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With hopes of gaining business from banking powerhouses in Charlotte, N.C., several big law firms have opened offices there in the past year. But a downturn in finance work has some of those shops rethinking their strategies. In the past year alone, five law firms on the NLJ 250, The National Law Journal‘s 2007 ranking of the nation’s 250 largest law firms, have launched practices in Charlotte, home to Bank of America Corp., Wachovia Corp., Lowe’s Cos. Inc. and several other Fortune 500 companies. In addition, most of the 18 NLJ 250 law firms that already had Charlotte locations bulked up their legal teams in recent months. Spurred in part by the growth of Charlotte-based financial institutions, law firms in 2007 considered the city as a market primed for expansion. And while these firms say they are in Charlotte for the long haul, the legal landscape in recent months has changed. Commercial mortgage-backed securities work has slowed “considerably,” for Sonnenschein Nath & Rosenthal, said Elliott Portnoy, chairman of the 644-attorney law firm. In April, it opened a Charlotte location with 16 capital markets attorneys. The group came from Atlanta-based Kilpatrick Stockton. Sonnenschein has “integrated” those attorneys into other practice areas, he said, which includes more traditional real estate work and litigation. Laying off people would be “entirely inconsistent” with the firm’s culture, Portnoy said. But earlier this year, Cadwalader, Wickersham & Taft did just that. It let go of 10 capital markets and global finance attorneys from its Charlotte office, which now has 82 attorneys. The New York-based law firm opened its North Carolina office in 1996. Another firm, Dechert, earlier this month offered reassignments to 13 of its finance and real estate associates, three of them in Charlotte. Dechert opened its Charlotte office in 2004. The newbies Others law firms are newer to the market. Chicago-based Winston & Strawn in January launched a Charlotte office with six corporate finance partners from local firm Kennedy Covington Lobdell & Hickman. Last year, Atlanta’s King & Spalding set up shop with four partners, also from Kennedy Covington, as did New York’s Dewey & LeBoeuf, with two partners from Dechert. Powell Goldstein of Atlanta opened an office with four partners from Cadwalader. In addition, Richmond, Va.-based McGuireWoods announced on March 5 that it is merging with Charlotte-based Helms Mulliss & Wicker, a 145-attorney firm with strengths in bond counsel work and litigation. The demand for structured finance services has undergone a “slowdown, if not a complete cessation,” said Mark Treanor, senior executive vice president and general counsel for Wachovia Corp. Law firms that want to maintain a strong presence in Charlotte will need to refocus on workout services, litigation and general banking matters, he said. Going ‘countercyclical’ In McGuireWoods’ situation, it plans to direct work to “countercyclical” practices such as bankruptcy and litigation, said Peter Covington, managing partner of Helms Mulliss who will become vice chairman of McGuireWoods once the merger is completed on March 31. “One side’s up and the other side’s down,” he said, adding that “full-service” firms in Charlotte will be better able to endure the slump. But the trick, said Portnoy, with Sonnenschein, is to transition attorneys who have a structured finance focus into broader practice areas. The skill set, he said, transfers smoothly, at least at his firm. Despite the difficulties created by the structured finance market, staking a claim in Charlotte likely is a smart move in the long run. The city is home to the sixth-highest number of Fortune 500 companies among the nation’s cities. Charlotte’s growth in large part stems from the creation of Charlotte-based Bank of America in 1998 through the merger of NationsBank and BankAmerica. The expansion of Wachovia, which most recently merged with A.G. Edwards, also has fueled the Charlotte economy.

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