Practice Notes

Major L.A. Firms Face Fallout From Reshuffling

By Kellie Schmitt

A law student posted the question on an online message board last month: 'Anything going wrong with Alschuler [Grossman] these days?' The well-regarded shop had dropped out of his school's on-campus interviewing program and the poster wondered why. Surf the postings and you'd see similar queries about other fixtures of Westside entertainment law, like Christensen Glaser Fink Jacobs Weil & Shapiro and Greenberg Glusker Fields Claman & Machtinger.

The latter two firms have been roiled by the federal wiretapping and racketeering charges against celebrity private investigator Anthony Pellicano. Terry Christensen was indicted earlier this year and his firm has seen an exodus of attorneys. Greenberg Glusker star partner Bert Fields hasn't been charged, but the case has cast him under a cloud of suspicion and his firm has endured some high-profile defections. At Alschuler Grossman, the instability has nothing to do with Pellicano, but instead stems from a clash of strong personalities. As someone on the message boards was quick to point out, the 85-lawyer firm is expected to split in two in the coming months; two name partners expect to take dozens of attorneys and join up with a New York firm, leaving behind name partner Marshall Grossman and his sizable band of lawyers.

Taken together, this movement represents a major reshuffle of Hollywood's Rolodex. The uncertainty surrounding the futures of these three major Westside entertainment firms has led to unprecedented levels of lateral movement throughout Los Angeles and to the launch of a handful of star-studded boutiques. Out-of-town firms are feeding on the uncertainty, too, moving in to poach key partners. 'By far and away, there is no region that has had more movement [than L.A.] this year,' says recruiter Larry Watanabe, who adds that most of the activity 'is centered in West L.A.' It started with the Pellicano tremors, he says, 'but that was just the tip of the iceberg.'

But there's one thing that unites these firms. 'You can't help but notice that the three Westside firms that have had problems this year are all run, controlled and proliferated by one person who has a death grip on the firm,' says Dan Hatch, head of the partner practice in Southern California at Major Lindsey & Africa. All three are so-called first-generation firms still closely associated with their ironfisted ' and aging ' founders: Christensen Fields and Grossman. Industry experts say it's common for such firms to trip up as it becomes time to pass the baton to a second generation of leaders.

Outside events, like the Pellicano indictments, may speed tensions to the surface. Shortly after Terry Christensen's wiretapping indictment, name partner Louis 'Skip' Miller left with several associates and created Miller Barondess. At Greenberg Glusker, where Fields continues to preside as patriarch, top partners Dale Kinsella and Howard Weitzman left with a group to form Kinsella Weitzman Iser Kump & Aldisert.

Transferring power is a common problem for first-generation firms because of the characteristics inherent in leaders who create them, said Robert Fortunato, a law-firm consultant and leadership expert. Starting a firm takes 'a fierce level of independence,' he says. Those who do it can't be expected to give up power easily. Law-firm founders 'wake up in a crisis and see a cadre of followers, not leaders,' he says and can't be expected to transfer power in an orderly fashion.

Sharing power doesn't come easy, either. At Alschuler, Grossman and name partner Stanton 'Larry' Stein are both permanent members of the firm's executive committee. Relations between the two have long been frosty ' lawyers within the firm say the two partners rarely speak to each other. Grossman began pushing for a merger earlier this year, widening the rift between him and some partners and all but inviting out-of-town firms to come in and poach. 'If you have two powerful leaders who don't get along, it's usually debilitating,' says law-firm consultant Peter Zeughauser. 'Look at Alschuler.

A few months ago, Steptoe & Johnson snagged a litigation partner from Christensen Glaser and five partners from Alschuler Grossman to open a Century City, Los Angeles, office. One of those lawyers, Michael Heimbold, says talk of a merger at Alschuler Grossman was one reason he chose to look at other options. He didn't have to look far: Over the past year, headhunters have blitzed the firm's lawyers. 'Everyone was getting calls,' Heimbold says. Indeed, most of the out-of-town firms that entered the L.A. market this year did so because they saw an op-portunity in the turbulence at Alschuler Christensen and Greenberg Glusker.

Of course, not all firms stumble. Loeb & Loeb, one of the biggest firms on the Westside, with 250 lawyers, has been around for 100 years. Others point as an example to Manatt Phelps & Phillips, which was founded in 1965. While all three name partners are still at the 325-lawyer firm, none is in a formal leadership role. And if you gauge success by a firm's ability to hold onto talent, Manatt Phelps is one of the winners, says recruiter Watanabe. 'For a firm of its size, and given the new entrants and changes in the marketplace, Manatt has lost a lot less partners than others,' he says. 'And they are an absolute prime target ' they are one of the last remaining free-standing firms a national firm would potentially target.'

Part of the reason Manatt Phelps has successfully transitioned is that business generation, as well as profits, is more evenly distributed among partners, Watanabe says. 'It's dramatically different than Alschuler, where there's a couple major rainmakers at the top and below that a wide group of people that don't generate business on their own,' he says. 'That makes a firm vulnerable.' Managers need to identify younger partners and groom them for leadership roles, Fortunato says. Senior partners need to share work and client relationships.

Lance Jurich, the partner in charge of Loeb & Loeb's litigation department in Los Angeles, says his firm has made a deliberate choice to put younger attorneys in management. Stuart Liner, the 44-year-old co-founder and CEO of Liner Yankelevitz Sunshine & Regenstreif, says he's already taking steps to ensure he and his firm of almost 100 attorneys don't face a problematic transfer down the road. Liner says he makes sure that no client brings in more than 4% of the firm's revenue, and he actively identifies future leaders. 'I learned that even at 44, I have to already be planning for a transition and identifying leaders,' he says. 'If you wait until you're 55 or 60, you're either going to have to roll in with someone else and lose your legacy, or keep pulling a lot of weight.'

Kellie Schmitt is a reporter for The Recorder, the San Francisco-based daily legal newspaper and an ALM affiliate publication of Entertainment Law & Finance.

When merger discussions between Alschuler Grossman Stein & Kahan and Cooley Godward ended in September, the development threw into more doubt the future of the former, a top-shelf entertainment boutique. Name partner Marshall Grossman, who planned to take most of the corporate litigators with him to Cooley Godward, says Cooley Godward ended the talks a month after the Palo Alto, CA-based firm announced it would merge with Kronish Lieb Weiner & Hellman, a New York litigation shop. 'It was too much for Cooley to consider absorbing two litigation-dominated firms at the same time,' says Grossman.

According to sources within Alschuler Grossman, when the end of the merger talks was announced, a group of about 40 lawyers who weren't interested in the merger were still moving forward with plans to break off and open a Santa Monica office affiliated with New York's Dreier LLP. That move, which would likely include most of the firm's entertainment and transactional practices, anchored by Stanton 'Larry' Stein and Robert Kahan, is expected to be completed by year's end.

The Cooley Godward discussions had progressed for several months, overcoming a hurdle over a significant client conflict, but stalling around the time that Cooley Godward merged with Kronish, a 105-lawyer firm. The Cooley Godward discussions had marked the second round of merger talks for Alschuler Grossman in 2006. Talks with Robins Kaplan Miller & Ciresi concluded earlier this year, but set off a round of departures including rainmaker Mark Neubauer and several other partners, who left to start a Century City office for Steptoe & Johnson.

' Kellie Schmitt

Loeb's Base Expands To Media, Internet

By Amanda Bronstad

Loeb & Loeb has become the latest L.A. law firm to expand beyond its
traditional practice of representing entertainment businesses and talent, such as Woody Allen and the Beastie Boys.

The firm has formed a new mergers-and-acquisitions (M&A) practice group to handle a rising tide of deals in the media and Internet industries. In the first 6 months of 2006, nearly 15% of Loeb & Loeb's revenues came from M&As, more than double the percentage in 2005. The firm has 30 lawyers who make up the M&A group, many in its New York office. The firm's leaders expect the new practice area to reach 50 lawyers in the next few years. Andrew Ross is chairman of the M&A practice area.

The move is similar to that of Los Angeles-based Manatt, Phelps & Phillips, which recently began moving away from talent clients toward entertainment institutions with corporate work.

Legal experts say firms that previously focused on representing talent in the entertainment field are shifting toward media and Internet clients that have increased their deal flow as they consolidate or grow. According to Ward Bower, a principal at legal-consulting firm Altman Weil Inc. 'What [the firms are] finding here is a convergence of two industries, in effect the computer and Internet industry and the traditional entertainment industry. Any time there is that connection of industries, there is a potential to create a lot of value.'

Founded in 1909, Loeb & Loeb opened a New York office in 1986, followed by smaller offices in Nashville and Chicago. Now with more than 240 lawyers, the firm grossed $146.5 million in revenues last year, up about 20% from 2004, according to a survey by The American Lawyer. John Franken-heimer, a partner in the Los Angeles office and co-chairman of the firm, says that the growth has come in several practice areas, including intellectual property and entertainment transactions for motion pictures, television, music, live events and talent. 'We still have talent,' Frankenheimer says, 'but now we represent a whole panoply of sophisticated financial institutions, including large private equity firms and hedge funds.'

Amanda Bronstad writes for The National Law Journal, an AFM affiliate publication of Entertainment Law & Finance.

Major L.A. Firms Face Fallout From Reshuffling

By Kellie Schmitt

A law student posted the question on an online message board last month: 'Anything going wrong with Alschuler [Grossman] these days?' The well-regarded shop had dropped out of his school's on-campus interviewing program and the poster wondered why. Surf the postings and you'd see similar queries about other fixtures of Westside entertainment law, like Christensen Glaser Fink Jacobs Weil & Shapiro and Greenberg Glusker Fields Claman & Machtinger.

The latter two firms have been roiled by the federal wiretapping and racketeering charges against celebrity private investigator Anthony Pellicano. Terry Christensen was indicted earlier this year and his firm has seen an exodus of attorneys. Greenberg Glusker star partner Bert Fields hasn't been charged, but the case has cast him under a cloud of suspicion and his firm has endured some high-profile defections. At Alschuler Grossman, the instability has nothing to do with Pellicano, but instead stems from a clash of strong personalities. As someone on the message boards was quick to point out, the 85-lawyer firm is expected to split in two in the coming months; two name partners expect to take dozens of attorneys and join up with a New York firm, leaving behind name partner Marshall Grossman and his sizable band of lawyers.

Taken together, this movement represents a major reshuffle of Hollywood's Rolodex. The uncertainty surrounding the futures of these three major Westside entertainment firms has led to unprecedented levels of lateral movement throughout Los Angeles and to the launch of a handful of star-studded boutiques. Out-of-town firms are feeding on the uncertainty, too, moving in to poach key partners. 'By far and away, there is no region that has had more movement [than L.A.] this year,' says recruiter Larry Watanabe, who adds that most of the activity 'is centered in West L.A.' It started with the Pellicano tremors, he says, 'but that was just the tip of the iceberg.'

But there's one thing that unites these firms. 'You can't help but notice that the three Westside firms that have had problems this year are all run, controlled and proliferated by one person who has a death grip on the firm,' says Dan Hatch, head of the partner practice in Southern California at Major Lindsey & Africa. All three are so-called first-generation firms still closely associated with their ironfisted ' and aging ' founders: Christensen Fields and Grossman. Industry experts say it's common for such firms to trip up as it becomes time to pass the baton to a second generation of leaders.

Outside events, like the Pellicano indictments, may speed tensions to the surface. Shortly after Terry Christensen's wiretapping indictment, name partner Louis 'Skip' Miller left with several associates and created Miller Barondess. At Greenberg Glusker, where Fields continues to preside as patriarch, top partners Dale Kinsella and Howard Weitzman left with a group to form Kinsella Weitzman Iser Kump & Aldisert.

Transferring power is a common problem for first-generation firms because of the characteristics inherent in leaders who create them, said Robert Fortunato, a law-firm consultant and leadership expert. Starting a firm takes 'a fierce level of independence,' he says. Those who do it can't be expected to give up power easily. Law-firm founders 'wake up in a crisis and see a cadre of followers, not leaders,' he says and can't be expected to transfer power in an orderly fashion.

Sharing power doesn't come easy, either. At Alschuler, Grossman and name partner Stanton 'Larry' Stein are both permanent members of the firm's executive committee. Relations between the two have long been frosty ' lawyers within the firm say the two partners rarely speak to each other. Grossman began pushing for a merger earlier this year, widening the rift between him and some partners and all but inviting out-of-town firms to come in and poach. 'If you have two powerful leaders who don't get along, it's usually debilitating,' says law-firm consultant Peter Zeughauser. 'Look at Alschuler.

A few months ago, Steptoe & Johnson snagged a litigation partner from Christensen Glaser and five partners from Alschuler Grossman to open a Century City, Los Angeles, office. One of those lawyers, Michael Heimbold, says talk of a merger at Alschuler Grossman was one reason he chose to look at other options. He didn't have to look far: Over the past year, headhunters have blitzed the firm's lawyers. 'Everyone was getting calls,' Heimbold says. Indeed, most of the out-of-town firms that entered the L.A. market this year did so because they saw an op-portunity in the turbulence at Alschuler Christensen and Greenberg Glusker.

Of course, not all firms stumble. Loeb & Loeb, one of the biggest firms on the Westside, with 250 lawyers, has been around for 100 years. Others point as an example to Manatt Phelps & Phillips, which was founded in 1965. While all three name partners are still at the 325-lawyer firm, none is in a formal leadership role. And if you gauge success by a firm's ability to hold onto talent, Manatt Phelps is one of the winners, says recruiter Watanabe. 'For a firm of its size, and given the new entrants and changes in the marketplace, Manatt has lost a lot less partners than others,' he says. 'And they are an absolute prime target ' they are one of the last remaining free-standing firms a national firm would potentially target.'

Part of the reason Manatt Phelps has successfully transitioned is that business generation, as well as profits, is more evenly distributed among partners, Watanabe says. 'It's dramatically different than Alschuler, where there's a couple major rainmakers at the top and below that a wide group of people that don't generate business on their own,' he says. 'That makes a firm vulnerable.' Managers need to identify younger partners and groom them for leadership roles, Fortunato says. Senior partners need to share work and client relationships.

Lance Jurich, the partner in charge of Loeb & Loeb's litigation department in Los Angeles, says his firm has made a deliberate choice to put younger attorneys in management. Stuart Liner, the 44-year-old co-founder and CEO of Liner Yankelevitz Sunshine & Regenstreif, says he's already taking steps to ensure he and his firm of almost 100 attorneys don't face a problematic transfer down the road. Liner says he makes sure that no client brings in more than 4% of the firm's revenue, and he actively identifies future leaders. 'I learned that even at 44, I have to already be planning for a transition and identifying leaders,' he says. 'If you wait until you're 55 or 60, you're either going to have to roll in with someone else and lose your legacy, or keep pulling a lot of weight.'

Kellie Schmitt is a reporter for The Recorder, the San Francisco-based daily legal newspaper and an ALM affiliate publication of Entertainment Law & Finance.

When merger discussions between Alschuler Grossman Stein & Kahan and Cooley Godward ended in September, the development threw into more doubt the future of the former, a top-shelf entertainment boutique. Name partner Marshall Grossman, who planned to take most of the corporate litigators with him to Cooley Godward, says Cooley Godward ended the talks a month after the Palo Alto, CA-based firm announced it would merge with Kronish Lieb Weiner & Hellman, a New York litigation shop. 'It was too much for Cooley to consider absorbing two litigation-dominated firms at the same time,' says Grossman.

According to sources within Alschuler Grossman, when the end of the merger talks was announced, a group of about 40 lawyers who weren't interested in the merger were still moving forward with plans to break off and open a Santa Monica office affiliated with New York's Dreier LLP. That move, which would likely include most of the firm's entertainment and transactional practices, anchored by Stanton 'Larry' Stein and Robert Kahan, is expected to be completed by year's end.

The Cooley Godward discussions had progressed for several months, overcoming a hurdle over a significant client conflict, but stalling around the time that Cooley Godward merged with Kronish, a 105-lawyer firm. The Cooley Godward discussions had marked the second round of merger talks for Alschuler Grossman in 2006. Talks with Robins Kaplan Miller & Ciresi concluded earlier this year, but set off a round of departures including rainmaker Mark Neubauer and several other partners, who left to start a Century City office for Steptoe & Johnson.

' Kellie Schmitt

Loeb's Base Expands To Media, Internet

By Amanda Bronstad

Loeb & Loeb has become the latest L.A. law firm to expand beyond its
traditional practice of representing entertainment businesses and talent, such as Woody Allen and the Beastie Boys.

The firm has formed a new mergers-and-acquisitions (M&A) practice group to handle a rising tide of deals in the media and Internet industries. In the first 6 months of 2006, nearly 15% of Loeb & Loeb's revenues came from M&As, more than double the percentage in 2005. The firm has 30 lawyers who make up the M&A group, many in its New York office. The firm's leaders expect the new practice area to reach 50 lawyers in the next few years. Andrew Ross is chairman of the M&A practice area.

The move is similar to that of Los Angeles-based Manatt, Phelps & Phillips, which recently began moving away from talent clients toward entertainment institutions with corporate work.

Legal experts say firms that previously focused on representing talent in the entertainment field are shifting toward media and Internet clients that have increased their deal flow as they consolidate or grow. According to Ward Bower, a principal at legal-consulting firm Altman Weil Inc. 'What [the firms are] finding here is a convergence of two industries, in effect the computer and Internet industry and the traditional entertainment industry. Any time there is that connection of industries, there is a potential to create a lot of value.'

Founded in 1909, Loeb & Loeb opened a New York office in 1986, followed by smaller offices in Nashville and Chicago. Now with more than 240 lawyers, the firm grossed $146.5 million in revenues last year, up about 20% from 2004, according to a survey by The American Lawyer. John Franken-heimer, a partner in the Los Angeles office and co-chairman of the firm, says that the growth has come in several practice areas, including intellectual property and entertainment transactions for motion pictures, television, music, live events and talent. 'We still have talent,' Frankenheimer says, 'but now we represent a whole panoply of sophisticated financial institutions, including large private equity firms and hedge funds.'

Amanda Bronstad writes for The National Law Journal, an AFM affiliate publication of Entertainment Law & Finance.