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Not all of the law firms expanding into the New York market are crossing time zones to get here. Many of the most rapidly growing firms in New York are based a morning’s drive away in Philadelphia, Boston or Washington, D.C. Most of these firms’ growth is of recent vintage though. Despite their geographic proximity, firms from the three other major legal markets of the Northeast Corridor have been slower to grow in New York than have firms from elsewhere in the country. Indeed, while most major Midwest and California firms had substantial New York offices more than a decade ago, only a few of the firms discussed below had even a token New York presence five years ago. Until last year, only one had more than 100 lawyers in New York. Compared with firms from the Midwest and California, firms along the Northeast Corridor outside of New York have faced particular challenges in achieving the combination of scale, client base and mentality that favors aggressive expansion. Like the cities themselves, Boston, Philadelphia and Washington, D.C., law firms are steeped in history and tradition. Naturally conservative, the top firms in these markets thrived for decades through longstanding ties to regional industries or dominance of certain practice areas. Convenient train and shuttle service appeared to obviate the need to open an office in New York or anywhere else. But the short distance to New York has always been a blessing and a curse. On the one hand, it has always been easy for lawyers from all over the Northeast to pop into Manhattan for a day. On the other hand, it has been an easy trip for clients too, not to mention New York lawyers traveling in the opposite direction. “We saw the best business skimmed away by guys coming from 90 miles away,” said Dechert Chairman Barton J. Winokur, describing the Philadelphia legal market in 1970s and 1980s. Now firms are coming from a lot farther than 90 miles away, but the top Northeastern firms have responded to the competitive pressure in the last few years by expanding enormously. Determined not to be left behind in the profession’s consolidation, they are seeking to remake themselves as national and, ultimately, international firms. Like their rivals in Chicago and California, the firms of the Northeast Corridor have decided a major New York presence is the linchpin of their ambition. PHILADELPHIA FIRMS For firms in Philadelphia, the choice has been particularly stark. A city whose name has been a watchword for urban decay for much of the last four decades, Philadelphia’s role as a regional financial center has also declined with successive waves of bank mergers. Not surprisingly, Philadelphia law firms were among the first on the East Coast to look outside their home market for opportunities. The historic leader among Philadelphia firms, Morgan Lewis & Bockius, was actually one of the first firms anywhere in the country to seek a national presence. The firm’s 305-lawyer New York office, opened in 1972, dwarfs that of any other East Coast firm not headquartered in New York. Morgan Lewis’ New York office has received boosts from a series of practice group acquisitions. The office got a huge boost in 1994 when it brought aboard 55 of the 125 lawyers from now-defunct Lord Day & Lord, Barrett Smith, including most of the firm’s litigation department. In 1999, Morgan Lewis acquired New York bankruptcy boutique Zalkin, Rodin & Goodman, and last December the firm acquired the intellectual property boutique Hopgood Calimafde Judlowe & Mondolino. The rapid growth has brought its hiccups; the firm was one of the handful of major East Coast firms to announce large-scale associate layoffs last year. “Across the industry, the period of growth three years ago was reactive,” said Charles E. Engros, the firm’s New York managing partner. “People were staffing up to meet deal flow.” The downturn has forced firms to take a different approach, he said. “It’s been healthy in terms of getting firms focused on strategy.” Following an administrative overhaul last year, the firm’s strategic focus now is on building national integrated practice groups oriented towards particular industries. Its showcase group is life sciences, which the firm is pitching as capable of handling the gamut of legal needs for the health care, biotechnology and pharmaceutical industries: corporate work out of New York, regulatory out of Washington and litigation and IP out of all three. The firm is similarly positioning itself in the media industry. Morgan Lewis’ historic Philadelphia rival Dechert has aimed its 85-lawyer New York office more squarely at a financial services-oriented practice. The problem so far is that much of their practice in that area, particularly its leading asset management and private equity groups, continues to be based mostly in Philadelphia, even though many of the largest clients are in New York. “People are on the train all the time,” Winokur said. The firm has targeted those areas for growth in New York, but the top priority at the moment is structured finance. In 1994, Dechert formed an alliance with London’s Titmuss Sainer Webb. Six years later, Dechert fully acquired the British firm, making it the largest American firm in the U.K. until Chicago’s Mayer, Brown & Platt merged with London’s Rowe & Maw in January. The 150-lawyer London office has given Dechert a hand into the burgeoning European market for structured finance products, particularly so-called collateralized debt obligations. A greater New York presence is key to growing this practice, Winokur said, as most of the clients are financial services giants straddling New York and London. The New York office should be 120 lawyers by the end of the year, he said, with growth also sought in bankruptcy and litigation. BOSTON FIRMS Compared with Philadelphia firms, Boston firms generally have seen less encroachment of their home market by out-of-town firms, and have therefore been slower to expand. Practice strengths in technology and intellectual property reflect the area’s status as one of the world’s premier centers of research in almost all areas. Boston is also home to some of the nation’s largest mutual fund and private equity firms, and local firms’ corporate practices are geared towards those sectors. The top Boston firms that dominate this work are some of the most profitable in the country outside of New York, but fear of being left behind by emerging super-firms is now driving some Boston firms to invest their profits in massive expansion plans. No firm more symbolizes this drive than Bingham Dana, which just announced its merger with San Francisco’s McCutchen, Doyle, Brown & Enersen. From a firm in 1995 that counted 175 lawyers in Boston and 25 in Hartford, Conn., the soon-to-be Bingham McCutchen will count about 820 lawyers worldwide. “We are great believers in consolidation,” said Jay S. Zimmerman, Bingham Dana’s chairman. “We firmly believe the profession is going to be dominated by 20 or 30 firms.” When the firm began aggressively expanding in 1997, New York was its top priority. Last spring, the firm acquired 75-lawyer New York firm Richards & O’Neill. With a large West Coast presence secured, New York is again the primary destination, said Zimmerman. The firm plans to move a number of litigators from McCutchen’s California offices and continue to build on strong bankruptcy, bank finance and insurer finance practices. A substantial capital markets practice remains a goal of the firm, and the firm remains open to acquisitions. “We’ll seize opportunities as they present themselves,” he said. Goodwin Proctor is another Boston firm that embarked on a national strategy five years ago. Chairman Regina M. Pisa said the New York office, now 70 lawyers, should reach 150 lawyers within 18 months. “Eventually you’re going to see our New York office as big as our Boston office,” she said. The New York office’s litigation and intellectual property groups are also bolstered by a 26-lawyer office in Roseland, N.J. Goodwin Proctor is one of the nation’s leading firms in the representation of fund management companies, and Ms. Pisa said the firm’s New York office is targeting related areas, particularly hedge funds and other private equity groups. The firm also has a sizable practice in real estate investment trusts, or REITs. The firm looks to practice areas where it can leverage existing strengths and compete with the best, she said. “On the private equity side, we run into the Sullivans & Cromwells and Cravaths of the world,” she said. “We look where there are opportunities to do the things we do well.” WASHINGTON FIRMS Not surprisingly, Washington firms have a similar position in regulatory practices. Significant transactions involving the health care, pharmaceutical, telecommunications, energy and other major industries are invariably subject to various regulatory hurdles. Washington firms have thrived handling that end of a transaction, while firms from New York and elsewhere generally take charge of putting the deal together. But virtually every major firm in the country now has a Washington office, and many of these offices have grown as large as the offices of local firms. Increasingly, Washington firms feel driven to expand their franchises from the standard Washington practice mix of regulatory work and litigation. Hogan & Hartson has expanded the most aggressively of Washington firms. Its 110-lawyer New York office is the result of the firm’s January acquisition of the New York firm Squadron Ellenoff Plesent & Sheinfeld, well-known in New York as the regular outside counsel to media mogul Rupert Murdoch. Hogan had worked with Squadron Ellenoff on a number of major transactions for Murdoch’s News Corp., and its acquisition gives the firm a substantial New York transactional capability. J. Warren Gorrell Jr., Hogan’s managing partner, said the firm was probably the only major Washington firm to have long had a substantial capital markets practice, particularly in equity offerings and REITs. These are areas the firm hopes to expand rapidly in New York, along with a litigation practice oriented towards intellectual property and white-collar crime. The firm acquired litigation boutique Davis, Webber & Edwards in 2000, and recently hired Loretta E. Lynch, a former U.S. Attorney for the Eastern District of New York, as a litigation partner. Other Washington firms are leaning more heavily on their Washington regulatory strengths to build New York transactional practices. Arnold & Porter has regulatory practices focused on financial institutions, telecommunications and food-and-drug law. The firm’s 75-lawyer New York office is looking to grow by taking on a greater amount of transactional work in these industries, said John A. Willett, the head Arnold & Porter’s New York office. The firm has also leveraged its Washington-based relationships with foreign governments to build a significant sovereign debt practice, with clients like the state of Israel. Bankruptcy, environmental and tax are other practice areas fielded by Arnold & Porter’s New York office. “We want the office to be significantly larger than it is,” said Willett, but noted the firm would be averse to a merger or large-scale lateral hiring. “Partners here are very conscious of culture and tradition,” he said. Covington & Burling, perhaps the most white-shoe of Washington firms, faces similar issues, which did not stop the firm from acquiring New York’s Howard, Smith & Levin in 1999, opening what is now a 75-lawyer New York office for the firm. “I would be shocked if we did another merger,” said Andrew H. Friedman, a partner and firm spokesman. Though the merger gave Covington a significant New York litigation practice, Howard Smith was primarily known as a technology firm, and Friedman said the firm expected the New York office to maintain a tech focus despite the downturn. The New York office represents stable, large-cap tech players such as Computer Associates and USA Networks, he said, and the tech focus dovetails with regulatory expertise in areas like Internet privacy. To marry more transactional work with regulatory expertise is the firm’s medium-term goal for its New York office. The firm has leading regulatory practices in the food-and-drug and health sciences areas in particular. In the long term, Friedman said, the firm would like to develop transactional capabilities attractive to clients independent of its regulatory expertise. “We’re hiring pretty aggressively in New York,” Friedman said, noting the firm was also looking to expand in European financial centers. “It’s very hard to be taken seriously in Europe without a New York presence,” he said.

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