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NEW YORK � Chadbourne & Parke is planning to take “aggressive measures,” including asking some partners to leave, in response to disappointing financial results for the past year. In a memo circulated firmwide Tuesday, Managing Partner Charles O’Neill said both revenue and profit had decreased in 2005 from the year before. “This is not acceptable to us,” he said in the memo, “especially in a strong economy.” According to the most recent AmLaw 100 survey by The American Lawyer magazine, a Recorder affiliate, Chadbourne had gross revenues of $241 million and profits per partner of $1 million in 2004. O’Neill said in an interview Tuesday that revenue had fallen around 5 percent in 2005, with profitability falling by a slightly smaller percentage. In his memo, O’Neill sketched out a number of reforms designed to boost “individual accountability” at the 440-lawyer New York firm. The management committee will take a more active role in firm strategy, he wrote, and practice groups “will be more tightly organized, and more forcefully led.” The partnership also would be pared to better fit the firm’s “present strengths and targeted areas of growth.” The memo did not state how many partners or what practices would be affected. The firm’s project finance, litigation and insurance practices are generally regarded as its strongest. “These measures, unpleasant though some may be, are necessary for the health and well-being of the firm,” O’Neill wrote. Such restructurings have not been uncommon at large firms, most of which have adopted highly centralized management structures in recent years. But Chadbourne, regarded as a mid-sized firm in New York, had resisted the trend, retaining a relatively collegial and democratic partnership structure. In Tuesday’s interview, O’Neill said the firm’s structure, which gives practice groups and individual partners great autonomy in making client development and practice management decisions, needed to change. “We’re going to have to be more businesslike in the way we approach things,” he said, citing an increasingly competitive environment. The firm’s more active management, he said, would develop practice initiatives rather than merely support them. He also said management would play a larger role in client development and relationships. More attention will be paid to utilization and realization metrics in evaluating partners’ performances. Despite the changes, O’Neill pledged in his memo that the firm’s collegial culture would not change. “We may be leaner, but we will not be meaner,” he wrote. STAYING COMPETITIVE Among the specific reasons for last year’s results, he said, were some write-offs on matters that failed to pan out. He noted the firm had withdrawn from representing telecommunications entrepreneur Walter Anderson, accused of one of the largest tax frauds in U.S. history, because Anderson had not paid his bills. He also said some corporate practice areas had proven less robust than expected. Though last year represented a particularly sharp drop in financial performance, the firm’s profits over the past few years have generally been flat. Last year’s $1 million in profits per partner barely passed the firm’s 2000 figure of $940,000. O’Neill said the unspectacular performance owed much to the firm’s investment in foreign offices. Chadbourne has been building a network of offices in Eastern Europe and Central Asia, having last year acquired a number of practices from then-crumbling Coudert Brothers. But O’Neill stressed in his memo that the firm needed to respond to competition, especially for prized lateral partners. “While reputation and expertise are most important, economic results matter, too, because this is a very competitive business,” he wrote. “We need sustained profitability to attract the best talent.” Anthony Lin is a reporter with the New York Law Journal, a Recorder affiliate.

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