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For the legal profession, 2001 was the year that risk lost its mojo. The swashbuckling, venture-backed, 20-something entrepreneur-savant is out. Way out. The Nasdaq tumble slammed shut the door on his exit strategy, and entombed billions of VC dollars in “pre-IPO” shares. The Blodgets and the Meekers of Wall Street — the analysts who transformed dot-com water into publicly traded wine — have been sued into silence. The nation’s sense of security crumbled on Sept. 11. Enron Corp.’s magic accounting mirrors cracked, and its shareholder equity vanished. Risk taking does not seem sexy these days. “For most of the last 10 years, law firms were more comfortable pretending they were entrepreneurs,” says Stuart Pape, managing partner at Washington, D.C.-based Patton Boggs. “Now, you’ll see the lawyers’ professional side taking pre-eminence over the entrepreneurial side.” Over the past half-decade, many large law firms strained to transform themselves into dynamic, daring players in the new economy. That effort now leaves some firms saddled with empty offices, worthless equity investments, bankrupt clients, and too many highly compensated, largely idle employees. Silicon Valley’s Brobeck, Phleger & Harrison and Cooley Godward, among others, placed huge bets on the tech sector, moving aggressively in recent years to open new offices and hire hosts of associates. Both firms have been forced to dramatically thin their ranks this year. Cooley came clean and laid off 86 in August. Brobeck’s chairman and chief image engineer, Tower Snow Jr., urged his partners not to cut associates, but he lost that argument. So far, an astounding 82 Brobeck associates have taken the firm up on its offer to buy out anyone who was on a pace to rack up fewer than 1,300 hours this year. Snow, who perhaps more than any other firm leader embraced the rhetoric and extolled the prospects of the new economy, has stepped down as chairman of Brobeck. D.C. firms rolled the dice, too. In June 2000, Piper Marbury Rudnick & Wolfe negotiated a 10-year lease on 75,000 square feet in Reston, Va. Twenty-three lawyers occupy it now, tech partner Nancy Spangler confirms. “Did we think we’d be bigger by the end of this year? Yes,” she says. Firms that made big bets on telecom clients had some bleak months this year, as dozens of companies filed for bankruptcy. Andrew Lipman, who heads up the telecom group at Swidler Berlin Shereff Friedman, acknowledges that the volume of work has slowed compared with the “aberration” of the past few years. He says he has let go several contract attorneys, and “migrated” some telecom associates into other practice areas. Kelley Drye & Warren D.C. partner Brad Mutschelknaus presides over a telecom group that expanded from about seven lawyers in 1996 to 50 today. “The growth curve has ended,” he says. But he and Swidler Berlin’s Lipman say that they’ve seen telecom work picking up during December, and both say they’re now busy handling restructuring and litigation. In the midst of a recession and the war on terrorism, caution, diversification, and security have displaced speed, growth and access to cheap capital in the hierarchy of corporate virtues. Of course, corporate clients have always turned to nit-picking, hair-splitting, big-firm lawyers to identify and manage risk. That’s what lawyers are trained to do. But, evidently, a booming economy can persuade even the most highly trained law firm manager that his or her own risks can be overlooked. That can’t be reassuring to clients. “Law firms are in fact in the business of managing risk,” says legal consultant Ward Bower of Altman Weil. “You wouldn’t want a doctor that managed medical risk in such a way that they got sick.”

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