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Philadelphia-based Pepper Hamilton has taken its first major step into the ancillary business world with the opening of Capsicum Group Inc., a technology- and operations-based consulting subsidiary. The business will provide technology consulting for a number of industries, focusing on information technology, manufacturing, distribution and the life sciences. Helping clients plan budgets, develop marketing strategies, build computer networks, evaluate outsourcing opportunities and evaluate potential vendors will be the focal point of Capsicum’s initial efforts. John R. Anderson and Samuel Goldstein will head Capsicum, Anderson as the managing director for marketing and outsourcing and Goldstein as the managing director for strategy and marketing. Anderson said that he spoke with Sharon Klein, the head of Pepper Hamilton’s technology department, about the similarities between consulting firms and law firms and that both then decided that Pepper Hamilton and its clients could benefit from opening a consulting service. “We talked about why law firms weren’t doing the same thing as consulting firms,” Anderson said. “We saw there was a lot of synergy between law technology and counseling work.” Anderson worked for Klein for a decade at Shared Medical Systems, where Klein was chief counsel. Anderson joined Pepper Hamilton in late 2000 as a strategic business consultant in the firm’s technology practice. Goldstein joins Capsicum after leaving Safeguard Global Services, a technology infrastructure company, where he was the chief information officer. He has also worked for several of the Big Five accounting firms for a combined 12-year span. Goldstein became familiar with Pepper Hamilton’s technology work while he was the chief executive officer of Airgas and while he worked at Safeguard. He said that after several brainstorming sessions with the firm, the idea of opening a separate entity naturally evolved, and he decided to come on board. The growth of Capsicum, both said, will depend on clients that come in over the next few months. “Any new start-up is about growth,” Goldstein said. “We are going to grow as appropriate. Engagements will lead to growth. Whether the numbers are 10 or 30 at the end of the year, I don’t know. We intend to grow based on opportunities, and we have some very promising opportunities right now.” The pair said that the success of the business would depend on three things: customers, flexibility and quality. “We just need to stay out on the street and get connected with customers,” Goldstein said. To that, Anderson added that being able to adapt with clients’ changing needs would also play an important part in the fledgling business’s success. “We also need to ensure that our work is always performed in a quality matter,” he said. James L. Murray, Pepper Hamilton’s executive partner, said that the business was formed primarily because of client demand. Before Capsicum, department head Klein found that clients were tapping into her previous experience in industry, which she gained while working in-house at Shared Medical Systems. “A lot of what Sharon was doing is not what you think lawyers will generally do,” Murray said. “While we were asking her to rely on her lawyering skills, she was applying past experience from a business standpoint, and we found there was a need for that type of counseling.” Klein will remain an employee of Pepper Hamilton and will not venture over into Capsicum, Murray said. While Pepper Hamilton is known for its corporate work and commercial litigation, Murray said, opening a technology-based ancillary business works for the firm because its technology practice is both active and broad-based. “We have a lot of clients in a lot of different areas,” Murray said. “And we were being asked to do things because the people in our practice had experience in industry.” Murray said that while the future could see Pepper Hamilton opening other ancillary businesses, no immediate expansions are in the works. “We are going to take a careful look at this one and see how it goes,” Murray said. “I don’t think we are going to get to the level of Duane Morris, which has 15 or 16 ancillary businesses. We want to be more focused on things that complement what we are doing as a law firm. We want to be an effective competitor in a competitive marketplace.” Capsicum will find its home in the same building as Pepper Hamilton’s Berwyn, Pa., office. Murray said Capsicum is subletting Pepper Hamilton office space from the firm.

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