Pay rifts, a partner divide, and a threat at the Ritz Carlton: 50 insiders reveal all on a massive shakeup at elite law firm Boies Schiller

boies schiller flexner law firm under fire 2x1

  • A massive transformation is taking place at elite litigation
    powerhouse Boies Schiller Flexner.
  • Over the past six months, more than 30 partners have exited the
    firm, which was founded by superlawyer David Boies — best known
    for his role in cases like Bush v. Gore and the fight for same-sex
    marriage rights. 
  • Business Insider spoke with more than 50 people, including
    current and former Boies Schiller attorneys, about the key issues
    behind the turnover, and events that help explain the firm’s
    shrinking.
  • Click here for more BI Prime stories.

In a Ritz-Carlton banquet hall in December 2019, famed trial
attorney David Boies made a proposal to his law partners that
caught a number of them off guard.

Speaking in front of about 150 lawyers at his law firm’s annual
partner meeting in Key Biscayne, Florida, Boies suggested changing
the firm’s compensation formula, according to five people with
direct knowledge of the matter.

The change would have cut how much partners earned from their
own hourly fees, which was how some lawyers — namely, those
responsible for doing the ground work on cases — earned
seven-figure paychecks without generating their own clients.

Instead, more money would go to satisfy top rainmakers, with a
discretionary bonus pool set aside to pay other partners as they
saw fit.

Boies proposed reducing partners’ cut of their hourly fees by as
much as five percentage points.

Some in attendance did not see the move as being in their own
interest, while others voiced concern because they wanted to better
understand the implications of the proposal. 

It was not something that had been discussed at an
equity-partner meeting the night before, and some were somewhat
taken aback by how casually the topic had been slipped into the
partner meeting, according to people familiar with their
thinking.

Those who voiced concern included Karen Dunn, a partner who
represented Uber in a trade-secrets case with Waymo, as well as
David Willingham, who had represented individuals charged in the
Varsity Blues college-admissions case.

After receiving pushback, Boies tabled the topic.

All the pay talk was a sign of the times for Boies’ firm, Boies
Schiller Flexner, which had for years been at the center of some of
the world’s most high-stakes business disputes, including Amazon
billionaire Jeff Bezos in the fight against National Enquirer
parent company American Media, and Blackwater founder Erik Prince
in his defamation lawsuit against The Intercept. 

Its attorneys had been discussing how best to transition the
firm so that its future wasn’t as closely intertwined with that of
Boies, who is currently 79. Pay was one of the central features
that needed to change, many of those attorneys believed, given that
Boies’ partners historically were paid to staff cases that he and
other founding partners brought in. 

Going forward, at least some inside the firm felt partners
should be incentivized to bring in new clients. 

“The proposal, by definition, was not in the short run economic
interest of a partner who was not, themselves, generating
business,” Natasha Harrison, one of BSF’s newly installed
co-managing partners, told Business Insider. 

Natasha Harrison, co-managing partner, Boies Schiller FlexnerShe said that
some partners had supported the proposal, and that at the meeting
Boies had been elaborating on a note that had previously been
shared with partners. At least one attorney who was there
acknowledged that the plan was shared in advance, but said it
wasn’t discussed in detail. 

It didn’t help Boies’ cause, though, that some in the room felt
that he should reduce his own pay, taking issue with an arrangement
for founders that grants him a cut of revenue, in perpetuity, so
long as his name is still on the door.

“That was a huge sticking point,” recalls one lawyer. “Everyone
calls it, ‘The Tail.'” 

Harrison said that Boies had reduced his equity shares over the
years, to the point where his equity shares were below the
percentage of firm business Boies generated.  

It wasn’t the first time that the lavish affair, where attorneys
were treated to specially catered meals, tequila tastings, and a
roll-your-own cigar booth complete with custom BSF labels, was
overtaken by shop talk about the leadership and direction of the
firm.

And at least on one other occasion, the conflicting interests of
certain partners were laid bare at the family-friendly annual
retreat.

Two years earlier, a tense exchange in which one partner
threatened another in a Ritz-Carlton lounge, fueled a division
between groups of partners who shared different visions of what BSF
would become — and who would lead it.  

What has happened within BSF since the 2017 annual meeting —
which took place shortly after Boies took heat for his role as
long-time lawyer for Hollywood mogul Harvey Weinstein, who has been
accused by more than 100 women of sexual misconduct and was
convicted in February 2020 of sexually assaulting a former
production assistant and raping a onetime aspiring actress — is
key to understanding the transformation firm leaders are now trying
to pull off. 

And the tensions have come to a head over the past six months,
according to current and former Boies Schiller attorneys. More than
30 partners have exited the firm, including the only two women of
color who were equity partners and other senior partners with a
collective book of business in the tens of millions of dollars.

A massive transformation

Business Insider interviewed more than 50 people, including
current and former attorneys, staff, and others close to the firm,
to learn about the events that have led up to this exodus and a
firm-wide restructuring that includes consolidating offices and
bringing in fresh talent to ensure future growth.

Nicholas Gravante, Boies Schiller FlexnerNicholas
Gravante, the son of a lawyer who was famous for representing New
York organized-crime families; and Harrison, a London-based lawyer,
are overseeing the changes after being elected as new co-managing
partners in December 2019.

Their efforts include reforming the firm’s pay system —
discussing changes to partner pay that include better rewarding
younger business generators, while offering associates a more
lockstep approach, based on seniority and hours worked. And, they
are discussing the creation of practice groups to organize
attorneys, something the firm has not historically done.

At the same time, they have delivered firm-wide video updates
during the coronavirus pandemic, including one recent call in which
Gravante gave associates a talk about how to develop business.

“They are modernizing and standardizing things,” said BSF
associate Demetri Blaisdell. “A lot of people are looking to see
what’s going to happen. And those of us who are at the firm are
still curious to see what the firm will look like if David and
Jonathan [Schiller] are no longer managing. It will be very
interesting to see what Nick and Natasha do.”

Some of the recent partner exits, though, have brought turmoil
to the firm at an already tumultuous time, according to sources.
The coronavirus pandemic has prompted even elite law firms to
institute
pay cuts, furloughs, and in some cases layoffs
as deal flow
dries up and litigators work around court closures.

Though BSF has not laid off attorneys because of the pandemic,

it has fired staff members who worked closely with partners who
recently departed

For the firm, which has already dealt with negative press from
David Boies’ defense of Weinstein and failed medical-technology
firm Theranos, the business challenges have come with unwanted
solicitations from rivals. 

“Neither we, nor our clients, think the future of the firm is in
doubt,” Gravante told Business Insider. “BSF fully intends to
maintain its position as an elite, market leading litigation
firm.” 

Other firm attorneys, too, have expressed optimism about its
future, citing litigation opportunities arising from the
coronavirus pandemic. 

“We know from past experience that when businesses experience
disruption — even disruptions less severe than this — what
follows is litigation, and often complicated litigation that raises
interesting, cuttingedge questions. And that’s
what we’ve always done,” said Bob Cooper, a partner at BSF in
Washington, D.C.

In a league of his own

When Boies was in his prime, firm management almost seemed like
an afterthought. 

A litigator known for his love of fine wine and playing craps,
Boies has always played in his own league in the clubby world of
white-shoe lawyers. His rise in the legal profession, which came
despite dyslexia and being raised in an Illinois farm town, was a
spectacle that the media ate up. In the 1990s, he grilled Bill
Gates in the Justice Department’s antitrust case against Microsoft,
and then came to the side of Al Gore in the Florida recount of the
2000 presidential election. 

The firm he formed in 1997, upon departing
Cravath, Swaine & Moore, became known for
taking on bold cases, giving associates meaningful work, and paying
them higher bonuses — often in the six figures.

In some of his busiest years, Boies defended former AIG chairman
Hank Greenberg against charges brought by the New York Attorney
General that he hid the true financial condition of the insurance
giant and duped shareholders. The trial took place in 2016, more
than a decade after those charges were first filed. 

He also helped secure multi-billion dollar settlements on behalf
of American Express in 2008, which had tussled with Mastercard and
Visa over antitrust disputes. 

The money that flowed from such cases made Boies Schiller one of
the most profitable law firms in the industry, with associates and
paralegals working 100-hour weeks, holed up in hotel war-rooms
before trials. 

“Do you want to sleep or do you want to win?” Boies
would say

Any concerns about firm management were muted in a sea of
riches. 

Questions around transparency

Insiders say there have been years-long efforts to
institutionalize Boies’ firm, pass down client
relationships, and promote younger partners into
firm management positions. Attention has been given, in particular,
to what Boies likes to call “core client” relationships, which have
consisted of large financial institutions and other corporate
giants.

But as his firm added headcount and his representations and
tactics in working for some clients drew scrutiny, some partners,
for a variety of reasons, felt the firm was no longer for them.

Some of them were concerned about the prospects for successfully
transitioning the firm from an informally managed one, with power
consolidated at the very top, to an institution with checks and
balances and transparency into management decisions.

Harrison said that there are currently sufficient checks and
balances, pointing to an executive committee, a finance committee,
and administrative partners for each office who oversee attorney
work. 

She also said that the chairman and one-third of the executive
committee are elected by secret ballot each year at the firm’s
December meeting. 

“One of the Firm’s unique attributes is its informality and
collegiality blended with the top lawyers and standards of a ‘white
shoe’ law firm,” Harrison told Business Insider. 

Others, though, felt that the firm needed additional
transparency into decision making. 

As of early 2020, equity partners did not know how much the
founders were paid, nor did they have an electronic copy of the
partnership agreement they signed, causing concern among some
partners who wanted better access to financial information, like
firm profits, revenue, and equity shares, according to people
familiar with the matter. 

Adding to the transparency concern were instances of
miscalculations of associate bonuses, along with some partners’
realization that they were being paid less than what they could
earn at competitors.

As for the partnership agreement, BSF co-managing partner
Gravante said it is not disseminated electronically to avoid public
distribution.

He also said that BSF was common with many law firms in that it
has a closed compensation system. The firm has periodically
considered at its annual meeting whether to make more information
available, like equity shares of partners other than the founding
partners, but each time it has gone to a vote, the vote has been to
restrict that information to the executive committee, he said. 

BSF co-managing partner Natasha Harrison acknowledged that the
firm’s business support functions have “at times trailed the
success of the firm,” but that it has and will continue to invest
in its infrastructure. She pointed to new hires in HR and the
firm’s effort to convert to a new financial system in 2021. 

“In terms of the formula compensation bonuses –
miscalculations are unusual but do happen from time to time; far
more often, a lawyer has mistakenly believed there was a
miscalculation,” she said.

No no-nepotism policy

The transparency concerns, according to some former BSF
attorneys, were only one part of the equation. 

A lack of a nonepotism policy also rankled
some attorneys, who saw this as emblematic of how the firm was
controlled by a few at the top. 

Children and personal friends of founders David Boies and
Jonathan Schiller have long been employed by the firm in a variety
of roles. It had been a longstanding joke among some paralegals and
associates, who coined a name for the treatment: “The Friends &
Family Plan.”

Current management says they are not aware of any other law firm
with a written no-nepotism policy, and that no partner had ever
proposed introducing a formal policy.

Kent Zimmermann, a consultant to law firms, said that
no-nepotism policies exist at some but not all law firms.

“A no-nepotism policy can be helpful because some firms believe
that it prevents the appearance of favoritism and actual
favoritism,” said Zimmermann.

“I think many businesses, and law firms generally, don’t want to
hire people that they can’t fire,” he said. 

As for Boies Schiller, a handful of insiders pointed to
instances that highlight the perceptions of favoritism created by
having people with close ties to founders working in prominent
roles — the very kinds of situations that no-nepotism policies
that may be more common in other industries are designed to ward
off. 

One of Schiller’s sons, Aaron, for instance, was hired as
architectural designer to help open the firm’s San Francisco office
in 2019. He had also been engaged by senior partners to design the
firm’s New York and Washington, D.C. offices. 

By a number of accounts, the offices turned out to be
high-quality, but the mere hiring of Schiller left some attorneys
wondering how much the firm paid him. Two people familiar with the
San Francisco office said there was concern about how hard they
could, or should, push back on any draft plans.

Gravante said that Aaron Schiller is an “outstanding,
innovative, and
awardwinning
architect, and his selection for the SF office assignment was made
entirely by partners other than Boies and Schiller, based on the
fact that both his design was preferred and his cost was less.”

Aaron Schiller said there was a competitive bid process with
senior partners for the three office redesigns. He also said he was
unaware of any concerns or criticisms and provided emails from
partners praising the San Francisco office design. 

“I was selected on the merits by the senior BSF partners
responsible for the design and the budget of those offices,” he
told Business Insider in an email. 

Gravante said the original design was reviewed with office
lawyers, who expressed a desire for more individual offices, and
the design was revised to accommodate their requests.

Boies Schiller Flexner New York

The issue of perceived favoritism had reared its head on other
occasions, though, too. This includes when another Schiller son —
Joshua Schiller, who has worked at the firm for more than a decade
— took on work for certain clients and some in the firm thought
favoritism played a role, according to people who worked there.

One of the biggest cases Joshua Schiller worked on included
helping to overturn California’s Proposition 8 ban on same-sex
marriage. 

“The only thing I have ever received in credit from the firm has
been due to my hard work and the business I have generated, which
is substantial,” Joshua Schiller said by email. 

BSF co-managing partner Gravante told Business Insider that
Joshua Schiller was one of the firm’s next generation of
“outstanding lawyers and business generators.”

“While the Firm may have included a limited number of associates
connected with the family in its founding years, it has evolved to
become an elite professionally run firm,” he said. “There has not
been a lawyer hired by the Firm in the last five years related to
the Founding Partners.”

“In terms of the children of Boies and Schiller who the Firm has
employed, they each graduated from top law schools (Columbia, NYU,
and Yale) and are outstanding lawyers in their own right,” he said.
“No one has ever expressed resentment or concern around their
employment, including pursuant to the Firm’s procedure for
personnel to express concerns and complaints anonymously.”

However, three sources familiar with the matter described an
incident which triggered a complaint made by a female associate
regarding Joshua Schiller.

In 2017, at an evening New York outing with BSF attorneys,
Joshua Schiller made what sources familiar with the matter
described as inappropriate comments in front of a female associate.
The associate later raised the issue to firm management and
Schiller was taken off of a case she was working on, said one of
these people, who was directly familiar with Joshua Schiller’s
reassignment. 

“I was having an animated conversation with colleagues after a
day of trial, and I do not believe that anything I said was
inappropriate,” Joshua Schiller said in an email.

Jonathan Schiller did not provide comment for this article. The
firm’s representative did not provide immediate comment on the
events described by the three sources. 

Nepotism was one of the many things that some in a younger
generation of partners wanted to address when they acquired more
power as Boies’ reign faded.

Boies’ backlash

boies backlash 2

In 2017, some of the firm’s younger partners who served on a
junior management committee included Dunn, a lawyer for Uber and
Apple; Damien Marshall, whose clients have included DraftKings and
HSBC; and Michael Gottlieb, a partner who was a former US Supreme
Court clerk and associate counsel to President Barack Obama.

Their work took on new meaning when Boies’ representation of
Weinstein came under sharp review, as numerous accusers aired
complaints of sexual harassment and assault.

As has now been well-reported, Boies, considered Weinstein’s
closest legal adviser, had signed off on a contract to hire Black
Cube, an Israeli intelligence agency, to investigate reporting from
The New York Times about Weinstein’s conduct. 

The New York Times, which had hired BSF to represent it in an
unrelated matter, fired his firm in November 2019. Boies wrote in a
memo to his own firm to explain himself, saying that he would never
knowingly silence women, and that it was a mistake to contract with
Black Cube without having control over its investigators.

The following year, The Wall Street Journal reporter John
Carreyrou wrote the book “Bad Blood,” which detailed Boies’
representation of Elizabeth Holmes, the founder of Theranos, the
blood testing startup which shuttered in September 2018. Holmes is
facing a criminal fraud trial slated for later this year.

BSF had stopped representing Holmes
in 2016
, and Weinstein, in late 2017. 

Firm fallout

The press coverage surfaced in conversations some BSF attorneys
had with their clients, including tech companies, Hollywood
studios, and some large financial institutions, according to six
people familiar with the matter. 

One attorney spoke of clients who said that they couldn’t give
the firm work because their company wasn’t supposed to hire the
firm generally, but this person declined to name an example, citing
attorney-client privilege. 

In late 2019,
The New York Times reported
that Boies had discussed a plan to
secure settlements from powerful individuals caught on video
engaging in lewd sexual acts with young girls. The tipster who
claimed to possess these contents turned out to be a possible
fraudster who never delivered the information he purported to have.
Boies later said that the coverage was unfair, telling NPR that, he

“didn’t do anything deceitful here, and there’s no basis for that
allegation.”

The firm continued to work on at least one high-profile
gender-related matter, too:
a matter for WeWork that ended in a $2 million settlement for a
former employee in 2018.

Business Insider could not confirm any specific clients who had
taken issue with Boies’ representations. 

Divide

When the chatter about Boies’ representation of Weinstein
started, in 2017, it caused some soul-searching within the firm.
Partners discussed how to best move beyond what some considered to
be a painful period in the firm’s history. 

At that time, there was a division emerging between partners in
the firm, according to people who worked there at the time. And at
the center of it was a lawyer with whom Boies had practiced for
much of his career.

Some of the tension surfaced during an effort to collect
partners’ signatures in a statement of support for Boies following
news reports of his role defending Weinstein — a letter that
essentially told Boies that attorneys stood behind him..

Source: FS – All – Entertainment – News
Pay rifts, a partner divide, and a threat at the Ritz
Carlton: 50 insiders reveal all on a massive shakeup at elite law
firm Boies Schiller