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TRIB 25 ADAPTING TO ADVERSITY WITH DIVERSITY OF SKILLS
The Connecticut Law Tribune
Managing partners at the 25 highest-grossing Connecticut-based law firms were generally upbeat about the 2010 business year, which finished with a strong final quarter.
But theyre decidedly concerned about the future.
Its too early to conclude that the Great Recession is in the rear-view window, notes
D. Robert Morris, managing partner of Pullman & Comley, and the after-effects of the 2008 Wall Street meltdown are still being felt by many clients. "Talking to people at other firms, many firms in 2010 had better fourth quarters than the first three quarters, and made our numbers look good for the year," Morris said.
According to the annual Trib 25 survey project, Pullman - No. 8 on the list - had gross revenue of $36 million in 2010, and robust profits per partner of $565,000. "I think the question for everybody is whether 2011 looks like the strong fourth quarter or looks like the rest of 2010," said Morris.
In firm after firm, diversification of practices was viewed as important to economic success - even though several 2010 increases came as a hard-to repeat windfall. At No. 4 Shipman & Goodwin, managing partner Scott Murphy oversees 10 specialized practice groups a pyramid with a solid base. The practice groups range from a well-established government bonds team, a private client group that operates like a trust company, and an education law practice that numbers 111 school boards as clients, out of about 150 statewide.
"We had a very busy 2010.
It was up," Murphy said. "The real problem we saw from the economic meltdown came right at the end of 2008 and the beginning of 2009, when the credit markets and capital markets froze, and people were just not doing deals, not taking risks, not making investments."
The spring of 2009 saw a rebound, said Murphy, and Shipman finished 2009 "actually above budget, and that momentum carried into 2010, which was also above budget."
Blend Of Expertise
Several firms with robust 2010 increases attribute them to once-in-a-blue moon phenomena.
At No. 17 Rogin Nassau, intellectual property litigators chalked up a $50 million trade secrets verdict that later settled for an undisclosed amount, says managing partner Steve Bartlestone.
That 27-lawyer firms enduring success is anything but a fluke, however, according to Weston-based law firm advisor Peter Giuliani.
"I was at a law firm managers conference recently," said Bartlestone, "and Peter Giuliani was talking about using our firm as an example of how you can do very good law, with complex matters, make a terrific living and you dont have to be in a mega-firm."
Giuliani reportedly pointed to Rogins blend of expertise in business, insolvency and commercial practice areas as a model for success and adaptability in a mid-sized firm. Bartlestone observes that "a Great Recession is not a bad thing for a [financial] workout group. We have a very strong practice on the mergers and acquisitions side, and we have a very strong practice on the restructuring and workouts side. So if the economy is moving one way or another, were fine.
If the economys stagnant, nobody does anything.
But were small enough to be very flexible, and adjust to what the marketplace is doing. Its one of the advantages of a small firm. We can turn quickly."
At Hartford-based Cantor Colburn, an intellectual property firm with offices in Atlanta, Washington, D.C., and Detroit, managing partner Phillip Colburn said 2010 "was sort of a transitional year. The first half was still like we were deep in the recession. The second half really started to turn around. You could see a really significant meaningful change in the volume of work coming down the pike. We really started aggressively growing by the fourth quarter. To jump ahead to today, were back ahead to our peak 2008 numbers, with attorneys and revenue."
The firm, which is No. 9 in the Trib 25, found opportunities in the downturn.
When General Motors was reducing its in-house patent lawyer staff, Colburn said, "we were fortunate to bring some GM people on board. Now it made it a lot easier for GM to expand [its business] with us, because they get the same review they got" from the automakers in-house department.
In fact, Colburn said, "a recession is somewhat of an opportunity for us, because a lot of the IP firms in the large cities are more focused on litigation."
Cantor Colburn is happy to do the all-important work of maintaining the legal force of patents and trademarks important and lucrative, if not glamorous work.
Cantor was ranked ninth in patents issued in 2010, and was in the top 20 nationally for new trademarks, which are "growing by leaps and bounds," Colburn said.
Another intellectual property firm is taking its place on the Trib 25 for the first time this year.
Hartford-based McCormick, Paulding & Huber is the smallest firm on the list, with just 15 lawyers, but it has built up a portfolio of patent and trademark clientele that stretches back many decades.
The firm filed patents for many of the famous firearms of the Connecticut Rivers "Gun Valley" starting in the late 19th century. Today, thanks to computer upgrades, it directly handles patent and trademark servicing for clients in Asia and Europe.
Managing partner Kevin Grogan, in the firms Springfield, Mass., office noted: "Our practice is unique patent and intellectual property because you dont have to be there. From the viewpoint of [clients in] Germany, Denmark or Japan, they see I dont have to be located right near the [U.S.] Patent Office anymore.
I dont have to be next to a courthouse.
Clients can go to somebody who has quality people and charges reasonable rates."
Grogan says theres plenty of "maintenance work" renewing a portfolio of a thousand patents and trademarks in the U.S. and throughout the world.
The firm has also started representing clients before the International Trade Commission.
"Last year it was transactional, this year seems to be a big litigation year," Grogan said. "Other years we crank out cases. I always try to get a mix of large corporate clients, small businesses, litigation, transactional work, trademarks, patents, copyrights… If you get enough bets down on the table, you get some stability in terms of revenue."
The firms diversified portfolio of IP work makes it a frequent target for merger proposals, but Grogan would rather "merge" on a more a la carte basis, forming strategic partnerships with non-IP firms around specific clients.
Some firms that have developed a long-held reputation are quietly eying greener pastures. At Updike Kelly & Spellacy, long known for its government savvy and lobbying expertise, 2010 marked the first year in decades that name partner Bourke Spellacy did not register as a lobbyist.
"Weve transitioned from our founding generation," said managing partner John F. "Jef" Wolter. "People here say it used to be that we got hired because of who we knew rather than what we knew. Now we kind of have both."
Lobbying, Wolter said, has become "kind of commodity practice.
Its a very easy enter, to hang a shingle and say 'Im a lobbyist." About four years ago, he said, the firm disbanded its separate lobbying group to make the statement "were a law firm, first and foremost."
Clients with government affairs work get all the benefits of the lawyer-client relationship, in terms of confidentiality and ethical strictures, Wolter said.
A finance and health care lawyer, Wolter said the No. 15 firm on the Trib 25 is offering clients a strong blend of commercial and litigation services.
This past year also marked a passing of the reins by Austin McGuigan, of Rome McGuigan in Hartford.
He transferred managing partner duties to Joseph Burns.
"Its time to give some of the young people a turn," said McGuigan. "Its their firm."
The firms strong revenues and partner profits numbers in 2010 were both a source of accomplishment and anxiety, he said.
The marked increase in revenue to $15 million -- almost $5 million more than the previous year -- was due in large part to litigation results that are, by nature, sporadic.
The firm handled the difficult divorce of United Technologies Corp. chairman George David from a Swedish heiress, and other sensational trial work. But McGuigan is concerned about the unpredictability of future legal work in a shaky economy.
Of 2010, he said, "Its probably the best year weve had, in terms of returns per lawyer. But the next year you dont know. The economy is punk. Its very hard with a small business.
You have some plaintiffs cases come in, but the following year, it may not happen."
He continued: "We do significant business with large corporations, and their legal budgets are under significant pressure. Its very hard getting clients who can afford the legal services you provide.
You feel a lot of responsibility to the staff in a firm this size. Theyre depending on us to continue to be productive.
In the middle of it all we have a fabulous year, but I dont think its a trend."
Charts full of numbers cant reflect the gains and losses of specific human beings, like an auspicious lateral hire, or a "rainmaker" partner who leaves the firm. Pullman & Comley is proud of recently hiring
Gary OConnor, formerly of Waterburys Drubner, Hartley, OConnor
& Mengacci, and most recently a partner at Pepe & Hazard successor, McElroy, Deutsch, Mulvaney & Carpenter.
OConnor brings a range of commercial and economic development skills.
Another lateral partner, Elliot Gersten, was snapped up by Pullman shortly after he performed the trial work that ended Secretary of the State Susan Bysiewiczs bid for attorney general.
Pullman has a long history as a home for lawyers with prominence and a foot in politics. That image was burnished when partner Andrew McDonald left to become counsel to Gov. Dannel Malloy, leaving both the state Senate and his law firm.
Managing partner Morris said the move caused mixed sentiments.
"Its wonderful, knowing that we can call Andrew and knowing that we have someone in his position who will take our phone calls," said Morris. "On the other hand, we lost a very great partner at the firm.
There are definitely mixed feelings about that."
Ann Rubin, the managing partner for Waterbury-based Carmody & Torrance, also made a strategic lateral hire, in the firms long tradition as a utility firm.
It brought aboard former Northeast Utilities in-house lawyer Daniel Venora. Twenty years ago, that utilitys general counsel was Walter Torrance, who practiced at Carmody both before and after his time as GC.
At Ried & Riege, managing partner Craig L. Sylvester spoke of 2010 as a year of mixed results.
"Because of the downturn, some of our business work wasnt as strong," Sylvester conceded. But one very major case had uplifting results. "We represented Johnson Memorial Hospital, of Enfield, in its reorganization, creating a synergy of our health care practice, our insolvency practice, and our non-profit practice."
They were all working together to serve a client, Sylvester said, and it "worked out very well for us."
He also couldnt resist a tip of his hat to onetime firm partner Christopher Droney, the U.S. District judge who has just been nominated to the 2nd Circuit Court of Appeals. "People still connect us, and it reflects well on us," Sylvester said. "We can bask in his success a little bit."
Although several firms had "one-shot" reasons for an uptick in revenues, the firm managers were all looking for opportunities to create a diversified and balanced income stream.
At Axinn Veltrop, No. 7 on the Trib 25, managing partner James Veltrop seems to like the stability of things with three legs. The firm has three main practice areas anti-trust, intellectual property and litigation.
"Business is very good," Veltrop said. "On the anti-trust side, there are a lot of deals going on throughout the economy, and were working on a number of major deals," including one involving Web giant Google.
"On the IP side, were continuing to grow and expand," said Veltrop. "We still have a substantial number of challenges to brand patents pending," he said. And in litigation, "we just finished a major trial in New Jersey, a massive trial for us," over generic pharmaceuticals.
The tripod motif plays out in the firms three locations Hartford, New York and Washington, D.C.
The two northern offices each have about 25 of the firms 55 lawyers, and the longer-range plan is to increase the D.C. office to similar size.
Shipman, in addition to its 10 Connecticut practice groups, opened a new office in Washington D.C. in May. The office is staffed by an insurance litigation group from the disbanding firm of Hogan & Hartson, which brought its work and principal client to Shipman. "Were now building resources to handle that work up here in Hartford," he said, adding that "its a major event that has been very, very successful."
Murphy, whose son happens to be U.S. Rep. Christopher S. Murphy, D-5th Dist., isnt ruling out other new avenues. One of the firms latest ventures is building expertise to advise Connecticut defense, aerospace and other businesses on import and export compliance matters. "Wed like to give people national expertise at Hartford pricing," said Murphy.
"Were very upbeat," concluded Murphy, echoing other general partners. "The areas of our practice that have provided a solid base are continuing to do so, and with that base, were being opportunistic in a market thats providing significant opportunities to firms."