Think Big, Law Firms on the Rise by Dimitra Kessenides | Lawcrossing.com

1.800. 973. 1177

CAREER COUNSELOR’S CORNER

Think Big: Law Firms on the Rise [Dimitra Kessenides] Closer Look: Growing firms in an uncertain economy. How do they do it? How much can they grow?

Boutique firms and solo practices have their

profits had jumped to $1.1 million. That’s an

growing complex dispute resolution practice.

place, but sometimes bigger is better. Take

increase in profits of -- we’ll do the math for

Meanwhile, it seems the two offices are

these eight law firms, for example -- already

you -- more than 70 percent.

getting a little cramped. The firm recently

robust, venerable practices that lately have

signed a lease for some breathing room

found themselves adding lawyers, increas-

How did the firm achieve such a don’t-bump-

-- 417,000 square feet of it -- in Washington,

ing profits, leasing more office space, and

your-head, pants-are-too-small, you-should-

D.C., which will be ready in spring 2006.

expanding into new practice areas. Anyone

try-out-for-the-basketball-team growth

care to argue that these are bad ideas? That

spurt? “Managed risk,” says managing part-

they don’t make a firm better? And what’s

ner Angelo Arcadipane, by way of explaining

intriguing -- astonishing, in fact -- about the

the firm’s white-knuckle decision to forego

growth of these firms is that they’ve man-

hourly rates on two major litigations in favor

aged to pull it off in an economic climate

of contingency fees. “We’re building a brand

that’s a tad, shall we say, unimpressive. This

in representing individual corporate clients

list isn’t based on a scientific formula, and

in cases stemming from major class actions,

it’s not meant to be all-inclusive. Instead, let

where the corporations don’t want to partici-

this selected roster stand as evidence that

pate in the class but want suits brought on

any lawyer seeking a firm that’s thriving for

their behalf.”

Web Site DUANEMORRIS.COM

the moment. You just have to know where to

The risk paid off. Profits surged and gross

When consolidation fever spread through the

look. Start here.

revenues were the highest in Dickstein

all the right reasons has plenty of options at

Shapiro’s 50-year history, landing it among

DICKSTEIN SHAPIRO MORIN & OS-

the country’s top-grossing firms for the

HINSKY, Washington, D.C.

first time. But the overnight success didn’t happen overnight. “Firms don’t make more

THE STATS Total Offices 2 Fastest Growing Office Washington Total Lawyers 2003 314 Total Lawyers 1998 239 Fall 2003 Incoming Associates 16

money just because they happen to make more money,” says Newport Beach, California-based legal consultant Peter Zeughauser. “They make more money because they hire the best lawyers, who attract the best work and the best clients. Those things feed

THE STATS Total Offices 22 Fastest Growing Office New York Total Lawyers 2003 536 Total Lawyers 1998 279 Fall 2003 Incoming Associates 12

law firm community five years ago, Duane Morris chairman Sheldon Bonovitz and his partners had only one thought: road trip!

They stocked up on Cheetos, piled into the car, and set out on a cross-country odyssey, snapping up office space and adding lawyers over the next four years in Boston; New York City; Princeton, New Jersey; Wilmington, Delaware; Washington, D.C.; Bangor, Maine; Pittsburgh; Atlanta; Miami; Chicago; Houston; San Francisco; and San Diego. They

off one another.”

even hopped a flight to London. Increased

Dickstein Shapiro’s method is simple: “Be

would mean increased competitiveness and

Web Site DSMO.COM Just two years ago, Dickstein Shapiro was

focused. Don’t be faddish,” says Arcadipane.

humming along nicely -- two offices, 283

“It’s not a rocket science strategy.” For

lawyers, and per-partner profits of $651,000.

Dickstein the focus falls on five core prac-

Real good -- but not good enough, as it turns

tice areas -- energy, intellectual property,

out. By 2002 the firm had squeezed 298 law-

general litigation, corporate and finance, and

yers into those two offices, and per-partner

regulatory affairs -- and, increasingly, on a

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DUANE MORRIS, Philadelphia

presence in major markets, they figured, profitability. “We’ve added groups of lawyers -- anywhere from one to 12 -- and developed from a regional firm into one that has a national footprint,” Bonovitz says. (We made up the part about the Cheetos, by the way.)

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1.800. 973. 1177

CAREER COUNSELOR’S CORNER

Back at the Philly HQ, the firm’s lawyer popu-

tainment law.

lation has held steady, but the number of law-

researching, you need to be pre-researched, to know the area well enough to respond im-

yers in other offices has more than doubled in

People noticed, to say the least -- people like

mediately based on the knowledge you have,”

the past five years, to 336. Like the geographic

entertainment superlawyer Jay Cooper, a

Alvarez says. What that means, in a practical

expansion, the firm’s personnel and prac-

25-year veteran of showbiz law in Los Angeles

sense, is having many lawyers with different

tice-area growth has been spread pretty

who counts Jerry Seinfeld and Sheryl Crow

areas of expertise everywhere. “To the extent

evenly. “As we’ve grown, we’ve integrated into

among his clients. A year later, Greenberg

that you can service a client even more by

practice groups and added both lateral as-

snapped up several established entertainment

enabling its general counsel to access 10 or

sociates and younger associates in our various

lawyers in New York City. Again, Cooper took

15 areas of your firm, the client’s ability to

markets,” Bonovitz says. In fact, 2002 saw the

note. A few months after that, a Greenberg

get great service improves overall, because

firm add 35 lateral partners.

partner contacted Cooper through a mutual

the number of firms they have to work with is

friend in an effort to lure him to the firm. The

minimized.”

Of Duane Morris’s 14 practice groups, intel-

conversation was not long.

lectual property and bankruptcy are among

Essentially, what Greenberg set out to do

the fastest growing, a trend seen at other

“Here’s this big firm, and you look at it and

a decade and a half ago was to repackage

firms across the country. Bonovitz claims

wonder, ‘Why would an entertainment lawyer

itself as a major player in the national and

the expanding “platform” has attracted more

go with a big firm?’ But I knew Joel Katz, so

international legal market. Sure, the firm’s

national clients and additional work from

I had to look and see what it was all about,”

still strong in Miami (its 36-year history there

existing clients. The plan now is to fill out

Cooper says. “I looked at what they’d been do-

has contributed to the general growth of that

the offices -- and, while they’re at it, to keep

ing and who had joined, and realized this firm

area). But, as Alvarez says, “To be a national

adding new ones. (For those of you following

was serious about being a real player in the

or international player, you need to get to the

along at home, that probably means one thing:

entertainment business. They’re a force. So

size and specialization where you’ll be viewed

hiring.) “Right now we have nearly 350 lawyers

when they talk to you, they’re not just another

that way.”

in those other markets,” says Bonovitz. “In the

eastern firm that says, ‘I want to be in show

next five years we’re going to add another 500.

business.’ They’re already in. And you take

It appears that the firm is indeed being viewed

The firm will be at 1,000 lawyers by then.” Gas

them seriously.”

as a national player -- in the last few years, to

up the car.

GREENBERG TRAURIG, Miami

cite just one example, 255 alleged victims of The consolidation tactic has worked for

abuse by clergy have enlisted GT’s services in

Greenberg Traurig in other practice areas,

lawsuits against the Boston Archdiocese.

too. “It became clear to us 15 years ago that

THE STATS Total Offices 20 Fastest Growing Office No Comment Total Lawyers 2003 975 Total Lawyers 1998 360 Fall 2003 Incoming Associates 20 Web Site GTLAW.COM Five years ago, Greenberg Traurig, which had specialized in real estate, corporate, tax, and international law, acquired one of the most prominent entertainment firms in the country, Katz, Smith & Cohen. Its leader was Atlantabased partner Joel Katz, who had represented B. B. King, Willie Nelson, George Strait, and Jimmy Buffett, among others. It was, as they say in the business, a big deal. Virtually overnight, GT became a national force in enter-

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there was a consolidation that was taking

HAYNES AND BOONE, Dallas

place in the legal marketplace, and it was worldwide,” says firm president and CEO Cesar Alvarez. The firm seized on the trend, and what was once a three-lawyer Miami firm grew and grew and grew. The number of lawyers shot from 360 in 1998 to 750 in 2000, and today the firm is knocking on one-thousand’s door.

GT’s strength is that while they’ve come very far very fast, they have strived to keep the quality of their service from declining. Clients’ demands are greater than ever these days, but most lawyers have less time on their hands.

Information technology has raised expectations: When a client’s on the phone, he wants his answer then and there. “Since you don’t have the luxury of really spending a lot of time

THE STATS Total Offices 9 Fastest Growing Office Houston Total Lawyers 2003 420 Total Lawyers 1998 300 Fall 2003 Incoming Associates 51 Web Site HAYNESBOONE.COM Lately, while many firms have gone hog-wild with merging, Haynes and Boone has taken a shockingly counterintuitive path to growth: meeting its clients where they are. Revolutionary, eh? Here’s an example of its ingenuity: “When NAFTA came along [in 1994], we had a number of clients express a need for a Mexico practice,” says managing partner

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CAREER COUNSELOR’S CORNER

Robert Wilson. The firm’s Mexico City office

California seems like a great place not to be a

the San Diego office, which opened its doors

opened in 1995. “Where our clients lead us is

lawyer these days. The spectacular nosedive

in 1998, has grown 41 percent just in the last

where we will go.” Brilliant!

that the state’s economy took when the tech

seven months and now employs 72 lawyers.

scene collapsed didn’t leave law firms with

And the Hong Kong office, a 28-lawyer outpost

In addition to Mexico, those clients -- who

many deals to do. From 2001 to early 2003, the

known for its IPO and real estate practices,

include Bank of America, ExxonMobil, and

casualties were staggering. Cooley Godward:

more than doubled in size in the same period.

Dell -- have led H&B clear across Texas and

100-plus layoffs. Wilson Sonsini: 100-plus lay-

all the way up to Washington, D.C. Even so, a

offs and a $55,000 decline in profits per part-

Don’t be fooled by all that success elsewhere,

regional firm with a significant national and

ner. Brobeck: some 500 lawyers left jobless.

though. Things are fine in Silicon Valley at the

international practice is still a regional firm.

Oh, and lastly, the layoffs at Heller Ehrman in

moment. Just ask Heller Ehrman.

“If we’re honest with ourselves, we can’t say

the past two years: zero.

we’re national, but we’re a wanna-be,” Wilson

LATHAM & WATKINS, Los Angeles

says. That aspiration has kept the fire burning

Yep, a big fat goose egg. Not only that, but its

under the firm as it makes the transition to

revenues, profits, and lawyers’ ranks have

the national stage. “We base our growth on

actually grown. How has Heller pulled it off?

the cold, hard stats,” says Wilson. Probably

By not putting all of its eggs -- goose or oth-

not a bad idea for a firm that can boast the

erwise -- in one basket. Namely, the basket

following cold, hard stats: From 2001 to 2002,

labeled “technology.”

gross revenues increased 8 percent to more than $180 million. Profits per partner are

“We don’t grow for growth’s sake,” says the

at $545,000. And the number of lawyers has

firm’s head of litigation, Matthew Larrabee.

risen almost 10 percent from one year ago, to

“What we ask is, ‘What size do we need to be

420. Especially impressive, considering that

to meet client demand?’ This avoids problems

H&B was launched by just a handful of attor-

with just adding numbers.” Unlike so many

neys a mere 33 years ago -- not so long in the

Bay Area and Silicon Valley law firms, Heller

life of a firm.

Ehrman never abandoned everything it knew in favor of an unnaturally tech-based practice.

Haynes and Boone’s next moves will likely be

Though a significant percentage of its busi-

to New York City and then California, accord-

ness today comes from technology clients,

ing to Wilson. Why? Because that’s where the

many of those are serviced by the venerable

clients are. “We have clients who have needs

life sciences and biotech practice, a Heller

in New York City,” he says. “They can hire a

Ehrman practice area that dates back nearly

New York law firm, but if we know their busi-

30 years.

ness and we know how they think, there’s no reason we shouldn’t be there.”

It was just at the moment when other West Coast law firms were betting their fortunes

HELLER EHRMAN WHITE & MCAU-

on technology practices, in late 1997, that

LIFFE, San Francisco

Heller’s management took a long, hard look at its capabilities and recognized they were more

THE STATS Total Offices 12 Fastest Growing Office San Diego Total Lawyers 2003 651 Total Lawyers 1998 405 Fall 2003 Incoming Associates 36 Web Site HEWM.COM

national. “We set about focusing our growth on particular practice areas -- like emerging companies, IP litigation, big-case litigation, and securities -- and we set about exporting our capabilities to the East Coast,” Larrabee says. “We wanted to take our West Coast market position and show our clients that it was national.” The Washington, D.C., office, which opened in 1995 with one lawyer, now has 50; an office sprouted in New York City in 1999;

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THE STATS Total Offices 21 Fastest Growing Office No Comment Total Lawyers 2003 1,536 Total Lawyers 1998 820 Fall 2003 Incoming Associates 112 Web Site LW.COM A decade ago, Latham & Watkins would not have appeared on this list. In fact, they wouldn’t even have been allowed to look at it. After soaring through the late 1980s, the firm was skidding. Several huge clients had fallen on hard times. The corporate practice had nearly bottomed out. There were layoffs, followed by major (and not particularly desirable) changes to the compensation structure for everyone, partners included.

Since that nadir, Latham has staged one hell of a comeback. In the past 10 years the firm has tripled its ranks to more than 1,500 lawyers. And it is now a major force on the global legal stage, making its way across Europe and Asia with a fierce determination. Nearly 300 of the firm’s lawyers are based in one of its seven European offices, and another 33 work in Asia, where Latham has outposts in Singapore, Hong Kong, and Tokyo.

And the firm is making boatloads of money: Profits per partner in 2002 reached $1.14 million. In the most recent Vault ranking of the country’s top 100 law firms, Latham was the only non-East Coast firm among the 10 most

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1. 800. 973.1177

CAREER COUNSELOR’S CORNER

prestigious firms. Consultant Peter Zeughaus-

and Dusseldorf handle corporate matters,

states start to look pretty good -- stable,

er sees the growth continuing unabated. “It’ll

cross-border financings, tax issues, labor and

steady, solid. “Here in the Midwest, we don’t

go to 2,000 [lawyers] easy -- very easy -- in

benefits, and intellectual property cases. The

hit the high peaks of Silicon Valley, but we

the next five years,” he says. “And that size

European work accounts for an ever-increas-

don’t have the troughs either,” says Brian

doesn’t hurt the quality of the work [they do]

ing percentage of the firm’s annual revenue,

Gardner, co-managing partner of Stinson Mor-

or Latham’s reputation. The reputation the

and McDermott expects to grow its European

rison Hecker, the Kansas City-based result of

firm has is that it’s getting an increasingly

presence this year with at least one more

a recent merger between Morrison & Hecker

large share of the most interesting work -- the

office (the exact location of which remains top

and Stinson, Mag & Fizzell.

best, most challenging work. If you really want

secret).

to get into the major deals, it’s firms of this

The Midwest has of late been kind to the law

scale and quality that are getting more and

The build-out in Europe has been the most

firms that call it home. Stinson Morrison

more of the premium work.”

visible and most concentrated area of growth

-- 340 strong after drawing lawyers in roughly

for McDermott lately, but new offices State-

equal numbers from both firms -- is sitting

side have contributed good old American

particularly pretty, with offices in Wichita,

dollars to the firm’s coffers. The firm opened

Kansas; St. Louis; Kansas City; Overland

a three-lawyer office in San Diego this year,

Park, Kansas; Jefferson City, Missouri; and

for example, which is busy with intellectual

Omaha, Nebraska. Many a merger has been

property work in the still-hot biotech sec-

carried out with much fuzzy talk about synergy

tor (McDermott has expertise in health law,

but little forethought about actually working

private liability, and FDA regulation). The

together. Not so Stinson. “I think the cultures

three-lawyer office was added as part of the

were nearly identical, if not completely so,”

firm’s growing life sciences practice, one that

says Gardner. “There was the same quality of

Ezickson places squarely in the “expanding”

work and approach to client service. What we

category for the coming year. The IP lawyers

both needed was to convey to larger compa-

MCDERMOTT, WILL & EMERY, Chicago THE STATS Total Offices 12 Fastest Growing Office London Total Lawyers 2003 933 Total Lawyers 1998 800 Fall 2003 Incoming Associates 31 Web Site MWE.COM Back in January 2002, McDermott, Will &

have been in a frenzy handling the develop-

nies that we had more depth in all the areas

Emery participated in a growing trend when

ment of intellectual property for companies

that we practiced in.” Those include corporate

it opened a small office in Europe. Munich, to

and institutions and protecting the rights to

finance, the business transactional group, a

be precise. The office had only five lawyers

that property. The firm issued 371 trademark

large employment practice, a strong general

-- just enough to maintain a presence. But for

registrations in 2002, an increase of 44 per-

commercial litigation practice, a growing

a firm like McDermott, which is accustomed to

cent over the previous year.

environmental group, and a hefty bankruptcy

being the resident juggernaut no matter what

practice.

continent it’s on -- the firm’s gross revenue

STINSON MORRISON HECKER, Kansas

in 2002 increased 12 percent to $628 million,

City, Missouri

landing it among the top 10 highest grossing firms in the United States -- a mere presence doesn’t cut it. In the 20 months since being established, the Munich office has quadrupled in size.

merger to admire by confining future growth

THE STATS Total Offices 8 Fastest Growing Office St. Louis Total Lawyers 2003 340

The push into European markets by U.S. firms

Total Lawyers 1998 274 (Combined)

has intensified in the last five years, thanks

Fall 2003 Incoming Associates 14

to EU competition and antitrust regulations,

Web Site STINSON.COM

trade issues, European biotech and pharmaceutical clients, and corporate work on

New Yorkers and Californians like to kid about

cross-border and cross-Atlantic deals. “The

the middle of the country, calling it Flyover

focus in Europe [for us] has been to build the

Land -- what you fly over en route from one

same full-service capability as [we have in the

coast to the other. But spend a little time in

United States],” says partner Doron Ezick-

market-addled Manhattan these days, or in

son. McDermott lawyers in London, Munich,

tech-ravaged California, and the in-between

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The firm plans to maintain its status as a mainly to the cities where it already has offices. “That doesn’t rule out the possibility of expanding into a different market,” says Gardner. “I would say we’re a Midwestern firm with a national reach. We’ll continue to grow, but we’ll be measured in that growth. There’s a lot of room for growth right in our own markets, with existing clients.” Stable. Steady. Solid.