Cox Smith's Michael Napoli
Michael Napoli had to get honest with himself. As a partner in the Dallas office of K&L Gates, he was representing mainly midtier clients in commercial and securities litigation. "If I were representing Google, K&L Gates would be the right place. But I'm not that guy. I'm never going to be that guy," said Napoli, 45.
Now a partner in the Dallas office of 115-attorney Cox Smith Matthews, Napoli finds that the San Antonio-based firm he joined a month ago is a nice fit for his practice. Still, he struggled with letting go of the prestige of practicing as a partner in a giant international law firm.
Napoli went to K&L Gates in 2001, when it acquired his old firm, 14-lawyer Wolin, Ridley & Miller. It was his decision to leave K&L Gates, he said, but it had become clear that he was not representing the major clients that the 1,762-attorney firm wanted to serve. "It is something to say you're a partner in one of the largest firms in the world," he said. "But that's just silly pride. It was just ego."
Napoli's situation is not unique. Many attorneys landed at big firms during the boom years of the last decade, often through mergers, only to find that their regional books of business didn't fit the large-firm model. With their clients unwilling to pay higher fees charged by big firms, Napoli and others have left behind the prestige and platforms of megafirms to find a better match with midsize practices.
Sometimes the partner's departure is the big firm's decision and at other times it's the partner's, but often it's a mutual decision -- both sides realize the fit isn't right. Ward Bower, a principal with Altman Weil, said the movement of partners into smaller shops is partly the result of larger firms "dusting off" their pre-recession strategies, which, for many, means refocusing on big clients with big fees and shedding partners with smaller practices.
That can be good news for midsize law firms, which generally have lower overhead costs and are better suited to sustain practices with smaller clients. While by no means immune to market downturns, midsize firms by some indicators seem to be bouncing back better than the bigger firms are. During the second quarter of 2012, midsize firms collectively posted the best performance of any law firm market segment, according to Peer Monitor, the Hildebrandt Institute's legal market tracker. Demand from clients of midsize firms -- which, for Peer Monitor, are those firms not on the Am Law 200 -- increased by 1.9 percent, compared with a 0.8 percent increase in Am Law 100 firms and a 1.0 percent increase for Am Law 200 firms, the organization reported. (The Am Law lists represent The National Law Journal affiliate The American Lawyer's survey of the largest firms by revenue.)
At the same time, big clients have been unbundling the work they previously doled out to megafirms and sending pieces of it to midsize firms with better rates, said Peter Zeughauser of Zeughauser Group, a consultancy.
"More work that can be bought at lower prices is going to midsize, lower-price firms," Zeughauser said. "This, combined with the pressure to maintain high profits per equity partner at the top national and international firms, is driving partners in those firms with lower-rate practices to greener pastures at the midsize firms."
GREENER PASTURES
Five years ago, Carl Westmoreland joined Seyfarth Shaw when his firm, Powell Goldstein, was suffering. Most of the lawyers remaining in that 100-year-old Atlanta firm were scooped up by Bryan Cave the following year.
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