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A wave of departures in the last six months has steadily whittled down the three core practice areas of Shaw Pittman LLP’s New York office, which now faces an uncertain future. Late last week, structured finance partners Gary Roth and David Krohn informed the Washington, D.C.-based firm’s management they were leaving its New York office to join the New York office of Atlanta’s Alston & Bird LLP, taking a number of associates with them. The departures represent the entirety of the New York office’s business and finance practice group. Roth acknowledged, with earlier departures among the firm’s litigators, the office essentially will be left with a technology practice. Once 30 lawyers, Shaw Pittman’s New York office now counts less than half that number. The travails of the firm illustrate the difficulties facing many out-of-town firms seeking to expand into the New York market. New York entices firms because of the higher rates that can be charged for legal services, but firms entering the city from markets with lower average profitability can find New York legal talent a slippery commodity. In February, litigation partner Charles G. Berry left the firm to join the New York office of Washington, D.C., rival Arnold & Porter. Last November, litigator Kenneth A. Caruso, who founded the Shaw Pittman’s New York office in 1994, joined Chadbourne & Parke, along with counsel Marvin R. Lange and a number of associates. Shaw Pittman has about 450 lawyers worldwide and about 300 in its Washington headquarters. According to The American Lawyer‘s 2001 AmLaw 100, the firm had profits per partner of $555,000 in 2000. A source close to the firm’s New York office said Shaw Pittman’s profitability had been hurt in recent years by “imprudent managerial decisions.” In particular, the source said, the firm’s opening of a Los Angeles office and its decision to match the associate salaries of the big New York and Silicon Valley firms were “mistakes” that rendered the firm unable to compete financially in terms of partner compensation, at least with regard to New York partners. “In Washington, the gap between Shaw Pittman’s profitability and other firms’ is fairly small,” he said. In New York, he said, the gap would run into the hundreds of thousands. Roth said money was not a factor in his decision to leave Shaw Pittman. He added that he thought Alston & Bird presented a better career opportunity. Roth said the abundance of options in New York was a difficulty facing law firms trying to keep partners. “You’re in the city with the biggest and best opportunities,” he said, acknowledging that Shaw Pittman had at one point appeared to be the best option for him. Alston & Bird had profits per partner in 2000 of $685,000. Arnold & Porter, where Berry went in February, had profits per partner of $670,000. New York-based Chadbourne & Parke had $940,000. Caruso of Chadbourne said he expected Shaw Pittman’s New York office would survive and flourish if it continued to focus on its strengths. Edward Hansen, the firm’s New York liaison partner, said there were no plans to close the New York office. He said further that the technology practice, always the largest in the office, was doing well. The firm’s technology practice focuses on outsourced technology contracts for largely corporate clients, an area Hansen said was not heavily affected by the downturn in the high-tech economy.

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