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More than half of the firms in The National Law Journal‘s survey of the nation’s 250 largest law firms launched new practice groups during the past year. The start-ups came largely in response to three factors: the onslaught of federal regulation aimed at corporate compliance, laws and rules to protect national security and a market tightened by the economic slump. The creation of a practice group, however, didn’t necessarily mean that a firm was hiring attorneys with the relevant expertise. Many new groups are the result of a firm’s reorganizing attorneys into units designed to meet client demand. This cross-fertilization among old practice groups allows large firms to boost service-and business-without expanding the payroll. “With a down economy, many firms suffer from overcapacity or underutilization of their lawyers,” said legal consultant Peter Zeughauser of Newport Beach, Calif. Interdisciplinary practice groups allow firms to repackage lawyers and aim the group at an emerging client need, he said, noting that even firms that are not feeling the pinch are doing the same thing. Federal anti-terrorism legislation has companies grappling with new standards affecting customs, employees, government contracts and a host of other issues. That’s also true for the wave of legal reforms spawned by the corporate scandals of the past two years. Clients want firms that can handle these issues from every angle. In response to questions posed in this year’s NLJ 250 survey, 139 firms said they started at least one new practice group between Oct. 1, 2002, and Sept. 30, 2003. Another 62 firms said they had not, and 49 firms did not answer the question. Jay Jaffe, president of Jaffe Associates Inc., a Washington-based legal consulting firm, said firms today are much quicker to start new practice groups than they were years ago, when start-ups could take two to four years, because firms are better able to anticipate client needs and then package services accordingly, he said. Coordinating work Lawyers in the Washington office of Thelen Reid & Priest realized that something had to be done to coordinate work related to the stream of anti-terrorism legislation, said Jerome P. Akman, co-chairman of Thelen Reid’s homeland security team, launched in fall 2002. A group of 32-all lawyers save for a couple of policy advisors-represents 11 substantive practice areas at Thelen, including agriculture, business and finance, construction, insurance, real estate, international trade, and labor and employment. No Thelen lawyer is purely a homeland security practitioner, and everyone does double duty in his or her substantive area of practice, Akman said. Foley & Lardner’s corporate governance services practice, started in March 2003, was largely inspired by the marketing department, said Patrick Quick, the informal leader of the group, which does not have an established chair. Roughly 25 lawyers were culled from three major practice groups: securities law compliance, securities law litigation and corporate compliance, Quick said. “We wanted to bring together the various disciplines to attack the need,” Quick said, pointing out that the firm needed a way to offer clients an array of services related to the Sarbanes-Oxley Act and other laws aimed at preventing corporate wrongdoing. Yet it is Foley & Lardner’s sports law practice, started about six months ago, that truly fits the firm’s long-term strategy for handling downtimes. “One of our strategic approaches . . . is what I call the national niching practice,” said Ralf Boer, chairman and CEO at Foley & Lardner. Instead of competing with other full-service firms across the board, Foley decided to carve out specialty groups to carry the firm through economic troughs, when transactional work declines. “We wanted to diversify our practice and to be less dependent on big deals,” Boer said. “When the business practice picks up, all of this will be gravy.” Even the nation’s largest law firm, Baker & McKenzie, found a streamlined way to create new practice groups without adding bodies. Christine Lagarde, Baker’s chairwoman, said that client demand drives the firm to “retool, recycle and re-engineer” resources to meet the demand for answers to issues with multiple angles. She sees legal specialization and traditional practice boundaries of the past morphing into practices that offer a more “universal” understanding of the issues. The firm tapped the skills of more than 50 firm lawyers for the U.S. homeland security practice, which emerged in March. Everyone has a dual identity and belongs to another practice group in the firm, said Teresa A. Gleason, a customs lawyer who works from the firm’s Washington office and is international practice coordinator for the homeland security group. Teleconferences held once or twice a month coordinate the homeland security team at Baker, which also set up a special electronic mailing list for the group. One member tracks legislative developments and updates everyone weekly, Gleason said. A fee-based “webinar” series starting in December, offering seminars on the Web, will shop the firm’s new practice groups around, Gleason said. Meanwhile, Piper Rudnick adopted a different strategy when building out its government affairs practice group last October. “We didn’t have the level of depth and breadth in the Washington practice that could really guide companies . . . in dealing with all the branches of government,” said Thomas F. O’Neil III, chairman of the new practice group. By merging with Verner, Liipfert, Bernhard, McPherson and Hand in September 2002 and opening the new practice group a few months later, Piper acquired a legislative affairs practice, which included lawyer and former U.S. Senator George Mitchell, who instantly boosted Piper’s Washington profile. Besides presenting a unified front to clients, new cross-practice groups market the breadth of experience that a firm has to offer. “Sarbanes-Oxley and all of these prosecutions . . . were marketing opportunities for everybody,” said Steven Kimelman, co-chairman of the new corporate compliance and government enforcement department at Washington-based Arent Fox Kintner Plotkin & Kahn. The lean approach to new practice areas allows firms to hedge their bets if the current fervor in certain substantive areas of the law, particularly corporate compliance, fizzles, Jaffe said. “Everybody is waiting to see if corporate America is really serious about it,” he said.

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