AROUND THE FIRMS

In the Face of Economic Hardship, Bay Area Partner Classes Fluctuate. Although the faltering economy has been taking its toll on partner classes at many of the San Francisco Bay firms for 2002-2003, some were nonetheless able to award partner status to litigators. The majority of firms polled by The Recorder, an affiliate of this publication, either increased their class size or stayed the same. Most of the firms' elevations were in the areas of business and litigation. The extremes were Morrison & Foerster (MoFo) and Sonsini Goodrich & Rosati, which significantly cut and increased their class, respectively. Keith Wetmore, chairman of MoFo, explains that the cutting was due to the current slow growth of the practice. Law firm consultant Peter Zeughauser says that when faced with slumping revenue, law firms are less likely to increase the number of partners. He says that although at first the Bay Area had progressive entry standards, this changed when the technical economy spiraled downward. Since fewer associates are rising to partner, there has either been a steadiness or an increase in the number of lateral partners employed. Wetmore thinks more laterals will join MoFo this year, some of them possibly being refugees from Brobeck, Phleger & Harrison. He also anticipates taking in laterals who are disturbed with those firms that are striving to gain from the high-tech explosion. Wilson Sonsini might be headed in another direction where partners are concerned: Though only five partners were made last year, this year 13 associates have been raised; the firm is close to its 2001 levels.

In accordance with the smaller firms of the area remaining consistent since 2002, the 140-lawyer Howard, Rice, Nemerovski, Canady, Falk & Rabkin has managed to steadily raise two to four associates; Nemerovski Canady also has brought in approximately the same number of laterals in that time period. Managing partner Stuart Lipton explained that the firm does not place importance on short-term economics. Cooley Godward's chief operating officer, March Pitchford, says that although there are many factors that come into play when making new partners, economic conditions are crucial. Important skills are productivity, client treatment and holding, and a proven competence in originating new ventures. However, Pitchford acknowledged that external factors must be reckoned.

At Heller Ehrman White & McAuliffe, where eight were raised to partner, profits per partner increase from $645,000 in 2001 to $710,000 last year. The firm holds strategic planning meetings at which the partners try to forecast the growth pattern of each year; then the attorneys can be moved up accordingly. Firmwide managing partner Robert Hubbell emphasizes that the firm needs to grow in order to achieve its yearly goal of increasing outcome per partner.

But associates at slower-moving firms should not give up hope. Environmental litigate Mark Elliott, a junior partner at Pillsbury Winthrop, advised associates in this situation to hone their skills, even though it make take a couple of years longer. He cautions that they should not move to another practice group; cycles change as the time passes.

17200 Is the Subject of California Attorney's Suit. Bill Lockyer, California's attorney general, recently filed suit in Los Angeles Superior Court against the Trevor Law Group (People v. Trevor Law Group et al, 290989) in Beverly Hills, which has been accused of extorting settlements from small businesses. However, Mr. Lockyer has decided to utilize Business and Professions Code '17200 ' California's unfair competition law ' the same statute that the firm is accused of using to carry out the extortion. This has resulted in Mr. Lockyer becoming embroiled in a deliberation over whether to amend the Business and Professions Code. So far, the plaintiff's bar has opposed any strong change. Mr. Lockyer feels that there probably will not be notable changes to the statute; he also expects to file other suits against attorneys. In addition to the Trevor suit, which is pending in court, he has another suit pending against the for-profit consumer group Consumer Enforcement Watch. The suit against Trevor alleges that the firm, among other things, neglected to explore claims before it sued, made clandestine agreement lacking public advantage and divided lawyer payments with nonlawyers.

Code 17200 empowers Lockyer not only to request that a court dismiss the Trevor firm suit, but also to order Trevor not to file any new 17200 actions unless they are court approved. The attorney general wants the firm's lawyers to be subjected to $1 million in civil penalties and to make amends for any monetary and/or property violations of the code.

John Sullivan, president of the Civil Justice Association of California ' which is leading the effort to change 17200 ' reportedly feels no dismay regarding the suit. In fact, Mr. Sullivan thinks that the attorney general's action could aid in establishing the tort reformers' case in the Legislature, since he feel the suit's basis characterizes plaintiff's lawyers' common conduct. However, Consumer Attorneys of California President Bruce Brusavich, Mr. Sullivan's Sacramento adversary ' said that was a false interpretation. Case in point: Unlike the Trevor group, seldom do plaintiffs' attorneys seek secret settlements in 17200 actions. Partner Shane Han was in agreement with Mr. Sullivan, although he defended Trevor's actions.

Another Major London Firm Expands Into New York. London's Allen & Overy has become the second Magic Circle firm to expand into the United States. Firms encompassing the Magic Circle include Clifford Chance (the first to expand into the States), Linklaters, Slaughter & May, and several slightly smaller firms. The Magic Circle designation means that these firms hold a rank in London's market that is commensurate with the position of such New York firms as Cravath, Swaine & Moore; Sullivan & Cromwell; and Davis Polk & Wardwell.

Currently there are 102 attorneys in Allen & Overy's New York practice, and the firm plans to introduce a United States litigation practice this month. Schulte Roth & Zabel litigation chair Michael S. Feldburg is initiating this new practice. The firm also brought aboard Barry P. Biggar, a structured finance partner from Bingham McCutchen's New York office. Prior to this, Cadwalader, Wickersham & Taft bankruptcy partners Kenneth P. Coleman and David Frauman joined the firm. As Allen & Overy's New York office's senior partner, Daniel P. Cunningham, explained, the firm is pursuing its goal of having satisfactory numbers of the appropriate people in order for it to be highly regarded as a New York firm. He said the firm's expansion would be accomplished naturally: law school students would be secured, and lateral hiring would be highly judicious. While Allen & Overy's size has doubled since Cunningham came to the fold, he admits that it might take three or four years for the firm to practice at its desired level.

Cunningham says that pursuit of this goal would gravely damage the firm's chances of a merger with another successful New York firm, although there is little chance of one happening any time soon. However, aspirations of a merger have impeded other London firms' growth. It seems that none of New York's top firms have accepted merger proposals from Magic Circle firms. Slaughter & May is the only Magic Circle firm that has decided against expansion into the United States. As for the others, they were faced with deliberating whether to move forward on their own, join with the lower-ranked U.S. firms or prepare for the time when New York's upper-echelon firms have a change of heart.

Two of the Magic Circle Firms, Linklaters and Freshfields, continue to operate New York offices that are roughly moderate. These offices center on corporate practice divisions, and the firms are optimistic that New York firms will consider these analogous. Terence Kyle, who heads Linklaters' 40-attorney New York office, acknowledges that the firm would prefer to expand in the New York market via a merger with a New York firm. However, he also says that there was no timeline on this plan and that the firm would handle matters discerningly.

A New York headhunter who preferred to remain anonymous said that Davis Polk partners would say the Magic Circle firms are not up to par with the New York firms. A managing partner from a prestigious New York firm said that Clifford Chance, the world's largest firm, is the Magic Circle's most feeble where its legal work's quality is concerned. The 3,600-attorney firm merged with the large but not mighty New York firm Rogers & Wells in 1999, and then pilfered West Coast partners from now-defunct Brobeck, Phleger & Harrison.

Despite the firm's accomplishments, Cunningham maintains that Allen & Overy will have trouble gaining certain clients who are accustomed to using London firms to serve only cross-border transactions.

In the Face of Economic Hardship, Bay Area Partner Classes Fluctuate. Although the faltering economy has been taking its toll on partner classes at many of the San Francisco Bay firms for 2002-2003, some were nonetheless able to award partner status to litigators. The majority of firms polled by The Recorder, an affiliate of this publication, either increased their class size or stayed the same. Most of the firms' elevations were in the areas of business and litigation. The extremes were Morrison & Foerster (MoFo) and Sonsini Goodrich & Rosati, which significantly cut and increased their class, respectively. Keith Wetmore, chairman of MoFo, explains that the cutting was due to the current slow growth of the practice. Law firm consultant Peter Zeughauser says that when faced with slumping revenue, law firms are less likely to increase the number of partners. He says that although at first the Bay Area had progressive entry standards, this changed when the technical economy spiraled downward. Since fewer associates are rising to partner, there has either been a steadiness or an increase in the number of lateral partners employed. Wetmore thinks more laterals will join MoFo this year, some of them possibly being refugees from Brobeck, Phleger & Harrison. He also anticipates taking in laterals who are disturbed with those firms that are striving to gain from the high-tech explosion. Wilson Sonsini might be headed in another direction where partners are concerned: Though only five partners were made last year, this year 13 associates have been raised; the firm is close to its 2001 levels.

In accordance with the smaller firms of the area remaining consistent since 2002, the 140-lawyer Howard, Rice, Nemerovski, Canady, Falk & Rabkin has managed to steadily raise two to four associates; Nemerovski Canady also has brought in approximately the same number of laterals in that time period. Managing partner Stuart Lipton explained that the firm does not place importance on short-term economics. Cooley Godward's chief operating officer, March Pitchford, says that although there are many factors that come into play when making new partners, economic conditions are crucial. Important skills are productivity, client treatment and holding, and a proven competence in originating new ventures. However, Pitchford acknowledged that external factors must be reckoned.

At Heller Ehrman White & McAuliffe, where eight were raised to partner, profits per partner increase from $645,000 in 2001 to $710,000 last year. The firm holds strategic planning meetings at which the partners try to forecast the growth pattern of each year; then the attorneys can be moved up accordingly. Firmwide managing partner Robert Hubbell emphasizes that the firm needs to grow in order to achieve its yearly goal of increasing outcome per partner.

But associates at slower-moving firms should not give up hope. Environmental litigate Mark Elliott, a junior partner at Pillsbury Winthrop, advised associates in this situation to hone their skills, even though it make take a couple of years longer. He cautions that they should not move to another practice group; cycles change as the time passes.

17200 Is the Subject of California Attorney's Suit. Bill Lockyer, California's attorney general, recently filed suit in Los Angeles Superior Court against the Trevor Law Group (People v. Trevor Law Group et al, 290989) in Beverly Hills, which has been accused of extorting settlements from small businesses. However, Mr. Lockyer has decided to utilize Business and Professions Code '17200 ' California's unfair competition law ' the same statute that the firm is accused of using to carry out the extortion. This has resulted in Mr. Lockyer becoming embroiled in a deliberation over whether to amend the Business and Professions Code. So far, the plaintiff's bar has opposed any strong change. Mr. Lockyer feels that there probably will not be notable changes to the statute; he also expects to file other suits against attorneys. In addition to the Trevor suit, which is pending in court, he has another suit pending against the for-profit consumer group Consumer Enforcement Watch. The suit against Trevor alleges that the firm, among other things, neglected to explore claims before it sued, made clandestine agreement lacking public advantage and divided lawyer payments with nonlawyers.

Code 17200 empowers Lockyer not only to request that a court dismiss the Trevor firm suit, but also to order Trevor not to file any new 17200 actions unless they are court approved. The attorney general wants the firm's lawyers to be subjected to $1 million in civil penalties and to make amends for any monetary and/or property violations of the code.

John Sullivan, president of the Civil Justice Association of California ' which is leading the effort to change 17200 ' reportedly feels no dismay regarding the suit. In fact, Mr. Sullivan thinks that the attorney general's action could aid in establishing the tort reformers' case in the Legislature, since he feel the suit's basis characterizes plaintiff's lawyers' common conduct. However, Consumer Attorneys of California President Bruce Brusavich, Mr. Sullivan's Sacramento adversary ' said that was a false interpretation. Case in point: Unlike the Trevor group, seldom do plaintiffs' attorneys seek secret settlements in 17200 actions. Partner Shane Han was in agreement with Mr. Sullivan, although he defended Trevor's actions.

Another Major London Firm Expands Into New York. London's Allen & Overy has become the second Magic Circle firm to expand into the United States. Firms encompassing the Magic Circle include Clifford Chance (the first to expand into the States), Linklaters, Slaughter & May, and several slightly smaller firms. The Magic Circle designation means that these firms hold a rank in London's market that is commensurate with the position of such New York firms as Cravath, Swaine & Moore; Sullivan & Cromwell; and Davis Polk & Wardwell.

Currently there are 102 attorneys in Allen & Overy's New York practice, and the firm plans to introduce a United States litigation practice this month. Schulte Roth & Zabel litigation chair Michael S. Feldburg is initiating this new practice. The firm also brought aboard Barry P. Biggar, a structured finance partner from Bingham McCutchen's New York office. Prior to this, Cadwalader, Wickersham & Taft bankruptcy partners Kenneth P. Coleman and David Frauman joined the firm. As Allen & Overy's New York office's senior partner, Daniel P. Cunningham, explained, the firm is pursuing its goal of having satisfactory numbers of the appropriate people in order for it to be highly regarded as a New York firm. He said the firm's expansion would be accomplished naturally: law school students would be secured, and lateral hiring would be highly judicious. While Allen & Overy's size has doubled since Cunningham came to the fold, he admits that it might take three or four years for the firm to practice at its desired level.

Cunningham says that pursuit of this goal would gravely damage the firm's chances of a merger with another successful New York firm, although there is little chance of one happening any time soon. However, aspirations of a merger have impeded other London firms' growth. It seems that none of New York's top firms have accepted merger proposals from Magic Circle firms. Slaughter & May is the only Magic Circle firm that has decided against expansion into the United States. As for the others, they were faced with deliberating whether to move forward on their own, join with the lower-ranked U.S. firms or prepare for the time when New York's upper-echelon firms have a change of heart.

Two of the Magic Circle Firms, Linklaters and Freshfields, continue to operate New York offices that are roughly moderate. These offices center on corporate practice divisions, and the firms are optimistic that New York firms will consider these analogous. Terence Kyle, who heads Linklaters' 40-attorney New York office, acknowledges that the firm would prefer to expand in the New York market via a merger with a New York firm. However, he also says that there was no timeline on this plan and that the firm would handle matters discerningly.

A New York headhunter who preferred to remain anonymous said that Davis Polk partners would say the Magic Circle firms are not up to par with the New York firms. A managing partner from a prestigious New York firm said that Clifford Chance, the world's largest firm, is the Magic Circle's most feeble where its legal work's quality is concerned. The 3,600-attorney firm merged with the large but not mighty New York firm Rogers & Wells in 1999, and then pilfered West Coast partners from now-defunct Brobeck, Phleger & Harrison.

Despite the firm's accomplishments, Cunningham maintains that Allen & Overy will have trouble gaining certain clients who are accustomed to using London firms to serve only cross-border transactions.