Ajay Raju ()
In a rare move of bringing in an outsider to run a law firm, Philadelphia-based Dilworth Paxson, with about 100 lawyers worldwide, has found its new leader from the ranks of 1,700-lawyer Reed Smith’s rainmakers.
Ajay Raju, a top rainmaker and former leader of Reed Smith’s Philadelphia office, is leaving the firm to serve as the first CEO of Dilworth Paxson. Raju, a corporate lawyer, will also serve as co-chairman of the firm along with bankruptcy partner Lawrence G. McMichael. Raju is bringing a 10-person team with him from Reed Smith.
Chairman Joseph Jacovini and Co-Chairman Stephen Harmelin will serve as chairman and vice chairman, respectively, of the firm’s executive committee. Former managing partner James W. Hennessey will now be the chief operating officer of the firm, running the day-to-day operations while Raju will also focus on day-to-day matters as well as the larger policy objectives of the firm, Raju said.
McMichael said he spends “150 percent” of his time practicing law and is excited to have Raju come on board to focus on the business of the firm. He said the two complement each other well in that McMichael is a litigator and Raju is a business attorney.
For Raju, it isn’t all about the size of the firm where he practices.
“It’s not a massive firm, but it’s not the scale anymore, it’s really about innovation,” Raju said of Dilworth Paxson. “You can be limited in geography but because we’re in a digital world with no boundaries globally … you can make a global impact sitting in an office in Philadelphia.”
Raju said he would be taking clients with him from Reed Smith with the exception of the foreign-based clients who need the global offices of Reed Smith. He said he still plans to practice while leading the firm, but Raju noted he has always served as more of a business and strategic adviser to clients rather than handling the day-to-day legal work. Raju said he intends to refer the matters Dilworth Paxson can’t handle to Reed Smith, likening the two firms to “sister firms.”
Jacovini and Raju said six associates and four paralegals who worked with Raju will be moving to Dilworth Paxson as well. Two of the associates will become partners at Dilworth Paxson.
“Ajay has made important contributions to Reed Smith in Philadelphia and across our firm,” Reed Smith global managing partner Sandy Thomas said in a statement. “We thank him for his valuable service to the firm and our clients and wish him every success. We have every expectation that Ajay will have a big impact on the future of the Philadelphia region.”
Raju has long been involved in initiatives to bolster the Philadelphia region’s reputation globally and has been reported to have political ambitions in the city. Dilworth Paxson is a firm with strong ties to the city’s politics that date back to founder Richardson Dilworth, a former mayor of Philadelphia.
“I wanted a life where my civic activities also found a corporate purpose with the organization that I was part of,” Raju said, at the same time noting his deep respect for Reed Smith. “For me, I was attracted to [Dilworth Paxson's] culture of sacrifice and also the culture of togetherness and their commitment to civic activities.”
Jacovini said his firm’s focus on this region allows it to be more tied to the civic and political spheres in Philadelphia. Dilworth has offices in Philadelphia and Harrisburg, Pa.; New York City; Cherry Hill and Red Bank, N.J.; Washington, D.C.; and Wilmington, Del.
“We think there is a place for a firm of our size,” Jacovini said, adding that the firm should grow some, perhaps to about 150 or 175 lawyers.
“We’re not going to be, respectfully, Reed Smith or Dechert or some of the other firms,” Jacovini said. “I never believed in that. I compliment them for all the wonderful things they do. It’s another way of practicing. At a certain size, with a certain geographic spread, you become a legal business. We’ve always sought to really work hard to maintain it as a traditional law practice, which is different, where you really know everybody and people are not just names on a spreadsheet.”
While Jacovini said Dilworth Paxson wants to hold true to its roots, he said he is a firm believer in changing up leadership to “reinvigorate” the firm.
“It’s an interesting blend of senior leadership, which will continue, with new leadership, and, to me, that’s important,” Jacovini said.
Raising the Profile
Dilworth Paxson has had its struggles over the years, falling from 175 lawyers to 60 attorneys in 1990 after several defections of key partners. Jacovini said that was in an era when consultants and the legal press were predicting only the 500-to-1,000-lawyer firm would survive.
The remaining 60 lawyers at the time, including about 20 partners, had $18 million in bank debt to pay off and all but one of the partners decided to stick it out, Jacovini said. The partners eventually paid off the debt and have grown back up to 100 lawyers.
“We made a lot of sacrifices and I’m very proud of it,” Jacovini said. “It was a very difficult time. We had loyal clients and loyal banks.”
When the recession hit in 2008, Dilworth Paxson didn’t have to lay anyone off and, despite the obit already being written for firms of Dilworth Paxson’s size, it has been the Dewey & LeBoeufs and Wolf Blocks of the world that dissolved, Jacovini said.
“Going forward, there is more safety and security in being smaller and more nimble than being huge,” Jacovini said. “You’ve got to have a certain scale. I acknowledge that. I’d like to have a little more scale here, but it’s not so easy to do.”
He said the firm has been approached about mergers over the years, but the right opportunity never presented itself.
Dilworth Paxson hasn’t been immune from departures in more recent years, with some partners leaving for larger firms. Most recently, white-collar defense group chairman David Laigaie left to serve in that role at Eckert Seamans Cherin & Mellott.
And in 2011, the firm lost a major Philadelphia rainmaker in Wayne Streibich, who led a team of seven other consumer financial services lawyers to Blank Rome, where that group has grown substantially.
For Raju, he will initially be focused on identifying Dilworth Paxson’s brand in the community and looking to attract new talent to the firm.
Dilworth Paxson has “a great legacy, great commitment to public service, but it’s not on the top of the tongue yet when it comes to every corporate board and that’s the space that we would like to cover right away,” Raju said.
Raju said the firm has a lot of talent, energy and appetite for innovation. For Raju, incorporating innovation and business techniques has been a cornerstone of his practice for the past decade, focusing on Lean Six Sigma principles and alternative fee arrangements, for example.
“Only in our industry do we not consider a more innovative or professional approach,” Raju said of the legal profession as a whole.
He said he thinks law firms will begin to blur the lines between practicing law and being strategic advisers that tap into business as well as legal acumen. Firms can get revenue from a lot of different avenues that aren’t all strictly focused on legal practice, Raju said.
“It’s nice to have 2,000 lawyers to have that leverage, but you can do it with technology and relationships that you couldn’t do 10 years ago and we’re going to test that,” Raju said.