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The champagne corks will soon pop as 2003 segues into 2004. It’s a time for both reflection and prediction. So Legal Times asked a cross-section of D.C.-area small-firm and solo practitioners to assess the past year and to look ahead to the next in an attempt to identify any significant business trends. Responses came from lawyers ranging from those in sole proprietorships to those in 12-lawyer shops and from those doing legal work across the spectrum � litigation, election law, energy law, family law, employment law, intellectual property, elder law, and estate planning. Initial signs are that, generally, business is good. By practicing the economies of scale that small-firm life allows, most firms are keeping up with the competition if not outdistancing it. Still, small firms are not immune to a host of the concerns that plague their larger counterparts and are susceptible as well to some woes that are uniquely their own. As director of the D.C. Bar’s Law Practice Assistance Program, Reid Trautz gets a panoramic view of the small-firm and solo landscape. One thing he says he was struck by this year is a change in the reason why lawyers are going solo or forming or joining small firms. Says Trautz: “Several years ago, we saw more lawyers going out on their own because the big firms let them go. Now, more lawyers are saying, ‘I want to slow down. I want more control over my life.’ “ This desire to break away, Trautz says, is a backlash to the not-so-distant rounds of layoffs at the big firms, where fewer people were left to share the workload. Lawyers are finding that one way to take back their destinies and make their lives more manageable, he says, is to become their own bosses. These lawyers now hanging their own shingles out for the first time are launching their practices at a juncture, according to Trautz, that still presents pitfalls. For one thing, Trautz says, a lot of corporations are still minding their budgets and not farming out as much work to outside firms as they once did. And he believes that the income at smaller firms has not yet fully stabilized and started growing as it has at the larger firms this past year. “People at small firms are still telling me that they’re not seeing the growth, not seeing the legal business,” says Trautz. Yet most of the practitioners questioned had no lasting complaints about the economic health of their businesses in 2003. “It’s been a very good year,” says Barry Coburn of D.C.’s nine-lawyer Coburn & Schertler, a litigation firm that handles about an equal number of civil and criminal cases, with a slight emphasis on the criminal. “We’ve had a wide variety of litigation. The firm is healthy. We experienced significant growth in 2003 over 2002.” Coburn says he has seen a rise in work from securities enforcement actions and other forms of white collar criminal actions. He expects this trend to continue into next year. Patent attorney David Posz of Reston, Va.’s six-lawyer Posz & Bethards says, “Big-name firms are big for a reason, but there’s a niche for smaller firms that can provide quality services at competitive costs.” Posz has seen a lot of large corporations, in an attempt to maintain quality and corral costs, turn to smaller shops, which are better able to rein in overhead. “What I keep hearing from clients,” says Kirk Howard Betts of D.C.’s Betts & Holt, a four-lawyer energy firm, “is that they want their firm big enough to do their work, but small enough to pay attention to them.” Joseph Sandler of D.C.’s three-lawyer Sandler, Reiff & Young, a firm that specializes in campaign finance and election law matters, says, “My sense is that small firms in 2003 have been able to hold their own.” Sandler, who served as staff counsel of the Democratic National Committee from 1986 to 1989, says that, for his firm, 2003 was “unusual” and “extraordinary,” considering it was not an election year. How much did the uncertain fate of the Bipartisan Campaign Reform Act of 2002 affect his business this year? “Everyone has been living with it for the past year,” he says. Sandler sees his business thriving in the new year, which will witness the first federal election under the new BCRA regime. Another piece of legislation promulgated in 2002 also had a measurable effect on how law is practiced at many firms. The Sarbanes-Oxley Act of 2002 and attention to corporate governance “is beginning to generate significant activity,” says employment lawyer Jeffrey Berger, the sole proprietor of D.C.’s Berger Law Firm. “Down the road, Sarbanes-Oxley will continue to affect many kinds of practices, including employment law.” For instance, Berger says that he is now including a section on Sarbanes-Oxley in personnel manuals that he prepares for clients. Employers must be made aware, he says, that Sarbanes-Oxley is “one more color in the whistleblower’s palette.” Tax laws, too, have the potential to affect the marketplace. According to William Fralin of the two-lawyer Estate Planning & Elder Law Firm in Arlington, Va., “Lawyers and accountants don’t care if they change the tax law one way or the other. Just change it. It’s always great for business.” As an example, Fralin points to the limit on tax-free inheritance, which is scheduled to be raised in 2004 from $1 million to $1.5 million for each spouse. “That’s potentially three million bucks we can pay to each generation,” says Fralin, explaining that this change will probably mean that the estate plans of a number of his clients will have to be revisited. “People who plan are going to have to find out what the new rules are and make the most of them,” says Fralin. ASSESSING ADR Coburn & Schertler’s Coburn has not found that alternative dispute resolution has made a profound difference in his work life: “They talk about mediation and arbitration, but I don’t think I see any diminution in the number of trials.” D.C. solo Nicholas Cobbs, on the other hand, has another view of ADR. “I see in my own practice cases that five or 10 years ago very likely would’ve gone straight to trial, where now everybody takes another look at things,” says Cobbs. “There is a trend in the direction of more arbitration and mediation,” adds Cobbs. “ADR is definitely coming into its own. That’s been in the works for some time.” Like Cobbs, Linda Ravdin of 12-lawyer Pasternak & Fidis in Bethesda, Md., places ADR under the rubric of “continuing trends.” “More alternative dispute resolution is happening,” she says. “The frequency seems to be increasing.” Yet as Cobbs observes, perhaps reconciling his and Ravdin’s perception of ADR with Coburn’s, there are more case filings than ever before, and most of the bigger cases are going to trial. And, according to Cobbs, just going to trial is changing, as more courts are requiring electronic filing. “This can be a burden, especially on the small practitioner. You really need broadband.” Aside from the logistical concerns, Cobbs worries that the technology vanguard is now outracing any considerations regarding privacy safeguards. Information that at one time a person could obtain only by making a trip to the courthouse is now being stored in databases vulnerable to the unscrupulous intent of professional snoops and telemarketers. Yet, as Cobbs says, “The flip side . . . is that you can get pleadings from virtually any court in the country.” Cobbs isn’t the only area lawyer thinking about technology. Berger of the Berger Law Firm says that e-mail has enabled him to pick up clients in France, England, Canada, and Romania. And Bernard DiMuro of Alexandria, Va.’s six-lawyer DiMuro, Ginsberg & Mook believes that technological sophistication is not the province of only the large firm. His firm is increasingly moving toward total electronic document storage, for example, and he equipped his home office this year with both cable and wireless modems for telecommuting. HEALTH COSTS If DiMuro is fully accepting of a larger role for technology in his firm, he is considerably less sanguine about the health care situation.”Health insurance is dramatically hurting the small firm,” he declares. This sentiment is shared by Ravdin. “Health insurance premiums are going sky-high, and it’s making life really difficult for everybody,” she says. “The cost is just astounding, and the rate of interest is just astounding. We got a big increase last year. We got a big increase this year. And I don’t see any signs that that trend is going to change at all. “It puts a lot of pressure on a firm in terms of being able to provide a good packet of benefits to its employees, and you can’t really attract a good employee if you don’t have good health insurance,” concludes Ravdin. Yet some practitioners are having an easier time than others attracting employees. The Estate Planning & Elder Law Firm’s Fralin has found that 2003 provided a buyer’s market for contract lawyers and associates. “You can get lawyers on the cheap. I’ll tell you, I can get lawyers cheaper than I can get paralegals,” Fralin says. “You’ve got six or seven law schools here pumping them out, and there’s just simply a glut here. While there’s a big market, including the federal government, there’s still more than the market could absorb. That’s my perception.” Gazing into his crystal ball, Berger of the Berger Law Firm can do Fralin one better. Taking account of all the baby-boomer lawyers who are comfortably ensconced in their own practices and reluctant to go gently into the retirement night, Berger foresees an even larger surfeit of lawyers down the road: “As more people in practice today don’t retire as they reach retirement age and continue to provide very experienced services for lower rates, it’s going to apply a countervailing pressure on all the people coming out of law school looking for jobs.”

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