The managing partner of Cleary Gottlieb, Michael Gerstenzang, has revealed a strategic goal for the firm to become one of the Top 20 law firms by gross revenue. This target sets the firm on a path to increase its revenue by about $500 million—an increase of 36% from last year’s performance when the firm was positioned at No. 30 among US law firms in terms of gross revenue.
This intended push for revenue growth is set against the backdrop of an industry that is witnessing drastic steps taken by other firms to hire top talents, creating what Gerstenzang describes as an “incredible frothiness” in the lateral partner market. In the context of the abounding cases of partners moving between firms for staggering amounts of money, Gerstenzang’s point of view resonates succinctly in his statement, “Comparison is the thief of joy.”
Though Gerstenzang did not mention specifics, it is well noted that a trio of partners from Kirkland & Ellis who joined Paul Weiss recently could each receive upwards of $20 million annually. Parallel to this, there’s a reported consideration by The Wall Street firm to create a nonequity partner tier to free up more cash. This move emulates other similar steps taken by top firms such as Cravath, Swaine & Moore.
As the firm’s managing partner since 2017, Gerstenzang has spearheaded Cleary Gottlieb to become one of the country’s most profitable law firms with partners earning an average of $4.3 million in 2022, according to Am Law data. When it comes to the firm’s strategic growth, Gerstenzang is self-assured that their competitive edge will not come from scaling the headcount, which stands at 196 profit-sharing partners, a count almost twice that of some exclusive firms, but rather from leveraging AI to compete efficiently against more populous firms.
In this regard, Gerstenzang is following advances in generative AI and its applications in law firms quite closely. With regard to this, Cleary Gottlieb has been experimenting with generative AI on their internal datasets and also set up their subsidiary technology and project development incubator, ClearyX, back in 2020. According to Gerstenzang, generative AI will, over time, minimize the need for firms to have huge numbers of lawyers using “brute force” on projects, and shift the billing structure away from billable hours, which often undervalues the lawyers’ work. In his perspective, generative AI and a shift towards value-based billing would be beneficial for both clients and law firms.
This strategic perspective on law firm management and the adoption of AI innovations comes from Cleary Gottlieb’s leader as the firm looks to outperform in a significantly competitive market where firms are not shying away from a different model, leveraging large ranks of nonequity partners to gain a competitive advantage. In what marks a bold and innovative approach, the firm’s clear focus on maintaining its culture and reputation, while championing AI adoption to boost efficiency and alter billing models for value-based billing could serve as an indicator of the evolving model of successful law firms in the future.
For more detailed insights on Gerstenzang’s plans for Cleary Gottlieb, read the full article on BloombergLaw.