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Keen: Outsourcing his in-housers The story of big-firm lawyers who go in-house is old news. But the other way around? That’s what happened at Federated Investors, Inc., in September. Stephen Keen, GC at the Pittsburgh-based mutual fund, told his in-housers that most would become attorneys at Reed Smith, also headquartered in Steel City. Three will become nonequity partners, five will come on as of counsel, and three will become associates, forming a new investment management practice group at the firm. Keen will hold down the fort at Federated along with two other remaining attorneys. This isn’t the first time a law department has decided to go over to the dark side. Last year the IP department at Ingersoll-Rand Company Limited became part of Milwaukee’s Michael Best & Friedrich. Still, such an arrangment remains fairly unusual. But Reed Smith and Federated say that the benefits of their deal are, well, mutual. Reed Smith wanted to expand its expertise to cover mutual funds, a steady and lucrative business for current and potential clients in the financial services sector. The firm now gains the experience of Federated’s lawyers, who specialize in regulatory work, the bricks and mortar of the practice. For Federated, the arrangement is appealing, in part because Reed Smith will de-liver a spectrum of legal advice at a fixed fee. Peter Germain, managing director of Federated’s mutual fund services division, declines to explain the specifics of the fee arrangement, but says that the costs will be about the same as what the company previously spent in-house. Decent Hours: Still An Option Under the deal, “initially nothing really changes,” says Germain. The transferred attorneys will stay in Federated’s downtown Pittsburgh offices, and will continue to work on the company’s matters on a daily basis. “But over time, the benefits [will] start to come out,” says Germain. The former Federated lawyers, for example, will have the option of taking on work for other clients. However, Federated attorneys can choose to preserve that gem of in-house life: decent hours. If they elect to work on a “Federated track,” they will only handle matters for the company, and won’t have to meet Reed Smith’s billable-hour requirements-and will be paid less accordingly. Germain says the in-house lawyers were at first surprised to find out about the move. But now, he says, “people are looking at the opportunities presented here.” One opportunity is to help Reed Smith build its new practice group. As the firm courts new clients, however, it may face some difficulty in persuading them to hire the former lawyers of a competitor. Echoing the opinions of other mutual fund specialists, a partner at an Am Law 100 firm voices skepticism about the new competition. “People might feel a little funny about hiring Federated lawyers,” this attorney suggests. But Frederick Leech, the Reed Smith partner who will head the new practice group, minimizes the potential challenge. “We think that’ll be manageable,” he says.

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