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Schnader Harrison Segal & Lewis will close its 10-attorney Atlanta office on Jan. 31, after just nine years in the Peach State. The firm opened up the office in 1992 initially for a client — United Parcel Service of America Inc., which had moved its headquarters from Connecticut to Sandy Springs, Ga. The firm also came to get a foothold in the burgeoning Southeastern market, said C. Wilson DuBose, who served as Schnader Harrison’s local managing partner from 1992 to mid-2000 when he joined Madison, Ga.’s Winkler DuBose. After Schnader Harrison came to Atlanta, however, DuBose said that UPS began using other Atlanta law firms. And in 1999, when the firm lost some corporate partners, it also lost some UPS business that followed partner and former executive committee member Jeffrey L. Schulte to Atlanta’s Morris Manning. Schnader Harrison has made news in recent years for growing in other geographic areas. In 1999, the firm opened up a small office in San Francisco. In 2000, it acquired Boston’s Goldstein & Manello, adding 50 lawyers, and took 45 attorneys from Mesirov Gelman. While those additions helped boost the firm’s revenue by 33.4 percent, to $103.5 million in 2000, they also were a factor in the 6.9 percent decline of average equity partners’ profits, to $325,000. Schnader Harrison’s firmwide chairman, Philadelphia-based Ralph G. Wellington, did not return a call seeking comment about the office closing. But after being contacted by The Daily Report of Atlanta, however, the firm issued a statement in which Wellington said: “Schnader Harrison has added 150 attorneys in the past two years, and opened substantial offices in Boston and San Francisco. We have not been able to expand our Atlanta office as we had hoped. In the current economic downturn, it seemed best to concentrate our growth to the other nine offices nationally. We look forward to establishing a significant presence in the Atlanta market in the future, as strategic and economic conditions allow.” Schnader Harrison Atlanta office managing partner John C. Porter Jr. said he believes Wellington and the firm’s executive committee made the decision to close the Atlanta office. He says he got very little notice of the closing, and that he thought the firm’s mission was to grow the office. “Those were my instructions as managing partner,” he said. IT WAS A SURPRISE But on Dec. 2 or 3, according to a Schnader Harrison associate who asked not to be named, lawyers in the Atlanta office were told they’d be closing by Jan. 31. “It was a surprise,” the associate said. “They just said that for economic reasons, the office was closing… . I think everybody around here thought that we were trying to grow things.” The associate said the firm is offering severance packages of two to three months’ pay. “It’s a horrible time to be looking for a job,” the associate added. “I can tell you that most people right now are looking around and trying to find positions. There are some individuals who have been offered a position to continue with the firm in another office and there are some that haven’t.” Severance packages are being negotiated on an individual basis, Porter said. “I think every attempt was made to keep as many people as possible,” he said. “I don’t know whether all of the associates were given offers to relocate, but all of the partners were given offers.” The office has three partners, four associates and three counsel. Porter said he does not know what sort of offers the counsel received. “I would assume that we weren’t making much money, but I haven’t seen the final figures,” Porter said. It’s not that the office was losing clients or scrounging for business, according to Porter. Rather, he said high overhead was cutting into the revenue of the outpost. Porter explained that because the firm had planned to expand in Atlanta, it had rights to an entire floor in SunTrust Plaza, at 303 Peachtree St. The firm occupies about three-quarters of the floor and subleases the rest. The firm has three years left on its lease. “I think it’s obvious that one can’t go on forever with 10 attorneys in a full floor of the SunTrust building,” Porter said. He also said he does not know how much rent the office pays or how much revenue it generates, because Schnader Harrison calculates revenue based on firmwide practice groups rather than geographic locations. Larry Jarema, director of leasing for Portman Management Co., which manages SunTrust Plaza, says rental rates are between $28 and $30 per square foot, and the average floor has about 23,000 square feet. So, a rough estimate of Schnader Harrison’s leasing costs is $644,000 to $690,000 per year. According to the Am Law 200, an annual ranking of law firm finances, the firm’s average revenue per lawyer was $365,000 in 2000, the most recent year for which numbers are available. If that’s representative of Schnader Harrison’s 10 Atlanta attorneys, revenue would be about $3.65 million and leasing costs might eat up about 19 percent of revenue. Despite nine years in the city, Schnader Harrison never managed to achieve critical mass here. According to Martindale-Hubbell Law Directory listings, Schnader Harrison’s local office peaked at 19 attorneys in 1997. It has fluctuated between 10 and 12 lawyers since 1999. The firm made several attempts to merge with groups of attorneys here over the years, but none ever panned out, Porter said. “It’s easy to do a bad merger,” Porter said. “A good merger requires the right chemistry, the right timing. You’ve got leases, all kinds of issues that both parties don’t have control over that really affect whether the deal is viable or not.” According to Porter, the office also was unable to find the right individual attorneys to hire. The Schnader Harrison Atlanta lawyers are now busy looking for new jobs. So far, counsel Carl H. Trieshmann has decided to join Schnader Harrison’s Washington office, and associate Lisa Y. Washington has joined the Atlanta Housing Authority’s legal department, according to Porter. Partner Allen N. Bradley says that for now, he, like most of the other local Schnader Harrison lawyers, has not decided what to do. He said he believes the firm’s overall financial health is relatively good, and said the Atlanta office was not losing clients. The Atlanta office was actually gaining clients in recent years, Porter said. He declined to discuss who they are, saying only that Schnader Harrison’s Atlanta lawyers have good relationships with attorneys in the firm’s other offices and if clients want to stay with Schnader Harrison, they’ll be taken care of. Porter acknowledges that Schnader Harrison did have some options other than closing the office. It could have subleased more space or moved its 10 lawyers to a less expensive office, for example. He said he does not know why the firm didn’t choose those options. “That would have been an alternative,” he said “This has been a tough year, and I think some hard decisions had to be made about the direction and the future of the firm. Those decisions were made by the firm, as reluctant as it may have been.” Jeff Blumenthal contributed to this story. Janet Conley is a reporter for The Daily Report .

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