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From big-dollar e-commerce deals to skyrocketing first-year salaries, boutiques and mega-firms have been capturing headlines stressing bigger, better, faster and much, much more. But what of the firms that reside in the great divide — the mid-sized shops, which typically employ between 50 to 100 lawyers. How have these firms met the marketing, rainmaking and recruiting challenges posed by their noisy neighbors? Head on, according to many mid-sized firm managing partners. “Size can be as much an advantage as a disadvantage,” says Jim Jordan, managing partner of Dallas-based Munsch Hardt Kopf & Harr. Jordan says his firm has been developing their game plan over the past two years, and honed it at a recent shareholder retreat. Jordan says the reason for the brainstorming and number-crunching is clear: “The cost of business has gone up. You can’t pay the freight if you’re not making money.” Even the older kids on the block echo the same fighting sentiment. “We have to constantly become more effective and constantly learn,” says David L. Doggett, managing partner of San Antonio’s Matthews and Branscomb, which turns 126 this year. McGinnis, Lochridge & Kilgore has been a fixture of the Austin, Texas, legal scene for more than 70 years, but managing partner Geoff Davis, who offices at the firm’s Houston outpost, says the firm cannot rely on its venerable status. “We are not just sitting here fat, dumb and happy thinking we have the world by the tail,” Davis says. “It’s a competitive world, and [boutiques and big firms] are substantial competition. We are going to compete with them — in our own way.” Managing partners agree the way to mid-sized success begins with tailoring the firm’s legal services to the audience most likely to need them. “What’s happened is that in the last five years … things have changed so much in the legal industry that how you manage your firm has taken on a bigger importance,” says Jordan. “It’s not how big you are, it’s what product mix you offer.” And which clients you market to, adds Bob Chambers, executive director of Houston-based Chamberlain, Hrdlicka, White, Williams & Martin. “There is a very upscale market of Fortune 1,000 companies and there is a mid-market of companies. The pricing is different; you have to understand who you are and your firm economics have to take that into account,” says Chambers. “You can be successful in both markets, but it’s a bigger challenge for a medium-sized firm to play to all segments.” Richard Geiger, managing partner of Dallas’ Thompson, Coe, Cousins & Irons, says playing to the right market has resulted in an inordinate amount of work. “Our clientele is middle-market, and we pay a lot of attention to their needs and it pays off,” says Geiger. “If you do good work, it will result in additional work from happy clients, and that’s what we’re doing � making our clients happy.” L. Parker McNeill, who manages one of Austin’s largest firms, Clark, Thomas & Winters, attributes the firm’s success in part to maintaining a tight geographic focus, even though he says a large percent of the firm business comes from companies based outside of Austin. This tailored focus allows the firm to enjoy a status that blurs the distinction between big firm and mid-sized firm. “We don’t see ourselves as a middle-sized firm in Austin,” McNeill says. For Munsch Hardt, finding a niche has meant streamlining the number of services it offers to load up on high-yield areas such as technology, and dump areas it perceived as dragging down profitability, like insurance defense. High-end work, theorizes Jordan, yields high profit margins, which allows a firm to recruit the best and the brightest — meaning a firm can play the high-stakes game of associate salaries. Similarly, Dallas’ Vial, Hamilton, Koch & Knox has reduced the amount of insurance defense work it handles. Managing partner Richard D. Pullman says that at one point, the work accounted for up to 50 percent of the business, but that it now hovers around 20 percent. The change, he says, has been a “slow withdrawal.” Pullman says his firm knows more than most how to maintain a competitive advantage. At more than 100 lawyers in 1997, the firm downsized significantly in 1998 and endured rumors predicting the end of the firm. Now, Pullman says the lawyer count hovers in the 60s, and he says 1998 was one of the firm’s most fiscally successful years to date. “The key is that you have to remember who you are,” says Pullman, who credits the firm’s difficulties with trying to keep up with the “Vinson & Elkins’ and the Akin Gumps” without the necessary revenue. The lesson the firm learned in 1998, says Pullman, is that keeping up with the Joneses didn’t make clients magically appear. “In realizing who we are now, we have become more price competitive — basically, we’re cheaper,” Pullman admits. “That doesn’t mean we can’t represent quality clients, because we do, and they come to us because we do just as good or better work [than the big firms] and we can pay better attention to them. When you’re smaller, you can take better care of your clients.” THE GIFT OF LIFE Davis acknowledges that it’s a challenge to compete with other firms for lawyer talent, but he says mid-sized firms can often offer benefits that make up the difference between salaries that are fair and those that are far-flung. “The money has to be right, but … money is just one part of the equation,” says Chambers. “It’s forcing every single one of us to examine what builds a healthy relationship.” Doggett agrees. The San Antonio legal scene includes big firms like Bracewell & Patterson and Haynes and Boone, but Doggett says Matthews and Branscomb is able to woo top grads by offering something more: a life. “If you come to work for us, you’ll have a life and ownership in the firm. Everyone we hire, we believe will become an owner; we groom people from day one [to make] partner,” Doggett says. Some firms, however, push their firm’s perks, but still come up with the cash to match the big firms. Munsch Hardt recently came close to matching the big-firm first-year salaries, says Jordan; the firm now pays first-years $105,000 annually. And Geiger says Thompson, Coe significantly increased lawyer salaries this May. “You can’t have too large a disparity between what we pay and what the larger firms pay,” Geiger says. But Vial, Hamilton has opted out of the recruitment game altogether, discontinuing their summer program. Instead, says Pullman, the firm is conducting one-on-one recruiting. “For one, it frees up a whole bunch of money, and we don’t have to worry in the summer about finding work for those in the program. Now we can make that work available to the first- and second-year associates and they can build relationships with the partners,” Pullman says. The firm also emphasizes the benefits of working for a smaller firm. “It’s what style of life you want — we don’t have the billing pressures of a larger firm, and the associates get better training,” he says, adding that the reduced billing pressures allow the firm to write off associate time, meaning clients are not billed for training time. When Matthews and Branscomb recruits, Doggett says he also stresses reduced billing pressure as a benefit over the big firms. And the difference between his firm and many boutiques, he says, is in the firm’s economic stability. Similarly, Jordan likens the boutique’s focus to putting all the eggs into a single basket. Diversity, he says, allows Munsch Hardt to profit when the economy is good and bad. The allure of joining a boutique, says Doggett, can evaporate with the changing winds of the economy — as evidenced by the recent downturns in the white-hot Internet IPO biz. “I’d hate to be a young lawyer looking at the stock ticker every day and wondering where the next paycheck is coming from,” Doggett says. Ultimately, managing partners agree that the qualities that make their firms attractive to law students also attract clients. And clients keep the doors open. “There seems to be a lot of opportunity, but you have to work for it,” posits Chambers. “It is a challenge to make sure, day by day, that you’re staying competitive in the marketplace.”

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