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With New Jersey’s bona fide office rule no longer a ball and chain, multistate firms are making decisions about whether to stay the course with their Garden State offices or to pull out and cut overhead. Last month, Skadden, Arps, Slate, Meagher & Flom announced that it will shut its Newark satellite after a decade of practice here. This week, Rochester-based Harris Beach is following suit, closing down the office that began in Hackensack in 1997 and later moved to Newark. “The development of our Newark office hasn’t happened as fast as I had thought,” says the office’s managing partner, Allen Molnar, who is leaving the firm after five years. On the other hand, Harris Beach’s loss is a gain for the Newark office of another regional powerhouse, Klett Rooney Lieber & Schorling, to which Molnar brings his litigation and transactional client list of primarily financial institutions, such as PNC Bank, Bank of America, Wachovia Securities and Washington Mutual. “We are delighted that Allen Molnar will be joining us,” says John Goldsmith, who manages the Pittsburgh-based firm’s Newark office. “He’s an excellent lawyer whose practice and experience will fit nicely with our offices.” Molnar calls the move “a bittersweet set of circumstances because I’ve been surrounded by goodwill on all sides.” Harris Beach managing partner Gunther Buerman says the decision to close the office is the result of several factors. The firm is losing its two partners in Newark, the lease ends this month and the state has dropped its bona fide office rule, which makes it easier for Harris Beach to service its New Jersey clients, corporate and litigation, from New York. Buerman says of Molnar, “He’s a terrific asset. We love him and would love to have him stay. We even offered him a chance to go to New York. … But the planets seem aligned so that this will work well for both of us.” Harris Beach’s Newark office had four permanent residents, with others coming in on occasion from New York and the other eight offices, most of which are in upstate New York. However, in addition to Molnar’s defection, the only other partner in Newark, real estate lawyer Benjamin Lambert Jr., is leaving to join the New Jersey branch of New York’s Ohrenstein & Brown. That office, now in the same building as Harris Beach — 2 Gateway Center — is moving to Rutherford. Lambert joined Harris Beach two years ago from Woodbridge’s Greenbaum, Rowe, Smith, Ravin, Davis & Himmel. Harris Beach’s strategy was to cross-sell New Jersey clients into using practice groups in New York City. But the firm has suffered its share of defections. In 2002, an eight-lawyer health care group, including two partners who split their time in Newark, walked out of the New York branch for the Washington, D.C., firm of Arent Fox Kintner Plotkin & Kahn. Harris Beach, according to the annual National Law Journal survey of the nation’s 250 largest firms, had 171 lawyers near the end of 2003, making it the 228th largest firm in size nationwide. That’s the smallest the firm has been in seven years, and it is the lowest ranking as well. The firm is down about 20 percent from 2001, according to the survey by the newspaper, an affiliate of the Law Journal. The firm lists 41 lawyers in its midtown Manhattan office, down from 50 in 2001. In the summer of 2000, the firm held merger talks with Hackensack’s 23-lawyer Winne, Banta, Hetherington & Basralian and had hoped for a deal before year’s end. But discussions broke off. KLETT ROONEY GROWING Klett Rooney’s New Jersey office began with four midlevel partners from Carpenter, Bennett & Morrissey in Newark, all with separate practices. Goldsmith, a corporate and tax lawyer, was joined by employment lawyer Rosemary Bruno, environmental lawyer Louis DeStefano and litigator Robert Stickles, who concentrates in commercial law and business torts. This past November, the branch picked up a two-lawyer international law boutique, Peri & Stewart of Maplewood. Steven Peri and Michael Stewart represent the U.S. subsidiaries and interests of European companies, in particular, Scandinavian companies. Goldsmith says their corporate, technology and intellectual property practices, along with his corporate work, will mesh well with Molnar’s book of business. Goldsmith says the Klett Rooney Newark office has nine lawyers with Molnar, with another associate about to join. The firm has close to 140 attorneys in six offices in Pennsylvania, New Jersey, Delaware and Washington, D.C. As for Harris Beach, Molnar and Buerman say the firm may well be back with a presence in the state. “My estimation is that this will not impede Harris Beach from continuing to seek access to the New Jersey market,” says Molnar. Buerman says Molnar is right. “We’re still looking. We did a small [acquisition] in Syracuse and two small [acquisitions] in Buffalo recently. We tried in New Jersey, and it just didn’t work out, but we are still interested in the market.” FUELING SPECULATION The closing of its Newark operation by Skadden, Arps, the nation’s highest-grossing firm, triggered some speculation about whether the end of the bona fide office rule might encourage further departures of branch offices of out-of-state firms. No doubt Harris Beach’s move could further such speculation. But Stewart Michaels, chairman of Topaz Attorney Search in Livingston, cautions midsized and large New Jersey firms “not to take too much solace” from such speculation. Says Michaels, whose firm put the Molnar move together and helps stock the multistate firms with in-state talent: “One major beneficiary of the bona fide office rule has been the larger New Jersey firms who serve as local counsel for big clients who use national firms for work here.” His point? Now that those national firms don’t need local counsel, some work will dry up.

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