Partly due to the pandemic and the wide shift to remote work, some U.S. lawyers have moved to Israel in the last two years to continue working. One Midwest law firm is seeking to capitalize on this growing talent pool.
Honigman, No. 120 in the Am Law 200, is opening a subsidiary in Israel with five lawyers from elite firms such as Davis Polk & Wardwell and Goodwin Procter.
The Michigan-based, middle-market firm said this week that it’s been working for about 18 months to create a community for talented lawyers who are immigrating to Israel but who’d like to continue to work on U.S. legal matters from a distance.
Its subsidiary, Honigman Law Israel, is offering U.S.-scaled compensation and shared office space to lawyers who are mainly in transactional and specialist practices and who might otherwise work alone from a distance at other firms or even decamp from Big Law to make their move.
Firm CEO David Foltyn said in an interview that a number of lawyers are interested in moving to Israel for religious reasons. He added that while some of Honigman’s first hires are already licensed in Israel, there are regulatory challenges that generally make it difficult for an Israel-based lawyer to grow a practice with clients in the country if the lawyer is only licensed in the U.S.
However, the firm sees an opportunity in creating a practice with U.S.-licensed lawyers based in Israel who are advising on U.S. matters.
We are “not calling on them to be rainmakers,” Honigman said. “We’re not asking them to develop Israeli clients. These are just exceptional lawyers who would join our team.”
“They’ll literally be doing what a similarly leveled lawyer in our Chicago office or in any of our offices would be doing for any of our clients,” Foltyn added. “They just happen to be in Israel.”
Among the first hires are Samuel Katz, a corporate and capital markets lawyer from Ellenoff Grossman & Schole; Inbar Rauchwerger, a mergers and acquisitions lawyer from Goodwin Procter; Aviv Avnon, a finance lawyer from Davis Polk; Rachel Rhodes, a corporate and capital markets attorney from Pillsbury Winthrop Shaw Pittman; and David Synder, a tax attorney from Roberts & Holland.
In interviews, Katz and Rauchwerger pointed to flexibility and the firm’s compensation structure, as well as the ability to continue working on complex matters for a U.S. firm while living in Israel, where they’ve both spent significant parts of their lives, as selling points to the Honigman initiative.
They also both pointed to the pandemic as a significant point that ultimately turned them to Honigman. Katz had worked in New York City before moving to Israel over a decade ago. He worked for an Israeli law firm for a handful of years before the COVID-19 paradigm shift to remote work opened up an opportunity to work at Ellenoff Grossman.
He said that when he heard Honigman was looking into creating this subsidiary, he was able to translate his experience and help the firm iron out details to formalize the program in a way that he hadn’t seen before.
“There are very limited opportunities to practice U.S. law at a very high level in Israel, and to have that opportunity provided is something that’s unique in a certain way,” he said.
Rauchwerger said she grew up in Israel and became a certified lawyer before moving to New York and ultimately working for Goodwin. When the pandemic struck, she wanted to be close to her parents and family and worked remotely from Israel for a significant period of time.
“I think around that time, I realized I would like to be back in Israel. I really enjoyed being back with my family,” she said. “My only issue was that I’m qualified in Israel, but I never practiced in an Israel law firm.”
She said she had offers to work for New York City firms and was negotiating how to work from Israel at least part time when she saw the Honigman opportunity and realized it was what she was looking for.
“I think this opportunity allowed me to keep working on the same volume of deals that you’d have in a New York law firm,” she said.
The firm is recruiting to attract more lawyers to the group. Foltyn, the firm’s CEO, said he wouldn’t be surprised if the Israel subsidiary group consisted of 10 to 15 lawyers in the near future. He’s not ruling out hiring litigators at some point, but said he will mostly stick to hiring in the transactional practices in Israel.
The project was not designed as “compensation arbitrage” to reduce payroll costs, he added, or as a way to draw in additional clients.
“If somewhere down the road that works, and we get more U.S. work, that’s a great thing,” he said. “But if it never happens, this still goes the way we want and we’re still delighted.”
Compensation for the Israel-based lawyers will be based on its U.S. pay scale, the firm said, noting, for instance, that its first-year associate salary is $205,000.
The move comes as large regional firms, in general, could face challenges on the talent front. According to a recent report from Fairfax Associates, the white-hot lateral market last year left many of them “underleveraged,” as larger firms lured talented associates with huge signing bonuses and salaries.
For those firms, “the possibility of future talent gaps could be even more significant than previous downturns,” Fairfax concluded.
Honigman, in particular, lost a large private equity group in Chicago to DLA Piper earlier this spring. Foltyn said the firm is staying aggressive in recruiting in the Windy City and in general, even though lawyers “are a little stickier than they were last year.” He also said the big group move is proof his firm’s platform is a successful one.
“They proved to us that the model works. They came in, they grew their practices on our platform, and they grew to a point where somebody was willing to bring them in on some terms that made sense to them,” he said. “But we believe there are more like that out there.”