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When the small Manhattan firm Duval & Stachenfeld handed out a slate of year-end associate bonuses in December that trumped the market-leading largesse of old-line firms like Cravath, Swaine & Moore and Sullivan & Cromwell, the reaction in much of the New York legal community was a collective “Who?” But to hear firm co-founders Patrick W. Duval and Bruce M. Stachenfeld tell it, that was just the response they were after. The pair, who met in the late ’80s as associates in the New York office of Latham & Watkins, reunited in 1997 to start their own shop. And they quickly realized that paying top dollar to associates was the surest way to become a known commodity. “If you’re trying to make a splash that you’re as good as the top firms but you don’t have the prestige yet, you have to do things like that,” Stachenfeld said. A little more than three years after its inception, Duval & Stachenfeld has developed a reputation as a significant player in the real estate field and has added practices in bankruptcy, corporate and litigation. The firm’s original cast of five attorneys has grown to 22, including six partners. And its founders have attempted to create the sort of place that big-firm lawyers often daydream about: an associate-friendly atmosphere in which every attorney feels invested in the firm’s performance. Certainly, the pair does not lack for ambition. Their objective, as Stachenfeld describes it, “is over a 10-year business plan to try to turn this into one of the premier firms in the world.” A 1983 graduate of Harvard Law School, Stachenfeld spent four years as a real estate associate at Shea & Gould before leaving to become in-house counsel at GLM Development Corp., a Washington, D.C.-based developer of shopping malls. Missing private practice, he joined Latham’s New York office in 1988. Duval had joined Latham a year earlier, after graduation from the University of Texas School of Law and a clerkship for Texas Supreme Court Chief Justice John Hill. At Latham, he worked on a wide range of corporate matters, from mergers and acquisitions and corporate finance to commercial bank loans and restructurings. The two men became friends and frequent competitors at the dartboard in Stachenfeld’s office and discovered that they shared a desire to start a business of their own. Their first attempt to do so, an off-hours venture to build a chain of family entertainment centers with go-karts, batting cages and miniature golf, never really got off the ground. “It wasn’t losing our shirts,” Stachenfeld recalled, “but some articles of clothing, a tie and a shoe or two.” Both men said that in retrospect, the way they were able to weather the failure of the business together gave them the confidence they needed to start their law firm years later. Stachenfeld left Latham in 1991 for the New York office of Mayer, Brown & Platt, and was made counsel there in 1996. Later that year, he joined the Manhattan real estate boutique Shapiro, Shapses & Block as a name partner. THRIVING NICHE PRACTICE Over the years, Stachenfeld had developed a thriving niche practice in institutional equity real estate transactions, representing the so-called “money partner” in deals involving a separate “operating partner.” But he continued to entertain the notion of starting a firm from scratch. After a year at Shapiro, Shapses, Block & Stachenfeld, he made the fateful call to Duval. By that time, Duval had made partner at Latham. But he jumped at the chance to start something of his own. “I never thought I’d be lucky enough to do something entrepreneurial in the legal community,” he said. In terms of a blueprint, both men said that their pleasant experience at Latham had convinced them that a successful firm must give its associates constant training and keep them involved in the decision-making of the firm. “We had a shared common vision which really emanated from our Latham experience,” Duval said. “It really allowed us to, in shorthand, in a very short period of time, say, ‘This is the kind of firm we wanted to build.’ “ The foundation was provided for because Stachenfeld brought with him two strong initial clients: the investment firm Angelo, Gordon & Co. and ING Realty Partners, the real estate equity investment unit of the Dutch financial services company ING Group. “Quite frankly we owe them everything,” Stachenfeld said. “They backed us.” At first, though, the new firm’s two partners and three associates struggled to keep up with the flow of work. “The beginning first year was torture,” remembered Terri L. Adler, who was one of those associates. “It was more work than even seems possible. I look back and I can’t believe it.” To make matters worse, Duval & Stachenfeld spent its first three months in a distinctly unglamorous temporary office space, sharing a receptionist and a copy center with other businesses in the same suite. Without a system of networked computers, the lawyers passed disks around to work on documents. And when the firm placed an ad for a staff person, there were so many responses that it shut down the fax machine and almost put the firm out of commission for a day. Duval used his corporate training to chip in on the loan-related work that came in, and also did the job of setting up the office, including finding permanent space in the Chrysler Building. (The firm is now located in one floor at 300 East 42nd Street.) The entire exercise brought home to Duval just how much is taken care of for big-firm attorneys. “One of the things about a big firm is stuff just happens and you take it for granted,” he said. Since that whirlwind beginning, Duval & Stachenfeld has grown steadily with the addition of big-firm refugees, including alumni of Paul, Weiss, Rifkind, Wharton & Garrison; Debevoise & Plimpton; Fried, Frank, Harris, Shriver & Jacobson; and Stroock & Stroock & Lavan. Peter B. Zlotnick, formerly a partner at the litigation boutique Olshan Grundman Frome Rosenzweig & Wolosky, came on last summer to start a new litigation department. Brian Trust left a counsel position at Simpson Thacher & Bartlett in June 1999 to lead Duval & Stachenfeld’s reorganization practice, which has become its second largest after real estate. (Duval, who is also the firm’s managing partner, heads the corporate practice, while Stachenfeld leads the real estate department.) Among the firm’s clients are a number of large financial institutions, including Bank of America, Canadian Imperial Bank of Commerce, Credit Lyonnais, First Union National Bank, Fleet Boston and Mack-Cali Realty Corp. FIRM CULTURE From the standpoint of culture, the Latham imprint is readily apparent. The firm’s associates committee is partially responsible for the associate review process, and partners meet with junior associates to discuss strategies for making business. “The associates participate in the machinations of what goes on behind the scenes much more than you would at a larger firm,” Adler said. Duval & Stachenfeld also provides a concierge service for associates and stages an annual weekend outing to Florida for lawyers and their significant others. At times, the democratic model can run toward the ridiculous. The 22-person firm has numerous committees, including ones responsible for recruiting, management, business development and associates. “I’ve joked that we need a committee on committees, we have so many committees,” Duval said. But, he added, “one of our core philosophies is making people feel a part of something.” To that end, Duval and Stachenfeld have said that their intention is to make partnership a realistic and accessible goal on a seven-to-nine-year track. Time will tell, but the statement alone addresses one of the most-heard complaints among large-firm associates, that the brass ring of partnership is all but unattainable. “Partnership isn’t yours to win, it’s yours to lose,” Stachenfeld said. The firm’s approach to compensation also makes associates feel fairly special. Total compensation for each class last year was pointedly set $2,500 or $3,000 above what Cravath and Sullivan & Cromwell paid, meaning that fourth-year associates made $243,000 and seventh-years $323,000. ALWAYS AVAILABLE “We’re not a brand name like Wachtell Lipton or Cravath, yet we have the same institutional client base,” Stachenfeld explained when the firm issued bonuses in December. “So in order to deliver the same service, we have to get the star associates. The fact that we’re an inch or so above Cravath is just to punctuate that point.” Associates have worked fairly hard for the money, though. With more bodies to call on, the hours are not as death-defying as during the firm’s first year or so in business. But Duval and Stachenfeld have made a priority of trying to decrease the workload. Last year, associates at the firm averaged about 2,200 hours, Adler said. And the firm has developed a reputation for availability, led by Stachenfeld, who arrives at work every day at 5 a.m. Said Eric Bergwall, a senior vice president at ING Realty Partners who has worked with Duval & Stachenfeld on dozens of deals, “They are to a man and a woman the most responsive lawyers I’ve seen. They don’t seem to sleep. They’re available at any time of day. As a firm, Bruce has probably bred that.” The firm will reach a milestone in September, when its first class of six first-year associates will arrive, and the founders said they expect growth of at least 20 percent per year. But they are adamant that they will get bigger on their own. “We don’t want to merge. We don’t want to acquire people,” Stachenfeld said. “We want to hire people and keep them here.”

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