry-leading compensation, Wachtell Lipton offers a number of perks to employees. New associates are granted a $20,000 salary advance and $3,000 stipend to cover moving and other expenses before their start date. All employees are also given several meals weekly, as well as fully subsidized gym memberships and free door-to-door car service for anyone who works later than 7:30PM (which, as mentioned above, is most everyone). The firm also provides the standard issue laptop and Blackberry, and will pay for associates to maintain broadband home internet connections.
Wachtell Lipton has no formal pro bono program, but strongly encourages associates to give back to the community both by taking on clients and teaching law school courses related to their practice area, which many partners and senior associates do on a regular basis. The firm counts all work done for pro bono clients as full credit towards billable hour calculations and has no explicit limit on the number of hours that may be counted, although in reality Wachtell Lipton associates rarely log as many pro bono hours as some other firms with formal programs due largely to their lean staffing model and consistently heavy deal flow.
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