State firms must tailor approach to growth

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Pennsylvania law firms have largely focused their growth initiatives outside of the state with an eye toward capturing market share by opening offices in new cities. But recruiters from some of the most sought-after locales for Pennsylvania firms said the firms are going to have to tailor their approach if they want to be successful.

Each market has a unique culture and legal community, but on the whole, the recruiters said, out-of-town firms too often rely on the “if we build it, they will come” philosophy of opening an office and assuming the work will follow.

“For being bright lawyers, brilliant lawyers, law firm governance is, by and large, pretty stupid,” said Jeff Coburn of Coburn Consulting in Boston.

Mr. Coburn said law firms often can’t articulate their vision, and that is a skill recruiters say is essential in convincing quality partners to join an unknown entity new to a market.

“The Philadelphia play has been [to] get good lawyers with more reasonable billing rates,” said Washington, D.C.-based recruiter Dan Binstock of Garrison & Sisson.

Pennsylvania firms have pitched Washington lateral prospects on the idea that the lawyers can have more flexibility with their rates by joining an out-of-town firm with lower overhead costs, Mr. Binstock said, noting firms in other markets have made the same play when trying to enter Washington.

Out-of-town firms need to have a good business case to enter a market, he said. For Washington, that might mean they have a number of good health care or medical device clients that need regulatory work, for example. Or, in more local practices, such as real estate, those firms would be better served entering the market when they already have clients on the ground there.

“But looking just to come because it’s solely a Pennsylvania firm with more flexible rates doesn’t by itself create a level of enthusiasm. … You can’t start with, ‘We want to open in D.C. because everyone’s in D.C. and we want a piece of the D.C. action,’ ” Mr. Binstock said. “It has to be a much more strategic business plan that this is based on.”

Larry Watanabe of Watanabe Nason & Schwartz in Solana Beach, Calif., focuses his practice on placing lateral partners in the California market.

Mr. Watanabe said the “single most defining fact” in an out-of-town firm’s successful entry to the state is that the firm already has clients in the market. That makes it easier to attract laterals, he said.

Mr. Binstock said Pennsylvania firms such as Dechert; Morgan, Lewis & Bockius; K&L Gates; and Reed Smith are more well-known commodities outside of the state. For other firms, including those Pennsylvania-based firms on the Am Law 100 and 200, more of an explanation is required, he said.

Some firms have done a good job penetrating the Washington market, Mr. Binstock said. But other Pennsylvania firms have had what he called a “one-sided” focus of wanting to grow in Washington because it could provide more regulatory work and that is a growth area in the country right now.

Mr. Binstock said firms that look like they are on a scavenger hunt for partners repel good candidates while those that conduct a “surgical strike” are more likely to get good people.

Mr. Coburn said everyone plays the game a little bit differently. Some firms assemble a group of lawyers over several years, while others come into a market and focus on select practices. He said firms should pick what they want to accomplish in a market and what the practice makeup should be and consistently implement that goal.

The strategic purpose for entering the market is the most important piece of the equation when opening in a new location, Mr. Coburn said. “Just a few lawyers in every practice area is not getting you anywhere,” he said.

David Pedreira, partner and general manager of search firm MillerBlowers in Tampa, Fla., said many of the larger Am Law firms are known throughout the various Florida markets — a hot spot for Pennsylvania firms of late. And on the whole, he said, firms have improved their approach to growing in the state.

“We saw a lot of growth for growth’s sake back before the economic downturn,” Mr. Pedreira said. That haphazard growth has slowed down, he said. But firms have to think about where in the state is the best fit for them.

Mr. Pedreira echoed the importance of a strategic growth strategy, though he was less tied to the practice or industry focus that some of the other recruiters said was the best approach. He said firms should have a mix of practice capabilities and touch on both corporate and litigation work.

The biggest thing, however, is economy of scale, Mr. Pedreira said. Firms need enough bodies and revenue to make the office at least somewhat viable in the immediate term. That can help attract other laterals. The first 18 to 24 months are the most important because that is when the firm is the “hot thing in town” and has the best chance for recruiting top talent, he said.

Cozen O’Connor CEO Michael Heller said regardless of how the firm enters a new city, the first year or two is spent focusing intensely on integration. The firm will hold client events in the new offices in the first six months, send existing Cozen O’Connor partners down to the office to help share the firm’s culture and encourage the new partners to visit other Cozen O’Connor offices.

“The worst thing that a law firm can do is bring in a group of new lawyers, pat them on the back, wish them luck and see what happens in a few years,” Mr. Heller said. “The best way to do it is to overresource the integration.”

Mr. Heller said he agreed for the most part that new office expansion should follow a firm’s clients and its business. “That’s why, unlike many of our colleagues, we haven’t opened an office in China, for example,” he said.


Gina Passarella can be contacted at 1-215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI. To read more articles like this, visit www.thelegalintelligencer.com.

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