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First, they started shortening their names. Now major law firms are talking about streamlining their practice areas. Gone are the days of trying to be all things to all clients. Here are the days of having a few signature practice areas with corollary supporting specialties. As the practice of law grows ever more expensive and firms work to attract as clients the leading companies in the rapidly changing economy, the one-stop-shopping mantra — invoked by managing partners when readying for battle with Arthur Andersen and the rest of the Big Five — has been replaced. “Historically, like a lot of firms when asked, ‘Who are you?’ we would say we are a large, full-service law firm,” says Francis Burch Jr., co-chairman of Piper Marbury Rudnick & Wolfe. “About three or four years ago, the light started to go on that that didn’t mean a whole lot — and was going to mean less as the process of globalization and consolidation and convergence continues.” Today, Piper touts core practices in technology, real estate, and national litigation. “We have lots of discrete specialties,” Burch says. “But in every case, they must further the firm’s ambitions and support one of those three broad concentrations.” Among the large firms in the fierce competition for high-end legal work, there is little room and even less tolerance for practice areas with mediocre profit margins. This year’s jump in associate salaries has only put the situation into starker relief. The salary increase, Burch says, “makes you think and behave more strategically. You invest in the development of practices where [billing] rates are not going to be the principal issue, but where clients are looking for expertise and where you have a very strong story to tell.” Tower Snow Jr., chairman of San Francisco’s Brobeck, Phleger & Harrison, has helped spur his firm from being a regional leader in traditional corporate work and litigation to a high-flyer in the technology community. “That notion of one-stop shopping has been so totally rejected in every other market on earth,” he says. “The same forces that affect our clients are going to affect us. The key is to have very specialized, very differentiated firms.” The D.C. firms in the top tier of size and profitability already tend toward specialization in certain kinds of corporate transactions or litigation. Howrey Simon Arnold & White, known for its antitrust work, has successfully diversified from that specialty to earn its current status as a litigation, antitrust, and intellectual property powerhouse. Along the way, executive committee member Ralph Savarese says, the firm decided that an energy practice would complement the other three. But, he says, “what we discovered after three or four years is that in order to be a first-tier provider in that area, you really need to have capabilities in other practices, such as project finance.” Rather than have a less than premiere practice or dilute their areas of concentration, Savarese says, firm leaders and the energy specialists decided that the members of the energy practice group should move on. Managing attorneys told the energy lawyers of the firm’s plans, and then let them stay on until they found another place to land. At D.C.’s Shaw Pittman, managing partner Paul Mickey Jr. says that three years ago his firm set out to build a reputation as the go-to firm for complex technology transactions. At the time, it seemed like an odd choice for a D.C.-based firm, especially since technology transactions were just one part of what a single-practice group did at the time. Not anymore. With the explosion in information technology work in northern Virginia, the decision seems prescient. TO THE GRAVEYARD? Not everyone is on board with the idea of specialization. Hogan & Hartson chairman Bob Glen Odle notes that for both the intellectual satisfaction of firm lawyers and for financial reasons, a broad array of practice areas is essential. “My view is that any law firm that says ‘I am going to be this and nothing else’ is going to the graveyard,” Odle says. Likewise, Latham & Watkins, one of the most profitable firms in the United States, is dismissive of the notion that to succeed, a firm must be known for a few core practices. Rick Bernthal, managing partner of Latham’s 144-attorney D.C. office, cites a survey on law firm prestige in the October issue of The American Lawyer magazine. Latham is not among the top 10 most prestigious firms when listed by practice area, but it is among the top 10 most prestigious firms overall. “While we, too, have made a substantial investment in the technology market, we think the strength of this firm lies in the diversity of our practices, not an overcommitment to any one practice or sector,” Bernthal says. “The question remains whether law firms that have invested very heavily in this [technology-oriented] market will be able to sustain their investment through more difficult economic times.” Despite the success some firms have had in repositioning themselves and marketing their talents accordingly, many home-grown firms in Washington face a conundrum. Regulatory work — the mother’s milk of several of D.C.’s top firms — is difficult to leverage. And government contracts, another D.C. staple, is an area where the work is highly price-sensitive and not as profitable as firms would like, similar to insurance defense and commercial banking matters. As a result, home-grown firms are retooling their images to highlight capability in hipper practices with greater profit margins. McKenna & Cuneo, for example, is using its government contracts position to cater to the numerous, locally based technology companies that design their products or services for federal procurement. The benefit of attracting more work outside of price-sensitive practices, even if they’re not the bedrock of the firm, is that corporate clients won’t haggle about the price. Despite current worries about clients putting the kibosh on law firms’ increasing billing rates, if the work is important to the company — and firms are building their key practices based on what they think fits that description — the client will pay the rates and maybe even throw in a bonus for success or speed. “Does a tech firm really care if we charge $250 an hour, $500 an hour, $2,000 an hour if we can get them public and generate millions? They don’t care. If we can make them successful, they’ll pay anything,” says the managing partner of one 825-lawyer firm. Piper Marbury’s Burch concurs. “For the best work for the best clients, I’m not in discussions about rates,” he says. On the downside, elevating a few practices above the rest may also generate some internal discomfort. Some firms have institutionalized their priorities in a way that makes them unmistakable. Howrey Simon and Philadelphia’s Morgan, Lewis & Bockius pay associates in hot practice areas better than those in other departments, while other firms are paying lawyers in certain markets higher than lawyers in other markets to stay competitive in the most lucrative niches. The danger is that firms risk losing talented lawyers to places where their practice area is in the spotlight. “You have to make people realize that although you’re emphasizing other things, they’re still valuable and you’re not trying to discourage them from achieving growth,” says the managing partner of one major D.C.-based firm. But in some cases, attrition in practices that don’t support the key growth areas isn’t entirely undesirable. Take, for example, the recent departure for Venable of two Shaw Pittman litigation partners — Philip Harvey and Campbell Killefer. They specialize in the kind of commercial litigation that might not correspond perfectly to the technology transactions Shaw Pittman does. But Venable counts complex litigation and corporate technology work as two of its star attractions. It’s not that Shaw Pittman is phasing out litigation. To the contrary, according to managing partner Mickey, the firm’s litigation department is growing. But the sort of litigation the firm tends to do has shifted. These days the disputes tend to be more intellectual property and trade secret-oriented. CORNERING A MARKET Streamlining may not diminish the rush toward behemoth law firms with branches across the globe, but it will change the way these growing firms look in the coming years. “The economic markets in which large firms operate are becoming more and more markets of winners and losers,” Howrey Simon’s Savarese says. For big and growing firms, managers are banking on an old rule of business: Find a corner of the market nobody else has and own it. According to the new model, large firms won’t always find themselves competing against every other large firm, as they have throughout the past two decades. Rather, Burch explains, the market “will have us competing with some kinds of firms for some things and very different firms for other” types of work. Thurston Moore, managing partner of Richmond, Va.-based Hunton & Williams, says, “There are a lot of people that are looking to differentiate themselves in the marketplace and starting to understand where the greater economic contributions are coming from in their firms and starting to ramp those up.” The point is “not to ignore the other areas,” he adds, “but to try not to be as ecumenical or full-service in their growth” as they may have been. Brobeck’s Snow sees it as an inevitable change as the largest firms grow larger still. “The laws of economics apply to every business on earth, and the profession of law has largely avoided or been immune to them,” he says. “Now the laws of economics are coming to law firms with a vengeance because law firms are now big business.”

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