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Stockbrokers in the dot-com collapse liked to refer to the “flight to quality,” as investors abandoned small, risky ventures for the stability of large companies with actual earnings. The same sort of migration has long been evident in legal recruiting — the movement from midsize, full-service firms to national and global behemoths, and from marginally profitable providers of commodity practices to brand-name players that can command premium fees and garner the most interesting work. And so it has gone, in double time, for the past year’s lateral partner moves among The Am Law 200. The sheer number of lateral partners arriving at or departing from Am Law 200 firms — 2,400 — was up by one-third from the year before, even with technology firms in full rout and the economy in steady decline throughout the period covered by our survey (the year ending Sept. 30, 2001). We attribute some of that annual increase to more complete survey data in the second year of this study, but that doesn’t explain all of it. Clearly, a recession does not inhibit mobility. So, what were the 2,400 job-hoppers seeking? It’s not just the obvious answer. “Partners do not move for more money,” insists Lynn Mestel, president of the New York-based legal recruiter Mestel & Company. “They move for a better platform to practice law.” That doesn’t mean the job seekers are willing to take a pay cut, but our study does tend to support Mestel’s belief that a bigger, multioffice firm is a lateral magnet. Of the 45 firms that recruited the most lateral partners, 37 are ranked by The National Law Journal‘s NLJ 250 among the nation’s 100 largest according to lawyer headcount. The same pattern holds true when we look at where the laterals are coming from and going to. More than two-thirds of the laterals hired by Am Law 200 firms came from non-Am Law 200 firms — they were moving into the profession’s top ranks — while about half of those leaving one job in The Am Law 200 went to another Am Law 200 firm. “A flight to safety,” is how recruiter Mark Henley, of New York-based Smythe Masterson & Judd Inc. refers to these migration patterns. Often the lateral movement is en masse. These combinations sometimes were regional: the smaller Mayor, Day, Caldwell & Keeton, for instance, swallowed whole by fellow Houston-based firm Andrews & Kurth. Often they were driven by one of the highly acquisitive national or global firms putting more notches in their letterhead, as when Chicago’s Hopkins & Sutter — once an Am Law 100 firm itself — became part of the Chicago office of Milwaukee’s Foley & Lardner. Fellow megafirm Holland & Knight added 106 lateral partners, absorbing one firm and cherry-picking from others to open new offices in Seattle; Portland, Ore.; and San Antonio. The objective at Holland & Knight and others like it is “to become a major force in major markets throughout the United States,” says hiring partner G. Richard Dunnells. The economic downturn is no deterrent if those being hired bring with them profitable business. “Any partners with [a] book of business are in demand,” says David Sewell, senior managing director in the Houston office of recruiter Major, Hagen & Africa. “The firms are looking for very specific practice areas they can acquire to augment the firm.” Hot areas include intellectual property, bankruptcy and litigation, as well as real estate and tax. Despite current conditions, corporate lawyers held their own in the rankings, but given their overall numbers at the large firms, that’s no surprise. Texas, as always, values size: Firms like Jenkens & Gilchrist; Andrews & Kurth; and Akin, Gump, Strauss, Hauer & Feld all hired substantial numbers of partners through mergers last year. These firms, which a few years ago might have been considered tortoiselike for risk-averse strategies that didn’t focus exclusively on technology clients, saw the benefits of their more diversified growth. “The big Texas firms maintained a full-service attitude,” says Sewell, who adds that he’s “got some groups [of partners] in play now.” R. Bruce McLean, chairman of Akin Gump, says the firm will keep hiring, but won’t cater to the whims of the market. It’s almost impossible to find a top IP partner now, he says, but the slowed-down economy has made it a good time to recruit an M&A partner, something the firm couldn’t get enough of in the recent boom years. “It may be a very good time to get some very good people,” says McLean. There’s almost always room to trade up, even when the starting point is a huge, elite firm. Peter Pantaleo, for example, who headed the bankruptcy group in the New York office of Los Angeles’ O’Melveny & Myers, left last year for New York’s Simpson Thacher & Bartlett. He, too, invokes the buzzword of the moment, adding to his list of superlatives that Simpson Thacher is “the biggest platform I can imagine.” Nicholas Groombridge, now at New York’s Weil, Gotshal & Manges, was similarly motivated, even though his jumping-off point was quite different. He left a thriving IP practice at the well-established but far smaller Fitzpatrick, Cella, Harper & Scinto, based in New York. “I wanted to develop more of an international practice, and I realized it would be a lot easier to do that from within a major international firm,” he says. Of course, even the largest firms lose partners, and those that lost the most are a bit defensive about it. Kilpatrick Stockton, for example, lost 28, although it hired 20. Managing partner William Brewster insists, “there hasn’t really been any client impact on us. We lost a group of trust and estates lawyers in Winston-Salem. That’s not exactly a growth market.” That accounts, at least, for four of his firm’s losses. Donna Petkanics, managing director for operations at Wilson Sonsini Goodrich & Rosati, which bled 14 partners last year, insists the firm is continuing to hire “strategically,” for its core practice areas — corporate securities and venture fund formation. “It’s an investment,” she says. “We’re in this for the long term.” Cesar Alvarez, CEO and president of Miami’s Greenberg Traurig, insists that the firm’s 40 partner losses occurred only because the previous year the firm topped the hiring list, with 107 new partners nationwide. Did it just grow too fast? “When you bring in so many, almost by definition you’re going to have people who leave for a number of reasons and some who don’t work out,” Alvarez says. “But we continue to grow.” It all pays off in the end, says Alvarez: “As you get larger you’re able to get resources that a smaller firm cannot get. And GCs are trying to reduce the number of law firms they use. So you’ve got to have the ability to provide what they need.” Some made the move now simply because they finally had time to consider it. “If you’re billing 4,000 hours a year you’re not going to get around to it,” says Charles Fanning Jr., a partner in the San Francisco office of headhunter Major Hagen. But lifestyle isn’t much of a factor in where people move, Fanning says. “I’m not getting calls from people at firms working hard where they want to trade down economically for fewer hours,” he says. “Those inclined to trade hours for dollars are probably not going to do it now. What you’re seeing now is people trading up.” Trading up, of course, is not trouble-free, as Greenberg Traurig’s churn — or any huge firm’s overburdened conflict-checking system — would attest. Still, Holland & Knight’s Dunnells, whose firm now has 1,326 lawyers, has no doubts: “We’re heading for 1,400 lawyers and it hasn’t deterred us yet.” So, a deeper, longer recession can only mean an acceleration of the flight to safety — at least as long as the demand for what the largest firms sell does not collapse. Related Charts: Lateral Arrivals and Departures Top 50 Firms by Lateral Hires Top 50 Firms by Lateral Losses With research assistance from Rosemarie Clancy and Dan McAllister

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