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Structured finance and mergers and acquisitions practices are cooling down, and medical malpractice and workers’ compensation cases are just plain cold, according to legal consultant Robert Denney’s 19th annual “What’s Hot and What’s Not in the Legal Profession” report. In addition, Denney said in his annual legal market forecast that increasing rates from large firms are creating opportunities for mid-sized firms and also causing primary firms to be replaced by their clients at a growing rate. Last year Denney rated M&A as hot, along with intellectual property. While he said this year the mergers and acquisitions practices are slowing down, bankruptcy hasn’t picked up just yet. Denney has it listed as a practice that is getting hot and predicts it could be back in full swing by the spring. To help during the downtimes of the M&A practices, some firms are creating subprime counseling practices, he said. Some of the hottest practices are in intellectual property, immigration, labor and employment, and corporate investigations, he said. Conventional wisdom might have failed some, according to the report, as intellectual property boutiques “continue to not just survive but thrive.” At a presentation yesterday at the Philadelphia office of Reed Smith before the Delaware Valley Law Firm Marketing Group, Denney said it is proposed legislation in Congress that may make intellectual property law even hotter. The legislation is looking to provide copyright protection against knockoffs of high fashion designs, he said. Pro bono work has also become more than just part of a firm’s charity efforts. Denney said law firms are looking at it as a practice area as well, as a recruiting tool. He said pro bono work has become a “major training ground for litigators” in a time when few cases make it to trial. Estate planning and elder law are also doing well thanks to the baby boomer generation. Much to his surprise, Denney said, family law is picking up as well because of determination of parentage suits over in vitro fertilization. And while Denney said the practice was heating up prior to Michael Vick’s infamous case, animal law is a “hot” niche practice, thanks to the Animal Fighting Prohibition Enforcement Act that was signed in May 2007. Complex litigation is still hot, but mediation is on the “getting hot” list, along with other forms of alternative dispute resolution. Libel law, foreclosures, art theft and fraud, insurance coverage and post-arbitration litigation are picking up, Denney said. Insurance coverage was “cool” a year ago, but global warming issues could cause a jump in the practice, he said. While medical malpractice cases might be on the decline – putting the practice onto Denney’s “cold” list – not all firms are feeling that effect. Alan Feldman of Feldman Shepherd Wohlgelernter Tanner & Weinstock said the firm’s medical malpractice work has probably never been stronger. He said changes to the law in the midst of tort reform were really meant to make it more difficult to file these cases for the attorney who only dabbled in the practice area. Although that probably did lower the total number of cases filed, Feldman said his firm now gets a larger number of referrals from a larger number of attorneys. That, of course, could change in the future, he said. “God knows, we’re trying to diversify our practice,” Feldman said. If it’s location diversification that is important, firms might want to look to the United Arab Emirates. Denney said Dubai is “white hot” with several U.S. firms opening offices in the region. China is still “hot” despite a shortage of legal talent. Spain is another hot market abroad, and Phoenix is a hot target on the domestic list for firms in the upper Midwest and the eastern part of the country. Denney called it “the sleeper market of the United States.” Ballard Spahr Andrews & Ingersoll was one of the latest firms to open an office there. Business Development Marketing budgets and staff continue to increase while the role of the chief marketing officer (CMO) is changing. Denney said some CMOs are earning a strategic function in the firm but often have to spend time managing their growing staffs. Other CMOs are expected to focus on bringing in new clients in a sales capacity. Firms have continued with print advertising and have dabbled a bit in television advertising, Denney said. The print advertising has changed in focus from institutionalized ads to those highlighting specific practice areas. It is the internal message that is sometimes the most difficult to get across, however, Denney said. He said firms are still struggling with implementing an effective client relationship management (CRM) system that can track business development activity. Denney wondered whether it wasn’t the programs, but getting the attorneys to use them. Jeanne Hammerstrom, CMO of Benesch Friedlander in Cleveland, has come up with a possible solution. She hired a marketing technology specialist to drive the CRM program along with the competitive and marketing intelligence system. This person works with recruiting and information technology staff members on project and practice management for practice groups. Other Trends Just as some may have been wrong about the survival rates of intellectual property boutiques, mid- to small-sized firms aren’t doomed either, Denney said. They are attracting clients faced with the increasing rates of larger firms, he said. Rate increases are also increasingly the cause of ire for corporate counsel and have caused the replacement of nearly two-thirds of primary firms, he said. Recruiting and retention processes are adapting to the marketplace. With the largest firms hiring more associates and law school class sizes remaining static, firms have to look to lower-tiered schools for candidates. Other firms, however, have avoided hiring new associates because of high starting salaries, Denney said. Some firms are eliminating typical lock-step partnership tracks by offering “high-performing” associates the opportunity to make partner sooner, while the track is extended for other associates, Denney said. Firms are also de-equitizing partners at an increasing rate, he said, to improve profitability and to keep or attract top producers. Partner buy-ins are down, Denney said. Only 65 percent of firms require new partners to buy into the firm, while 85 percent did two years ago, he said, citing the “Law Office Management & Administration Report.” Corporate legal departments and large firms continue to outsource commodity work, but mainly within the United States, Denney said. A form of outsourcing that is just beginning is the use of “virtual assistants.” These assistants are paralegals and administrative specialists who work offsite and online for certain legal projects, he said. Law firms are also looking to include staff on what were once attorney-comprised committees. Staff members now sit with lawyers on the technology, marketing and strategic planning committees of some firms, Denney said. What’s Not . . . In The Report Two reports came out recently that painted a healthy picture of associate happiness at the country’s largest law firms, with 75 to 80 percent of associates either “very satisfied” or “satisfied.” “I don’t believe it,” Denney said. “I have yet to see a firm in the last five years where anything approaching 75 or 80 percent of associates are satisfied.” Maritime law, which was on Denney’s mid-year report a few months ago, is still hot at some of the country’s largest firms. He said Rawle & Henderson also has the practice and it’s probably stronger and better than ever. Denney said he just couldn’t get a good enough handle on the status of real estate law to include it in the report. The health of the practice varies by firm with no geographical or size pattern.

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